Fight to End Harmful Tax Practices in Detroit Underscores the Need to Continue to Challenge Institutional Racism

By Kimberly Buddin-Crawford

Hundreds of African-American homeowners in Detroit will lose their properties this fall, joining the thousands before them who are part of one of the largest tax foreclosure crises since the Great Depression. For many, the narrative is similar: residents are given tax bills that do not reflect the value of their homes and which they are unable to pay. Left with few options, the residents often wind up having their homes taken in foreclosure.

Under state law, Michigan municipalities are required to annually conduct individualized assessments of all properties. Based on these assessments, the county makes certain necessary adjustments and ultimately determines the property taxes. In many Wayne County cities, and throughout the state of Michigan, this is a seamless process, which most residents do not think twice about. 

In Detroit, however, many black homeowners do not have that luxury because the City of Detroit has admittedly failed to properly conduct annual property value assessments in at least a decade. Some homes, like that of 67-year-old Julia Aikens, are on record with the city to have a value $10,000 to $20,000 more than the property’s accurate assessment, resulting in significantly higher tax bills. 

The racially discriminatory practice has devastated black homeowners and rendered many once-solid neighborhoods dangerously unstable. Some have likened the process to “a conveyor belt” out of the City for many of its long-time black residents. And this anti-black injustice—which the ACLU of Michigan has been fighting through a lawsuit filed on behalf of black Detroit homeowners— is unfolding right in the heart of one a city with one of largest black populations in the country. 

As we take time this week to celebrate the life and legacy of Dr. Martin Luther King Jr., we at the ACLU think it’s important to remember that the struggle against racial injustices facing blacks is far from over. Nothing reminds us of this quite like our tax foreclosure case.

In the mid-2000s, Detroit experienced the not only burst of the housing bubble but also a failing public education system, increased unemployment, and a bankruptcy. A city that had seen relentless white flight since the 1950s now also saw thousands more residents and businesses, black and white, abandoning Detroit properties that they could no longer afford. Although this resulted in a steady decline in property values, city assessors in Detroit failed to keep up with the reduction in property assessments as required by law.

As a result, many homes in Detroit are taxed a values that are double—even triple—what the homes would sell for on the open market. This overtaxing has had particularly deleterious effects on those living in low-income and predominately black neighborhoods where property values declined most significantly. 

In the black community—where historically people have faced restrictive covenants under Jim Crow, refusal of loans, redlining, and predatory lending—homeownership is particularly cherished. Not unlike other American families, blacks depend on their homes as a key source of collective wealth that can be passed down to successive generations. Now, as homeowners in black neighborhoods face the fact that they are 10 times more likely than those in non-black neighborhoods to fall into foreclosure, that wealth is being jeopardized. 

With the highest black population in Michigan, a majority foreclosed homes in Detroit are of black residents.

Unfortunately, the Wayne County Treasurer’s Office has only exacerbated the problem. Wayne County continues to knowingly foreclose on properties that are improperly assessed—a practice that has a disparate impact on people of color. The Wayne County Treasurer’s Office pushes people to enter into unaffordable payment plans, still based on the unlawful and improperly calculated taxes, with no consideration for a homeowner’s actual ability to pay. This simply delays the inevitable and many homeowners ultimately default, spiraling back into foreclosure proceedings. 

Compounding this tragedy is the fact that many of those facing foreclosure are eligible for relief from their entire tax burden. Under the City’s poverty exemption, a large portion of Detroiters qualify to have as much as 100 percent of their property taxes waived due to their low income. However, many homeowners are unaware of the exemption. Many of those who attempt to apply are unsuccessful because of the City’s convoluted application process, which requires homeowners to go to the municipal center, wait in line (often for hours), fill out a form to request a poverty exemption application and wait for the application to be sent via snail mail. 

Some never received applications. Many others received them within days of or after the due date. Repeatedly, homeowners who were in desperate need of the exemption simply were not given sufficient time to gather the numerous documents-- tax forms, utility bills, pay stubs, public benefits information, and even children’s report cards, etc.—required to apply for the exemption. Consequently, they owe taxes they cannot afford, shouldn’t have to pay and likely will never be able to pay.

The collateral consequences are that thousands of black Detroiters—elderly, those with disabilities, families with young children—lose their homes each year for an inability to pay taxes that they should not have been required to pay in the first place. Many of the foreclosed Detroit homes are sold in the foreclosure auction for less than what people owe in taxes. Although some homes are purchased, restored, etc., many sit vacant, are vandalized and stripped, increasing the opportunity for criminal activity and further decreasing property values.  Occasionally, the city spends thousands of dollars—sometimes costing more than the amount of taxes owed—to tear down dilapidated structures. 

The city and county’s focus should be on doing right by all residents, many of whom have stood by through the community’s darkest times. It should focus on assisting its most vulnerable populations, creating more resources and better accessibility for low income families and communities of color. This is about government accountability. Ultimately, the entire community loses.

The ACLU of Michigan, along with NAACP Legal Defense and Educational Fund and Covington & Burling LLP filed a lawsuit under the Fair Housing Act and Due Process violations. To learn more about the lawsuit visit: HERE.

 

 

 

 

As we take time this week to celebrate the life and legacy of Dr. Martin Luther King Jr., we at the ACLU think it’s important to remember that the struggle against racial injustices facing blacks is far from over. Nothing reminds us of this quite like our tax foreclosure case.