Class Slams Detroit on |Tax-Foreclosure Crisis

     DETROIT (CN) — Going to bat for thousands of distressed homeowners, most of them black, the American Civil Liberties Union claims in court that Wayne County’s foreclosure crisis is the worst Michigan has seen since the Great Depression.
     County treasurer Eric Sabree is going after homeowners for unpaid property taxes, but the ACLU says those tax rates are woefully out of date.
     “The city of Detroit has failed to conduct properly the legally mandated property tax assessments for at least two decades,” the complaint states, filed Wednesday in Wayne County Circuit Court.
     “Further, after the values of homes began to drop precipitously in 2008, the city of Detroit failed to reduce the assessed values of the homes to match the actual true cash values, a fact which city officials have acknowledged,” the complaint continues. “As a result homeowners, including plaintiffs, were taxed as if their homes were worth many times their actual true cash value.”
     The ACLU brought the suit as a class action, with the Morningside Community Organization as lead plaintiff.
     That nonprofit is joined by seven individual homeowners and three other community groups.
     Four of the individual plaintiffs say they qualify for a poverty exemption that excuses them from paying property taxes, but that Detroit’s “needlessly complex and impenetrable application procedures” have kept those exemptions out of reach.
     Quoting data compiled by the United Way of Southeastern Michigan, the ACLU notes that 36 percent of Detroit homeowners facing tax foreclosure in 2015 met federal poverty levels.
     More than 80 percent meanwhile “had faced a hardship in the prior year — including medical problems, divorce, job loss, or a family death.”
     The ACLU says property values sank heavily in Wayne County, and Detroit in particular, after the 2008 financial crisis — some by as much as 80 percent.
     Yet Detroit has not conducted a citywide reassessment for 50 years, according to the complaint.
     Detroit is aware of the problem and even began reassessing, but that process will not be complete “until late 2016 at the earliest,” the complaint states.
     Compounding the outdated assessments, according to the complaint, is that Detroit now intertwines tax debts with water liens.
     The ACLU notes that Detroit water bills are exorbitant because of “a series of poor financial investments by the city.”
     “The homeowners often face the dual challenge of a water shutoff in the short term — with hefty fees for reconnection — eventually followed by a tax foreclosure based in part on the unfairly high water bill,” the complaint states.
     Wayne County sold 6,000 homes at the 2014 tax-foreclosure auction, and that number climbed to 8,000 occupied homes last year, according to the complaint.
     Though the 2015 auction included “a record-high number of properties,” according to the complaint, Treasurer Sabree has estimated that 20,000 properties will be auctioned this year.
     The ACLU says Sabree sent out 38,000 foreclosure notices for back taxes from 2013 or earlier, and around 20,000 of these notices were for tax bills less than $3,000. To avoid foreclosure on 2013 taxes, 2016 is the last year.
     Wayne County census records show that the tax-foreclosure rate in blocks where most homeowners are black is 10 to 15 times higher than in blocks where most homeowners are non-African American.
     “The Wayne County Defendants practice of foreclosing on homes in the county with tax debts based on an illegal over-assessments of property values has a gross disparate impact on African Americans in Wayne County,” the complaint says.
     One of the plaintiffs, Spirlin Moore, is 77, black, deaf and illiterate. He receives less than $10,000 a year from Social Security disability and food assistance. Though denied a poverty exemption in 2012, 2013 and 2014, he was granted it in 2015 and 2016.
     Another plaintiff Walter Hicks, 57, is also black and disabled from a back injury. He makes a mere $15,000 a year but says he was denied a poverty exemption in 2012.
     He was then too discouraged to apply in 2013, according to the complaint, but reapplied in 2014 and was once again denied.
     The ACLU says the county mistakenly believed that Hicks owned two properties because it confused him with someone with a similar name. The county allegedly refused to reverse its decision despite proof of the error.
     Another plaintiff, Julia Aikens, is a former medical assistant who has been on disability since 1999. When she was denied a poverty exemption in 2014, the county allegedly told her that she had to have lived at her property at least one year> The ACLU says Michigan law makes no such requirement for the poverty exemption.
     The complaint also describes how Vietnam War veteran Edward Knapp walked 20 blocks and waited 45 minutes in line for a poverty exemption in 2014, only to be told that they county would mail him an application.
     He says the application came a day after the deadline and was thus denied, though he makes just $17,000 a year.
     ACLU attorney Mike Steinberg filed the lawsuit, which seeks an injunction, alleging race-discrimination violations of the Fair Housing Act and violation of due process.
     Wayne County, Detroit, the treasurer and the Detroit Citizens Review Board did not return requests for comment.

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