Creating Blight
The treasurer’s office pushed back the February 2015 deadline for paying back taxes or entering into a payment plan and having one’s property removed from foreclosure to May 12. On that date, to avert the emergency facing city residents, community organizations led by the American Civil Liberties Union held a press conference to demand a moratorium on the foreclosure of occupied homes. They reminded the county treasurer that during another emergency — the 1930s Great Depression — leaders had worked to protect homeowners from foreclosures.
Their letter also outlined how such foreclosure auctions were “counterproductive” — delinquent taxes are not recovered. In the past three years the county claimed it was owed $691 million in unpaid taxes, penalties and interest but the auctions only raised $107 million. For a 15% recovery rate, the county displaced residents and destabilized neighborhoods.
Yet according to the city assessor’s office, a random sample of residential properties auctioned off in 2012 found that fully 40% exceeded the property’s worth. Loveland Technologies, which has mapped Detroit’s foreclosure property, concluded that there is an 86% overlap between tax evictions and blighted homes. Tax foreclosure, carried out by the city and county, is the greatest source of the city’s blight.
In 2010 Washington provided $498 million to the state of Michigan to help homeowners at high risk of foreclosure. Yet over five years Lansing has only provided $188 million to help homeowners; $26 million was spent on administrative expenses and $23 million allotted for blight removal. Denying 57% of all applicants, sometimes deeming them “too poor” to be eligible, the Step Forward program now plans to divert millions for “blight removal” instead of saving homes and neighborhoods from blight.
Of course there is a tax exemption in place for those who are too poor to pay, but unlike many other Michigan cities and towns, Detroit does not send out information about it or make the application available online. Individuals are required to apply in person, placing a burden on elderly and disabled people. This represents yet another hurdle in a city with an inadequate transit system and where 25-33% do not have access to a car.
“There is an 86% overlap between tax evictions and blighted homes.”
Just as with Detroit’s water crisis, no governmental body addresses underlying structural problems that Detroiters — 83% African American and 9% Latino – face. It’s unlike other U.S. cities in that poor people often own homes inherited from their families when Detroit was a thriving industrial city, or purchased before the homeowner became disabled or retired on a fixed income.
It’s also important to remember that the city’s bankruptcy was carried out on the backs of retired city workers. Retirees lost their cost-of-living increases, most of their health care, and took a 4.5% pay cut. (Uniformed retirees, who are ineligible for Social Security, took less of a cut.)
When the Wayne County Treasurer’s office sent residents notices that they could work out a payment plan to take their homes off the foreclosure list, several thousand turned out. Last winter the state legislature passed a series of bills around foreclosure, including a more flexible plan that capped monthly payments at 3% of the back taxes with 10% due up front. Additionally the treasurer had the discretion to lower the 18% interest rate for the current year to 6%.
Raymond Wojtowicz, Wayne county treasurer, announced on May 5 that 9,000 occupied homes have been removed from foreclosure proceedings. But a payment plan doesn’t address the structural problems of over-assessment nor mean that those plans are affordable.
The County Treasurer’s office has since pushed the foreclosure date back to June 8. As of May the revised Loveland Technologies website indicates there are probably 20,900 foreclosures on occupied homes with an additional 18,563 “reversions.” (Reversions are properties that were auctioned during the 2012-14 period but have not paid their taxes and therefore have reverted to the county.)