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The Detroit Journalism Cooperative is an integrated community media network providing insight on the issues facing Detroit. It features two radio stations, an online magazine, five ethnic newspapers, and a public television station-- All working together to tell the story of Detroit.The DJC includes Michigan Radio, Bridge Magazine, Detroit Public Television, WDET, and New Michigan Media. To see all the stories produced for the DJC, visit The Intersection website.Scroll below to see DJC stories from Michigan Radio and other selected stories from our partners.

Tax foreclosures hurting Detroit’s recovery

Lester Graham
Michigan Radio
Alisa and Darryl Beavers rent a house on the east side of Detroit. They had hoped eventually to buy it. Tax foreclosure complicated things.

At one time, Detroit’s black families had one of the highest home ownership rates in the nation. Now that rate is among the lowest. Every year in Detroit, thousands of people lose their homes to tax foreclosures. In many cases, it is unnecessary. The city is accused of illegal taxes and denying tax exemptions homeowners deserved.

When I got to Darryl and Alisa Beavers' house, I was greeted by Jackson, their small dog. They’ve been living in a three-bedroom, two bath, 1,600 square foot home on Detroit’s east side. There are a lot of nice houses in this neighborhood.

The Beavers have been renting with the idea of eventually buying the home from their landlord, a friend. But, Alisa says a few months back they didn’t see or hear from the landlord for a while.

“And so we went over to his house and that’s when he found out the landlord passed away. And then we found out it was like maybe four years’ worth of back taxes owed,” Alisa said, her husband Darryl adding, “So, we got a foreclosure letter.”

This is more than an inconvenience for the Beavers. It’s more than just having to move. They’ve been working and spending their own money on this house.

“We fixed the house up to move into it, to live in it. We painted everything, we fixed everything in the house. The floors, we did everything. And the kitchen as well,” Darryl explained. The couple also invested in a furnace and a hot water heater.  They were invested in making the house comfortable with the expectation they’d one day buy it.

The house was put up for auction for back taxes. The Beavers saved some money and worked with the United Community Housing Coalition  to put in a bid for the home. They didn’t get the house. It sold for $4,400. It’s worth around $40,000.

They’ll soon meet with the new landlord to determine what their rent will cost, or make arrangements to purchase the house – presumably at market price, or learn when they have to be out. They’ve already received an eviction notice.

The Housing Coalition will help them find new place to live if it can.

Credit Lester Graham / Michigan Radio
Michigan Radio
Ted Phillips heads up United Community Housing Coalition.

Ted Phillips is the executive director of the non-profit advocacy group. The Coalition helps thousands of people facing tax foreclosure in Detroit stay in their homes.

“(We) make sure that if there are ways to get out of foreclosure, there are various kinds of payment plans and what have you, we work with them to do that. We try to work with them so they’re not throwing money away. And what I mean by that is if somebody owes seven, eight, nine thousand dollars worth of taxes, they have no business paying two or three thousand (dollars) and losing the house anyway. So, we try common sense kind of stuff,” Phillips explained.

Phillips says the city has worked to reassess properties that were over-valued and over-taxed. But the job is not finished. Some people are paying a rate five times what they should.

In many cases, the homeowner should not be paying taxes at all. Their income falls below the federal poverty guideline and they should be getting an exemption.

“Very often the common scenario that we see is that somebody comes in for tax foreclosure, they should have been getting it (poverty exemption) forever, for that matter, you know, they’re 70 years old, their income hasn’t changed in years, but they didn’t know about it and they first time they hear about it is when they’re in foreclosure and about to lose their house,” Phillips said.

Some homeowners are getting hit with both barrels. They’re eligible for the poverty exemption, but not getting it. And they’re charged taxes at an unreal rate.

Walter Hicks says the assessment of his house on Detroit’s west side is ridiculous.

“Because what they had the house worth was, I think, 30 to 40,000 (dollars) and I got the house appraised, it was appraised for nine thousand,” Hicks said.

On top of that, Hicks has been eligible for the poverty exemption in the past. His income has not changed, but he was denied the exemption a couple of years ago. The city said he owned another house in the city. The city said that made him ineligible for the exemption. It turns out that it’s someone else’s house. The man has the same first and last name.

The clerk at city hall told him nothing can be done. It’s too late. Hicks still has to pay the taxes. Hicks has repeatedly explained the situation to the city. His story has been reported in the news media. Still, he’s heard nothing from the city.

"The bottom line is people are losing their homes with inability to pay taxes that they should never have had to pay in the first place."

“Not a thing. To rectify the problem — I know they done heard me, I know they know the issue. You know all I want them to do is to correct the error that they made,” Hicks said.

Now, Walter Hicks is plaintiff in a lawsuit filed by the American Civil Liberties Union and the NAACP.

“The bottom line is people are losing their homes with inability to pay taxes that they should never have had to pay in the first place,” said Michael Steinberg with the ACLU.

The lawsuit originally charged the Wayne County Treasurer’s Office and the city of Detroit with violating the Fair Housing Act. That’s because black people in the county face tax foreclosure at a much higher rate than white people. A judge dismissed the case against the county, but the City is still in court. The ACLU also says the city is breaking state law for failing to assess property values properly.

“It’s tragic. You know, the fact that the city is starting to come in line with state law helps people going forward, but it really doesn’t help people who – and there’s tens of thousands of them — who have lost their homes over the past five years,” Steinberg said.

In emails responding to our questions, the Detroit mayor’s office showed progress on re-assessments of property. They noted a dramatic drop in foreclosures this year, about half of what they were last year. Many people were put on payment plans. Many people are getting poverty exemptions.

The city calls the ACLU lawsuit “recklessly irresponsible” and says it would “threaten basic city services to all Detroiters.”

The city’s future is threatened regardless. Here’s why: Without stable home ownership in a city, nothing is stable.

“One of the most important ways in which people acquire wealth, have that wealth increase and transfer that wealth from one generation to the other is the house,” said Peter Hammer, a professor of law at Wayne State University.

That increase in wealth happened for the white middle class. New Deal programs during the Great Depression helped white people get ahead and buy homes. It did not help black people.

Many African-Americans who did by a home, bought it in inner-cities. Values in those locations often have plummeted. Instead of increasing wealth, many black families lost it.

“You look at the household and then you look at the city which really an aggregation of all the households. And the same things that are preventing the average household from aggregating wealth and being prosperous is also undermining the ability of the whole entire city of aggregating wealth and being prosperous,” Hammer said.

In an effort to keep the city of Detroit afloat, it’s already taxing at a higher rate than anywhere else in the state. It’s residents are among the poorest in the state. If the city is ever to see prosperity, it has to find a tax rate its citizens can afford or it will continue to force thousands of its residents out of their homes each year.

Mike Wilkinson with Bridge Magazine contributed to the reporting of this story.

Support for the Detroit Journalism Cooperative on Michigan Radio comes from the John S. and James L. Knight Foundation, Renaissance Journalism, the Ford Foundation and the Corporation for Public Broadcasting. 

Provided by the City of Detroit.

Lester Graham reports for The Environment Report. He has reported on public policy, politics, and issues regarding race and gender inequity. He was previously with The Environment Report at Michigan Public from 1998-2010.
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