“I’d like to try to go with the new Detroit if that’s really coming, like a family heirloom.” Detroit Needs Residents, but Sends Some Packing By MONICA DAVEY JUNE 26, 2014 DETROIT — Ronald Ford Jr. has watched neighbors move away and brick houses on his family’s block crumble to nothing, but he says he wants to stay put and give a chance to city leaders who now promise a renaissance. “I’d like to try to go with the new Detroit if that’s really coming,” Mr. Ford, 49, said, standing outside the house on the city’s east side that he describes as precious, “like a family heirloom.” Yet as Mike Duggan, the mayor of the nation’s largest bankrupt city, pledges to stem the flood of departures that have crippled Detroit and to begin increasing the city’s population for the first time in decades, Mr. Ford is on the verge of losing his family’s house. So are tens of thousands of others here who failed to pay their property taxes. In a city that desperately needs to hold onto residents, there is a virtual pipeline out. At least 70,000 foreclosures have taken place since 2009 because of delinquent property taxes. And more than 43,000 properties — more than one in 10 in this city — were subject to foreclosure this year, some of them headed for a public auction where prices can start as low as $500. Tax foreclosures have grown so steeply that county officials have lately had to forgo pursuing tens of thousands of additional properties that have fallen far enough behind to risk foreclosure. “It’s more than this office can handle at this point,” said David Szymanski, the chief deputy for the Wayne County treasurer’s office, which had so many properties to foreclose on this year that it held 10 sets of hearings about them in a convention center auditorium. “We are popping at the seams.” Other cities wrestle with unpaid taxes, too, but the size of Detroit’s problem is staggering. Several factors have brought the city to the point that crucial revenues are not being collected and thousands of houses are being taken away each year — not by banks, for failure to make mortgage payments, but by the government, for failure to pay taxes. Contributing are soaring rates of poverty, high taxes despite painfully diminished city services and a long pattern of lackadaisical tax collection by the city. In some cases, homeowners have abandoned properties and simply quit paying taxes, and foreclosure may be the only way to get a house back into the hands of people who actually want to live there and pay their share. In other cases, those who lose or abandon their houses sometimes end up buying other houses at auction — sometimes for as little as $500 — and begin the cycle again, although new rules are aimed at taking back properties sooner if taxes are again not paid. Either way, the city fails to get all the tax revenue it is owed. Political leaders here acknowledge that the flood of tax foreclosures has become a problem, and say they are making efforts to improve the situation by lowering property assessments — and thus tax bills — and by trying to help people find steady incomes. But it may not be enough. “This whole ecosystem has to be rethought if we’re going to be effective and sustainable going forward,” said Matt Cullen, a business executive who took part in a task force, begun by the White House, aimed at solving Detroit’s crisis of blighted neighborhoods and abandoned and dilapidated buildings. “How important is it to take it back on taxes? At what point should you be really working hard with the owner to keep them in? Fundamentally, if you take the people out of the home, almost invariably the home ends up being blighted and taken down.” Forty-five years ago, Mr. Ford’s family bought the 1920s-era house for about $17,000. But in recent years, Mr. Ford said he had struggled to find work and pay even his immediate bills — for electricity and food — much less overdue property taxes. Though he was hired in June to do demolition work, Mr. Ford said he did not have the more than $7,000 he owed in back taxes since 2010 and in interest and fees, which now amount to 30 percent of that total bill. This winter, he found a plastic sack hanging on the front door, alerting him that the house was to be foreclosed on for taxes. It will most likely be sold at auction this fall unless he finds the money. The bags speckle the neighborhoods here during certain seasons. “All the wind came out of me when I saw that,” Mr. Ford said. “I’ve been here since I was 3. My focus is on finding a way to keep it. But if not, where will I be? I don’t know.” In 1999, Michigan changed the way its localities dealt with people who failed to pay property taxes. State lawmakers ended a system of tax liens in which the rights to collect debts were sold to investors, but which often left the titles of properties murky and, in the time-consuming process, left properties to decay. Under the new method, homeowners who fell three years behind could expect to lose their homes. In Detroit, which lost a quarter of its population in the ten years after 2000 and where those who remained struggled during the recession, more and more people began falling behind. In 2008, 47,000 properties were subject to forfeiture, meaning their owners failed to pay taxes for one year. By 2010, that number hit 86,000. And by 2012, 95,000 properties had gone unpaid. The county’s required legal announcement of homes in forfeiture, mostly from Detroit, is reams thicker than most Sunday newspapers — a fat, gloomy record of a city in foreclosure. Of the properties in forfeiture, thousands of owners come up with the money to pay off their debts. Others qualify for programs aimed at sparing them from losing their homes, including a state program using federal funds and a county program that permits extensions of time, as well as stipulated monthly payment agreements and assistance from nonprofits. This year, for example, thousands of the more than 43,000 properties headed for foreclosure had by mid-June been spared. Still on the list: the owners of more than 26,000 properties — some of whom could not qualify for assistance or already failed to meet monthly payment plans. Ted Phillips, the executive director of United Community Housing Coalition, where a worn office is regularly crowded with families in search of a last-ditch way to save their homes, has watched the numbers swell. “If we don’t make some changes with what we’re doing, I don’t know where this ends,” Mr. Phillips said. In a city where 38 percent of people live below the poverty level, people have often viewed their tax bills as the least of their problems — particularly as they watch neighborhoods hollow out but their taxes stay relatively high. And the interest rate, set by state law, reaches 18 percent by the time properties are to be foreclosed on, making the prospect of catching up more remote. It is difficult to compare tax foreclosure rates on a national scale. States use a range of time frames and methods to handle unpaid taxes. In Michigan, Wayne County, which includes Detroit, has the highest number of properties foreclosed on for taxes by far; Genesee County, Mich., the second highest, saw 2,769 foreclosed on in 2013, state records show, while 17,965 were ultimately foreclosed on the same year in Wayne County. “By any measure, this number of tax sale properties for a city the size of Detroit is extraordinary,” said John Rao, a lawyer with the Boston-based National Consumer Law Center. For some, the remarkable churn of tax foreclosures here has become just one more game in a city where the unwritten rules of survival are unlike any other. Some investors have purchased properties at auctions, only to continue skipping payments but collect rent or resell. Renata Lewis, 33, said she agreed to purchase a home from a family acquaintance by making payments over a period of time. It was to be the first home she had ever owned, and she has decorated the inside with purple accents and stencils with messages like “Dream Wish Imagine.” Not long after, she learned that the house was drastically behind on taxes. Ms. Lewis, who has three children, said she was struggling to make monthly payments of $858 to cover the old bills. “When I moved in here, I felt like I finally did something right,” Ms. Lewis said. “But now I feel like I messed up. They knew what was going on with this house already. Here I went and paid for this house and now I can lose it?” There have been efforts to remake Michigan’s rules, including measures to require those who purchase properties at auction to keep tax payments up to date. “A lot of it gets back to the basics of economic growth and having jobs,” Gov. Rick Snyder said of the larger issue. “We’re getting people to work.” Mayor Duggan’s administration recently lowered assessments around the city, and it is in the middle of a property-by-property look at values that could further affect tax bills by the end of 2016. “His first priority is keeping Detroiters in their homes and in the city,” said John Roach, the mayor’s spokesman. Patricia Adams said she already was seeing upbeat signs for her city, such as increased trash removal. If police protection can improve, she said, she believed Mr. Duggan’s vision for growing Detroit could yet be possible. But for her, it may be too late. Ms. Adams owes more than $20,000 in back taxes and interest. Obligations for payment plans have not been met, county officials said, despite generous extensions. Her plan now is really just a hope — that she can buy her own house back during the auction this fall. ----------------------------------------------------------------------------- Sheelagh McNeill contributed research from New York.
Posted on: Fri, 27 Jun 2014 17:47:17 +0000
Trending Topics
Recently Viewed Topics
© 2015