Detroit Mayor Mike Duggan's plan to spend an additional $200 million demolishing houses will never fully wipe out the city's blight if its root causes continue to go unaddressed, Free Press columnist Nancy Kaffer writes in her latest piece.
In his May 30 speech at the Mackinac Policy Conference, Duggan unveiled a plan to seek taxpayer approval for a bond issue that would let the city keep up the pace of demolitions when its allotment of federal demolition dollars runs out around the end of this year. The city claims that at that point, it will have 18,000 blighted houses left to demolish. It has spent more than $200 million demolishing about 18,000 since the program began in 2014.
But a key cause of blight is tax foreclosure, and the number of Detroit households on the brink (those two or more years behind on their taxes) has steadily remained in the tens of thousands. That's why, Kaffer writes, in order to avoid throwing money into "a bucket with a hole in the bottom," there must be a policy solution to keep those people from losing their homes.
It's true that the number of tax foreclosures in Detroit have dropped about 88% since 2015. But the number of tax-delinquent homes has fallen by only 13%, according to an analysis published this year by the Quicken Community Fund, the philanthropic arm of mortgage Dugganlender Quicken.
Quicken's researchers spoke to the owners of 24,089 of about 45,000 tax-delinquent occupied Detroit homes. What those researchers found was that about 75% of those tax-delinquent owners are eligible for the city's poverty property tax exemption. If those homeowners had known they might be eligible for the expemption, they wouldn't have owed property tax at all.
The city recently settled a lawsuit with the ACLU that alleged it made that exemption — which lets people living in poverty avoid property taxes — too difficult to access. As part of that settlement, it has agreed to streamline the process.
And this is where the Legislature could help.
The tax-foreclosure auction is mandated by state law, just like the poverty property tax exemption. So the state Legislature could pass legislation enabling cities to make the poverty exemption retroactive, allowing Detroiters who should have been receiving the exemption for years to wipe out years of back taxes most can never hope to pay — and enabling those homeowners to pay for other important stuff, like water bills, or home repairs.
The correlation between foreclosure and blight is obvious. When a house is foreclosed, it often goes vacant. It deteriorates the longer it sits. But there's also data to back up that premise. Last year, in a story on the status of the city's vacant houses, Metro Times reported that the worse a house’s condition, the more likely it is to have gone through foreclosure:
The batch of 4,800 houses deemed "heavily blighted" by the Land Bank have gone through foreclosure a total 5,000 times, records show. The 20,000 houses deemed "vacant and likely blighted" have gone through 19,000 foreclosure events. And the 17,000 "vacant and unlikely to be blighted" houses have gone through only 12,000 foreclosure events. (A house can be foreclosed more than once in its lifetime.)
And of course, the process wastes money ("Money. Bucket. Hole." as Kaffer puts it). In 2017, almost 2,800 owner-occupied homes in Wayne County were foreclosed for less than $1,000 in back taxes, according to an analysis by Bridge Magazine. The average demolition costs more than $11,000.