As Downtown Detroit Gentrifies, Longtime Black Residents Fight Illegal Tax Foreclosures
JUAN GONZÁLEZ: We turn now to look at Detroit, Michigan. Fifty years ago this summer, a rebellion took place in the city streets. Forty-three people were killed. Thousands more were injured. Over 7,000 were arrested. More than 2,000 buildings were destroyed. Thousands of white families then fled the city, reshaping the makeup of Detroit.
Fifty years later, Detroit is being reshaped again, but under very different circumstances. Detroit is now 80 percent African-American, and 40 percent of the city’s residents live below the federal poverty line. But as downtown Detroit becomes increasingly gentrified, thousands of the city’s longtime residents, mostly African-American families, have lost their homes to foreclosure.
AMY GOODMAN: A recent study called "Stategraft" found one in four Detroit properties have been subject to property tax foreclosure between 2011 and '15. And according to legal experts, many of the foreclosures may have violated the state's constitution.
We go now to Detroit, Michigan, where we’re joined by Bernadette Atuahene, a professor at Chicago-Kent College of Law at the Illinois Institute of Technology and a visiting professor at Wayne State University Law School in Detroit. Along with her colleague Timothy Hodge, she authored that study, "Stategraft." Her recent op-ed piece in The New York Times is headlined "Don’t Let Detroit’s Revival Rest on an Injustice." She’s with the Coalition to End Unconstitutional Tax Foreclosures.
Democracy Now! invited Detroit’s mayor, Mike Duggan, to join us on the show, but we did not get a response. Tomorrow is the Detroit mayoral primary election.
Professor Atuahene, thanks so much for being with us. Explain what you found in this report.
BERNADETTE ATUAHENE: Yeah, there are three main findings. The first is that Michigan’s Constitution is clear, and supporting legislation: No property should be assessed at more than 50 percent of its market value. Other state constitutions, to the extent that they measure—that they mention property tax assessments at all, say things like the property tax assessment must be fair, uniform and equal, which means it’s up to the judge to decide legality. But because the Michigan Constitution and supporting legislation specifically say no property should be assessed at more than 50 percent of its market value, it means people like me can come in and run the numbers and determine legality. And that’s exactly what we did. So we ran the numbers from 2009 to 2015, and we found that in each of those seven years, anywhere between 55 and 85 percent of properties were being assessed in violation of the Michigan Constitution, putting into disrepute the record number of property tax foreclosures in Detroit.
The second finding is, when we broke up the data into what we call five quintiles—quintile one is the lowest-valued homes, to quintile five being the highest-valued homes—we found that in quintile one and two, in the majority of those years, 95 percent or more of properties in quintile one and two were being assessed in violation of the state constitution. But then, when you got to quintile five, which are the highest-valued homes, the majority of those homes were being—were not being assessed in violation of the state constitution.
The third thing I want to bring to your attention is, in Detroit, there’s something called the poverty tax exemption. And as you mentioned, 40 percent of Detroiters fall below the federal poverty line. And in Detroit, if you fall—according to the poverty tax exemption, you’re not supposed to be paying taxes if you fall below the federal poverty line. But because the poverty—the city failed to advertise the poverty tax exemption, because the city put several unnecessary barriers in the way, obstructing people from applying for the poverty tax exemption, we have a situation where people were illegally assessed, unable to pay the inflated taxes, foreclosed upon, for taxes they weren’t even supposed to be paying in the first place.
JUAN GONZÁLEZ: So, in other words, what your study found is that not only were most of the homeowners in Detroit being assessed at higher rates than the constitution allowed, but that there was a disproportionate impact on the poorest households. What was the effect, the actual effect, then, on the people, on the residents of Detroit?
BERNADETTE ATUAHENE: Well, I can give you this story. The effect was they weren’t able to pay those overinflated taxes. I can give you the story—there’s lots of heartbreaking stories, but there’s one particularly poignant story of Mr. Joseph Bates. His family had been—had purchased this house. His great-grandfather purchased this house in Southwest Detroit in 1907. In fact, his grandfather was a chauffeur to Henry Ford himself. And that house was—provided cover for five generations of the Bates family, which is five generations of working-class Detroiters. Last year, that home was foreclosed upon, and Mr. Bates was evicted from the home for nonpayment of property taxes.
The problem is that his home, his taxes, annual taxes, were about $1,300 per year, but his home was not worth more than $2,400, because it was severely dilapidated, and it also—several of the rooms were unlivable. And in addition to that, Mr. Bates has worked in grocery stores his entire life. He’s never made more than $10,000 a year, so he definitely qualified for the poverty tax exemption. But like several Detroiters, he didn’t even know about the poverty tax exemption. And then, even if he did, again, the various obstacles put in the way, unnecessary obstacles put in the way, means that he never applied for the poverty tax exemption. So Mr. Bates was evicted from a home his family has owned since 1907 for a nonpayment of illegally inflated property taxes that he was not supposed to be paying in the first place.
AMY GOODMAN: Let’s go to Joseph Bates in his own words. Again, as you say, bought—his great-great-grandparents bought the house in 1907. He was ultimately foreclosed on last year.
JOSEPH BATES: I had diabetes for a couple decades, that I didn’t know about. I didn’t have any health coverage. So, young, I didn’t think about it. So, illnesses started happening. I couldn’t—I could work less and less. So I ended up losing the house, again, because I couldn’t keep up with the taxes. ...
Last year, people, a company, bought my home. I didn’t know. [inaudible] Wayne County taxes—and bought my home at 1538 Junction. They went there. They came. They were—the first time I seen them. They said they were there to clean out the yard. I had no idea what was going on. I told—they told me that they had owned the house for years. I said there was no way they could have done that, because the taxes were coming in my name—you know?—and everything. And so they came two weeks later, and they came with four people to throw me out. They wanted—they told me to go to a homeless shelter.
AMY GOODMAN: So that was Joseph Bates describing at a news conference, along with a number of other people, the effect of these foreclosures. He ended by saying they told him to go to a homeless shelter. What is the remedy here, Professor Atuahene?
BERNADETTE ATUAHENE: Well, several long-standing Detroit grassroots organizations have formed the Coalition to End Unconstitutional Tax Foreclosures. And there are three demands of the coalition. The first demand is to stop these unconstitutional tax assessments.
The second demand is, for those people who were already foreclosed upon and that already lost their homes, to provide some kind of compensation. And the coalition hosted a People’s Forum on June 17th, which had over a hundred people in attendance. We broke those people up into seven breakout groups, with a trained facilitator and scribe, and heard from them the things that they want. And two of the option—two of the things that many people talked about is compensation, which we can use the hardest-hit funds, which are federal funds currently used to demolish homes in Detroit, and we’re saying let’s repurpose that money, because that program is under federal investigation, repurpose that money to pay these illegally inflated taxes. And we also are saying the Land Bank owns—the Detroit Land Bank owns 97,000 homes at the moment; 30,000 to 32,000 of those homes are residential properties. So, give people a home, those who lost their home through these unconstitutional tax assessments.
So, the third and final demand is, on September 5th, the Wayne County Treasurer is about to foreclose on another round of houses this year. And we’re saying let’s put a moratorium on tax foreclosures, until we can ensure that people, those people—delinquent tax owners have not been unconstitutionally assessed.
JUAN GONZÁLEZ: And briefly, could you tell—could you give us your sense of—the national news on Detroit is of a Detroit renaissance. And what is your message to people across the country of what is actually happening in Detroit, as this week you head into a mayoral primary?
BERNADETTE ATUAHENE: Yeah, I think that there is, in fact, a renaissance. But the sad thing about it is that, you know, there is—Detroit is 143 square miles, and the renaissance is happening in 7.2 of those square miles. And in those 7.2 square miles, you have developers getting tax subsidies, tax breaks and tax incentives that benefit people who are mostly newcomers to the city, while those long-standing Detroit residents, who’ve stayed in Detroit after the Detroit riots, have stayed with Detroit through its hardest times, are now being subject to monumental tax injustice. And so, the story of the revival, we need to really take a closer look at it.
AMY GOODMAN: And finally, the mayor, Mayor Duggan, what—how has he responded to your report?
BERNADETTE ATUAHENE: So, in January, the city finished a reassessment of all the residential properties in Detroit. And for the first time in 50 years, they’re doing what they were legally supposed to be doing the whole time, which is assessing properties based on their current market value. So when they were rolling out the report, I was at the press conference and had an opportunity to ask him about unconstitutional tax assessments. And his response to me was that, well, if people believe that their assessments were unconstitutional, then they should have appealed those assessments.
There are three problems with that statement. Number one, all the empirical evidence shows that more affluent homeowners are more likely to appeal their taxes. Less affluent homeowners are less likely to appeal and also less likely to be successful in their appeal. Number two, appeals processes are made for those unique cases, because no system can get everything wrong—right. No system can get everything right. And so, an appeals process is designed for those unique cases where they got it wrong to get it right. An appeals process is not designed to correct systemic injustice, which is what is happening here in Detroit. As I said, anywhere from 55 to 85 percent of properties are being assessed in violation of the Michigan Constitution.
AMY GOODMAN: Bernadette Atuahene is a professor at Chicago-Kent College of Law, visiting professor at Wayne State University Law School in Detroit. We’ll link to her piece in The New York Times, "Don’t Let Detroit’s Revival Rest on an Injustice." She’s with the Coalition to End Unconstitutional Tax Foreclosures.
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