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Investigation Reveals Detroit Overcharged Homeowners On Property Tax After Recession

MARY LOUISE KELLY, HOST:

In the years after the Great Recession, the city of Detroit overtaxed homeowners by at least $600 million. That is according to an investigation by the Detroit News and Reveal from the Center for Investigative Reporting. Their reporting finds that those bloated tax bills have left homeowners in the nation's poorest big city struggling to hold onto their homes.

Christine MacDonald is an investigative reporter at the Detroit News, and she joins me now. Welcome.

CHRISTINE MACDONALD: Thank you for having me.

KELLY: So let's start with the backdrop to how these inflated tax assessments happened, which I suppose means we should go back to the economic collapse in the start of the recession. Just paint me a picture of quite how bad that was in Detroit.

MACDONALD: Well, the recession hit Detroit very hard. We had a very high percentage of subprime loans prior to the recession. And when the housing market crashed, those homes went into foreclosure, and so many folks lost their homes in Detroit. We estimate that as a city as a whole, a third of Detroit properties went through foreclosure after the recession.

KELLY: A third - wow.

MACDONALD: Yes.

KELLY: So time passes. Michigan, Detroit start to crawl out of the recession. But housing prices do not go back to where they were, and you can scoop up houses for very, very little money. Who's buying?

MACDONALD: We see a lot of investors coming in. They would sell them to people who were renting who didn't want to rent anymore and wanted that American dream.

KELLY: A lot of first-time homeowners.

MACDONALD: Correct. People were buying these homes often without even the basics of heating, plumbing, even electrical and hoping to make something of that home. And you add that to - the tax debt on these properties was almost too much for many people to bear.

KELLY: Right, because the problem that emerged - and where your reporting kicks in - is that the city is still assessing property taxes on these houses at the pre-recession rates. People are being handed tax bills that are very close to what they actually paid for the house.

MACDONALD: I mean, people could buy houses at that point for $500.

KELLY: And they're facing tax bills in the thousands...

MACDONALD: Yes.

KELLY: ...Of dollars.

MACDONALD: Yes. Yes. I mean, our lead woman, Anna Bolden - she bought a house for, like, 4,800 in 2011, and her tax bill that year was 26,000.

KELLY: Wow.

MACDONALD: Yeah.

KELLY: So eventually, the state gets involved. This is 2013. Michigan orders Detroit to get their act together and...

MACDONALD: Correct.

KELLY: ...Reassess property tax rates. And yet the debt continues to build.

MACDONALD: Correct. Those new values weren't put in place until 2017, and it didn't help people like Candis Patterson at the time. She was a woman we met going door-to-door to talk to people about this issue, and she lives in a west side Detroit brick bungalow. She's a housekeeper downtown, and she's got three children.

CANDIS PATTERSON: This is my first time being a homeowner, so it means a lot, you know, owning your own home, being a single mom, being able to pass something down to your children.

MACDONALD: She, we found, had been assessed by the city double what she should have been. She now owes about 6,500 and is currently facing foreclosure. She's on a payment plan to pay that back, but she is very worried that she could lose her home.

PATTERSON: It's a lot of weight on my shoulders. I think, you know, I might lose my home, and I would have nowhere to go. So it's very frustrating not knowing if my house is going to be swept up under me.

KELLY: Wow. How are Detroit officials responding to your reporting?

MACDONALD: Well, they argue that there's no money to correct this and that there was a window for people to appeal these values. You could appeal, but that process was super difficult in a lot of people's minds. The best staff admit that they wouldn't even have been able to handle all the appeals if folks were aware and could do it. So they're trying some separate programs to target for low-income homeowners to wipe away their taxes, but that's not satisfying many homeowners who are upset about this.

KELLY: I wonder what your takeaway is. Is there a bigger story that these staggering numbers that you've come up with in your reporting - that they tell us about Detroit and how it's doing after the recession, particularly when it comes to housing?

MACDONALD: Yeah. I've covered housing in Detroit for almost 15 years. It's staggering how we are left today feeling so much of the pain from the housing crash, even today that there are thousands of people still facing foreclosure. They're mired in this debt.

And that we - as a city, we're a majority homeowner city, and we flipped to a majority renter in part because of this. And that there's just this - we're a majority black city, and there's - you think about the massive loss of the wealth, the generational wealth, because folks can't hand this asset down to their children. And that's what Candis clearly, you know, wants to do with her three kids, and - just scary to think about her losing that home and what her options would be, which aren't many.

KELLY: Christine MacDonald, thank you.

MACDONALD: Thank you.

KELLY: She's an investigative reporter with the Detroit News. Mark Betancourt also reported this story on Detroit homeowners being overtaxed.

[POST-BROADCAST CORRECTION: In this interview, a Detroit News reporter incorrectly describes a $26,000 tax bill. The bill was actually $2,600.]

(SOUNDBITE OF VASEN'S "SLUNKEN") Transcript provided by NPR, Copyright NPR.

Corrected: January 18, 2020 at 12:00 AM EST
In this interview, a Detroit News reporter incorrectly describes a $26,000 tax bill. The bill was actually $2,600.

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