The study found a much larger proportion of homes in the lowest price range were subject to these inflated assessments when compared to homes in top price tiers. Moreover, property owners who would have been eligible for waivers because of economic hardship encountered numerous barriers preventing them from obtaining approval for a reduction or elimination of their property tax bill.
The study, which is to appear in the Southern California Law Review, is authored by Bernadette Atuahene, a professor at Chicago-Kent College of Law and a visiting professor at Detroit’s Wayne State University College of Law, and Tim Hodge, professor of economics at Oakland University.
The Michigan constitution states homes cannot be assessed at more than 50 percent of their market value, yet the study analyzed sales data from 2008 to 2015 and found between 55 and 85 percent of homes were assessed at amounts higher than allowed by the state constitution.
Further analysis looked at the distribution of these inflated assessments in five different price bands, referred to as quintiles in the study.
“We found that in quintile 1 and 2 [the lowest priced homes] 95 percent or more were being assessed in violation of the Michigan constitution,” Atuahene said in an interview. “But when you get to quintile 5, the highest valued homes, only about 13 percent were being assessed in violation of the constitution. Which means that the poorest homeowners with the lowest valued homes are bearing the burden of these unconstitutional assessments.”
Detroit Chief Assessor Alvin Horhn disputed the findings of the study, saying the methodology was flawed.
“We are familiar with the UOC study on assessments in the city of Detroit and find that much of it relies on data that do not meet the standards of the State Tax Commission. Therefore, its findings would not be applicable under Michigan law,” Horhn said in a statement. When asked for specifics, city officials declined to provide any details.
“In each of the past four years, the majority of Detroit homeowners have received double-digit assessment reductions,” Horhn said in the statement. “Every property owner has the legal right to challenge their assessments, and this year more than 14,000 Detroiters took advantage of this process. By the end of their appeal, more than 80 percent either received an assessment reduction or became satisfied enough with our methodology that they chose to not pursue their appeal any further.”
Atuahene denied Horhn’s contention about the study’s methodology. “Horhn has said that our study is flawed because it includes non-arm’s length transactions, family sales, and land contracts,” she wrote in an email. “The study absolutely does not include these sales.”
The study appears to give credence to efforts by the American Civil Liberties Union to address what it asserts are high assessments by Detroit that resulted in foreclosures carried out by Wayne County, the jurisdiction where Detroit is located. The ACLU filed suit against Wayne County on behalf of Detroit homeowners, arguing the assessments violated the U.S. Fair Housing Act since they disproportionately affected African Americans.
Attorneys from the NAACP Legal Defense and Education Fund and the Washington-based private law firm of Covington & Burling were also part of the legal team that provided support to the lawsuit. Last month, the Michigan Court of Appeals ruled against the ACLU, affirming a lower court decision that it lacked the jurisdiction to hear the case and it should go to the Michigan Tax Tribunal.
“They haven’t been absolved of any wrongdoing,” Atuahene said. “It’s just the lawyers have to bring it to a different court.”
Homeowners who fall below the federal poverty line qualify for a Poverty or Hardship Exemption and can have their property taxes waived during the years they are eligible for the program. But according to the ACLU, many homeowners who would have qualified were ultimately foreclosed upon because of bureaucratic barriers.
Barriers, according to ACLU documents, included requiring homeowners to submit a request for an application in person at a faraway municipal building that was only open during limited daytime hours. Applications were then mailed to their home. But some taxpayers never received the documents. Others received them so close to the deadline that they didn’t have time to collect all the paperwork needed for the multi-page application.
Moreover, many of those who did complete and submit the application in a timely manner never received a response or were denied for reasons the ACLU alleges were “arbitrary and capricious.”
The ACLU can either file an appeal with the Michigan Supreme Court or proceed with the individual cases through the Michigan Tax Tribunal.
Mike Steinberg, legal director of the ACLU in Michigan, said it plans to pursue the issue but is still considering which legal route to take.
UPDATE: This story was updated to reflect Atuhene’s response to Horhn’s comment about the study’s methodology.