Charles and Sonja Bonnett are life-long Detroiters raising seven children in the city. When the Great Recession and municipal bankruptcy hit Detroit in the early 2010s, many families fled a city in freefall. But, the Bonnetts braced themselves and stayed in the city they love and have always called home.
After years of saving, the Bonnetts were finally able to purchase their first home in 2012. The Detroit assessor claimed their new home was worth $46,000 and began taxing them at that rate. But, they had purchased it for only $20,000—the approximate price of other homes in their area. Like most Detroiters, the Bonnetts were unaware they could appeal their faulty property tax assessment during a short, two week window in January of every year. When the Bonnetts could not afford to pay the illegally inflated property taxes, the Wayne County Treasurer foreclosed on their home in 2015, sold it to an investor at the tax auction for $500, and he eventually evicted the family. The house is now standing empty.
Worse yet, the Bonnetts were not supposed to be paying the property taxes that led to their eviction in the first place. They live under the federal poverty threshold, and therefore qualified for the Poverty Tax Exemption. But, due to poor advertising and several unnecessary hurdles erected by the City of Detroit, they were unaware of their exemption. Losing their home meant losing their savings, their neighborhood relationships, and the primary asset they wanted their children to inherit. This is no way to treat families who refused to flee Detroit when it was facing severe economic adversity.
The Bonnetts are not alone. Between 2011-15, the Wayne County Treasurer foreclosed upon one-in-four Detroit properties because of unpaid property tax debt. No American city has experienced this dramatic number of property tax foreclosures since the Great Depression. Why is this happening? In a prior study, Tim Hodge and I found the city of Detroit had been systematically over assessing the majority of homeowners in violation of the Michigan Constitution, which states that no property should be assessed at more than 50 percent of its market value. A newly released study, authored by Chris Berry and myself, is the first attempt to measure the impact of unconstitutional tax assessments on property tax foreclosure rates. The findings are startling.
Controlling for relevant factors, we estimate that, between 2011 to 2016, 10 percent of all tax foreclosures were caused by illegally inflated tax assessments. In addition, less expensive homes were over assessed at a greater frequency and magnitude than higher-priced homes. As a result, we estimate that, for the lowest priced homes, 25 percent of tax foreclosures were due to unconstitutional property tax assessments. That is, working class families who could not afford more expensive homes were most deeply affected. The Bonnett family is sadly the rule and not the exception.
To fight this glaring injustice, several long standing Detroit grassroots organizations formed the Coalition to End Unconstitutional Tax Foreclosures. They are demanding compensation for homeowners, like the Bonnetts, who have been unconstitutionally assessed and then foreclosed upon when they could not afford to pay the resulting illegally inflated property taxes.
Today at 2 p.m. the Coalition is calling on all Detroiters to meet at the corner of Beaverland and Majestic for the launch of its dignity restoration housing campaign. The Bonnett family, who will be the featured speakers, worked with the Coalition to secure a new home. Together, they are now urging officials to provide compensation for other families who were unconstitutionally assessed and then unjustly foreclosed upon.
Of course, no city can operate if people do not pay their property taxes. But, the property taxes charged must be fair and legal. The data have decisively shown this is not the case in Detroit. Thousands of families worked hard and saved for years to have the American dream of homeownership only to have their homes unjustly confiscated, and so Mayor Duggan must make developing a compensation program one of his top priorities. More specifically, officials from the city, county, and state must join with banks to create a compensation program with the goal of restoring dignity to all those who lost their homes due to illegally inflated property tax assessments. The Bonnetts received a replacement home and others put in their position deserve the same.
For more information about the movement to secure compensation for families subject to unconstitutional tax assessments and tax foreclosure, go to illegalforeclosures.org.
Bernadette Atuahene is the Damon J. Keith distinguished visiting professor at Wayne State Law School and law professor at Illinois Institute of Technology’s Chicago-Kent College of Law.