How Detroit's mistakes cost this woman her home

As of last week, Sabrina Beal is a homeowner again, thanks to a program that aims to repair the damage done by illegal assessments, mass foreclosure and the Wayne County Tax Foreclosure Auction. 

The founders of the Dignity Housing Restoration Program aim to identify homeowners like Beal — Detroiters who lost their homes because they failed to pay taxes on illegal inflated assessments — and move them into new, renovated homes at no cost. Dignity Housing hopes the City of Detroit will consider the new program a pilot and use the template they've created to make other Detroiters in Beal's circumstances whole. 

Who is Sabrina Beal?

It's hard to get a bank mortgage for a low-value home, and banks normally don't lend to people who live in poverty. Land contracts, in which purchasers make loan payments directly to property owners, are a way for folks like Beal to buy homes without relying on big banks or cash transactions.

But land contracts also allow unscrupulous sellers to take advantage of unsophisticated buyers. The person who sold Beal her North End home owed back taxes Beal didn't know about. Yet because of the way the land contract was structured, those taxes became Beal’s responsibility, along with the property's regular tax bill, which Beal struggled to pay.  

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And because all of those taxes were based on an illegally inflated assessment, they were really high — $9,000, far more than Beal could afford. 

So Beal lost her home to tax foreclosure.  

"I felt like a failure," she said last week. "I had promised my kids a better future."

But here's the thing

Sabrina Beal's property taxes should never have been so high. 

State law says that the official assessed value of your home — that is, the dollar amount you're required to pay taxes on—  can't be more than half the property's market value. If you could sell your home for $100,000, the assessed value can't be more than $50,000. If your home could sell for $50,000, the assessed value can't be more than $25,000. 

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But as the average price of a Detroit home fell from $80,000 in 2008 to $25,000 in 2010, property assessments stayed high. Internal city reports and outside academic research have found that 53% to 83% of city properties were assessed in violation of Michigan's constitution. 

And those inflated assessments contributed directly to Wayne County's flood of tax foreclosures, according to new research by professors Bernadette Atuahene and Christopher Berry, published last week in the UC-Irvine Law.

Between 2009 and 2017, Atuahene and Berry estimate, 10% of 100,000 residential foreclosures in Detroit were caused by illegally high assessments. 

For the city's poorest residents, it's worse: Among homes with a market value of less than $9,000, Atuahene and Berry estimate, about 25% of foreclosures are related to illegal assessments. 

Detroit's assessment division started to use a new computer system in the early aughts, but there were problems. State law requires assessors to visit 30% of property annually. But the city's own auditor found that the average time between site visits by assessors was 30 years. 

From 2003 to 2017, assessors extrapolated property values from previous assessments, instead of using comparable sales prices. One eastside homeowner described by Atuahene and Berry bought her home on a land contract for $18,000. The city assessor's office said it was worth $74,000. A southwest Detroit homeowner, the professors said, was paying taxes on a home worth about $2,400, taxed by the city as though it were worth $28,000. 

Both lost their homes to foreclosure. 

The owners of lower-value homes — those most likely to be over-assessed — are least likely to challenge those assessments, Atuahene and Berry found, and also least likely to be successful in reducing them. 

It gets worse

By Atuahene and Berry's reckoning, Beal is among the many Detroit homeowners who shouldn't have had to pay property taxes at all. 

State law requires cities to offer homeowners living in poverty relief from property taxes. In Detroit, impoverished homeowners are eligible for a 100% exemption from property tax. But the city has done a terrible job of making eligible homeowners aware of the exemption. Last year, as part of the settlement in a lawsuit brought by the ACLU, it promised to do a better job. 

But any progress the city has made came too late to help Beal. So she lost her home, the safe haven she hoped to offer her children, over illegally high taxes she shouldn't have had to pay in the first place. 

If that sounds crazy . . . 

It is. 

And that's why you should care. Because our elected representatives in Wayne County and Lansing could fix it

For starters, it could stop holding the county's annual tax foreclosure auction until the city and the county can figure out how to blunt the worst harm it causes. 

But in the absence of revolutionary change, the state Legislature could allow cities to offer the poverty property tax exemption retroactively, allowing homeowners like Beal to wipe away back taxes for years when she would have been eligible for the poverty exemption. 

And city and county officials could take serious steps to make homeowners like Beal whole. 

Tax foreclosure hit Detroit hard. Nearly one in four Detroit properties has been foreclosed on. Tax foreclosure is a primary driver of the blight Detroit Mayor Mike Duggan has made eliminating the centerpiece of his administration. 

That's important work, but it's reactive. Repairing Detroit's neighborhoods — repairing the damage done to Detroiters like Beal — requires more. 

Nancy Kaffer is a Free Press columnist. Contact her at nkaffer@freepress.com.

Correction: The original version of this story misstated the value of Sabrina Beal's property tax bill: $9,000 was the accumulated, not annual, total.