One of the challenges of Detroit’s financial condition is that many have historically not paid property taxes.
According to officials, the City of Detroit plans to file 597 lawsuits, against mostly banks and companies, to recover more than $12.2 million in unpaid property taxes.
The average amount the city hopes to recoup per suit is $19,942 and $7,898 per parcel, covering 1,543 parcels.
This week demand letters were sent to banks, investment companies and others, and plans to file all of the suits before the end of the month, mostly in 36th District Court.
“For too long, there are those who chose not to pay what they owed in taxes, leaving everyone else to pay the price,” said David Szymanski, treasurer and deputy chief financial officer for the City of Detroit in a statement. “We are working to improve City services for our residents, and to do that – whether its better police and fire protection, streetlights or better schools for our children – we need everyone who does business in this city to pay their fair share.”
There are also taxes owed on these parcels to Wayne County, Wayne County Community College District, Wayne RESA, the Detroit Public Schools and others.
This is the first round of an ongoing effort by the City to recover what it is owed, with the City planning to go after delinquent taxes for other years, as well. This is focused on amounts owed from 2010-12.
This could also mean that those who have speculated on property in Detroit, but say lost the property later back into the tax auction, could also see lawsuits. Michigan law allows a city to sue property owners over delinquent taxes, regardless of whether the property has gone through foreclosure or auction and has been sold.
Action Doesn’t Include Resident Homeowners, Says Treasurer
The plans says that the city of Detroit will be going after only those who own property for profit, and not going after any individual who owns fewer than three properties and is not associated with an LLC or company.
“We are not talking about the family that has fallen on tough times, those struggling to decide whether to feed their children or pay their taxes,” Szymanski said. “We went to great lengths to ensure that we were going after only those who bought property as investments, not as a place to live. This is about those who tried to make money without paying what they owed. We are standing up for our property owners who paid their taxes and played by the rules.”
