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How Duggan's tax proposal would work
Current state law requires local assessors to slash the value ― and thus the taxes ― of both vacant lots and lots with structures so derelict they are unusable, Duggan explained in his Mackinac Island address. At the same time, occupied residential and commercial properties are taxed at a whopping 86 mills, the highest rate in the state. Many former Detroit homeowners and small businesses have been lured by more reasonable rates in Detroit’s suburbs. Duggan wants to increase the tax on vacant land to 246 mills, and cut the tax rate on buildings to 60 mills. Cutting that rate would provide a tangible boon to longtime Detroit residents, prospective new residents, old and new businesses.
Equally important, the mayor says, the tax change will prompt Detroit property owners to reconsider the value proposition of allowing vacant land or derelict buildings to languish. The average tax bill for a vacant lot, Duggan says, is $30, and there are some 30,000 neglected vacant lots from which the city must pay crews to clear illegally dumped trash and mow the grass. The foreclosure auction all but invited speculators to acquire mass quantities of land, gambling on future development boosting the property’s value. Sometimes, that means decades of waiting, while property sits unused or in disrepair.
Just eight new single family homes were built in Detroit in 2022. There are nearly 1,000 abandoned, privately owned commercial and industrial buildings in Detroit, Duggan said last week. Rehabbing a derelict building, or new construction on a vacant lot, returns the property to the 86-mill tax rate — a disincentive for many property owners.