NY Transplant discovers that Detroit is just as expensive

[ABetterDetroit]

Proposal A makes it hard to do an apples-to-apples comparison for taxes on a property.

No doubt Detroit's homesteaded millage rate is higher than Livonia's [[68.44 mills vs 39.36 mills according to Mi Treasury's property tax estimator). It's 70 percent higher in Detroit.

With a purchase, the city will uncap any property taxes. So, a new sale in Detroit of $100,000 [[SEV of $50,000) will have a tax bill of ~$3,422. The new sale in Livonia of $325,000 [[SEV of $162,500) would be ~$6,396.

So, the taxes on a new sale in either community would be roughly double in Livonia. The only way the taxes would be roughly the same would be the same is if the family owned the property for a long period of time which would keep the taxable value low.

And yes, I largely agree with the article, especially with the insurance costs.

Proposal A was just another special interest [[old people) tax break and nothing more. It certainly was NOT property tax reform. Just look at who benefited, the people who had been in their homes for a long time. Who did it punish the most? Young people with growing families who would need to get bigger houses, first time home buyers and people moving here needing houses. After 20 years what have we got? A declining population. One of the worst performing housing markets statewide in the country in that time period and still top ten highest property taxes in the country.

We bit off our nose to spite our face. One of the largest wealth generators for individuals in America is appreciation of value in the primary residence. Hows that been working around here for the last 20 years? High property taxes on low value homes is a economy and neighborhood destroyer. 4k in property taxes is ridiculously high period.

[DetroiterOnTheWestCoast]

I think that perhaps something smaller than a 5 bedroom house might have been a better choice.

[Willi]

I lived in NJ, NY, CT area for about 12 years.

Detroit is cheaper in soooooo many ways

[Dumpling]

I am glad this lady moved to Detroit from New York and hope for success for all of her
visiting artists-in-residence. I'm glad that they are being cared for and encouraged
while they are here.

Ann Arbor last I checked had rent-by-the-hour cars called "Zip Cars". These are far more
expensive by the hour than personally-owned cars, but for some Ann Arborites these
are a "better buy". Would "Zip Cars" work for the New York lady and her guests here
in Detroit? Also, enough other Detroiters don't have cars so that private transportation
buses are quite common in Detroit. I kind of think the writers' driving hours might mesh
nicely with the normal commuter hours during which these buses are used the most.
Also, some Detroit stores have "jitney service" for one's grocery needs. These are in
addition to city buses and the usual taxi services.

So far as taxes, probably she wouldn't qualify for "hardship exemption" on the property
taxes, but could likely fight the appraised value of her house down year by year which is
what many established property owners in Detroit do as a survival tactic.

[ABetterDetroit]

So far as taxes, probably she wouldn't qualify for "hardship exemption" on the property
taxes, but could likely fight the appraised value of her house down year by year which is
what many established property owners in Detroit do as a survival tactic.

Neither of these are really viable long term solutions to the crippling problem of unrealistically high property taxes in Detroit. How many people have to lose their homes and how many houses have to fall to total ruin before something is done to stop the decline of residential real estate values to zero? Property tax reform would be a huge step towards stopping this cycle in Michigan's urban cities.

[Dumpling]

The elimination of the property tax within the City of Detroit is being looked at, partly because it is a declining share of the city income. It is high in comparison to other municipalities and it is high in proportion to what the poorer residents can pay. To be sure, greater demand for
policing, fire, and bus services cause the taxes required to be higher.
In my opinion, if one's house is hit by scrappers/squatters, a tax credit for the complete cost of repairs and replacements should be given.

[Willi]

I don't agree with Dumpling's sentiment

Insurance for a home is paid by the owner
---- not the taxpayers.

Taxpayers pay for police to stop the scrappers

[Jason]

I am glad this lady moved to Detroit from New York and hope for success for all of her
visiting artists-in-residence. I'm glad that they are being cared for and encouraged
while they are here.

Ann Arbor last I checked had rent-by-the-hour cars called "Zip Cars". These are far more
expensive by the hour than personally-owned cars, but for some Ann Arborites these
are a "better buy". Would "Zip Cars" work for the New York lady and her guests here
in Detroit? Also, enough other Detroiters don't have cars so that private transportation
buses are quite common in Detroit. I kind of think the writers' driving hours might mesh
nicely with the normal commuter hours during which these buses are used the most.
Also, some Detroit stores have "jitney service" for one's grocery needs. These are in
addition to city buses and the usual taxi services.

So far as taxes, probably she wouldn't qualify for "hardship exemption" on the property
taxes, but could likely fight the appraised value of her house down year by year which is
what many established property owners in Detroit do as a survival tactic.

http://www.zipcar.com/detroit/find-c..._id=1072097971

zipcar is in detroit and there's about a dozen lots downtown/midtown, plus a few scattered around elsewhere. It's an amazing deal and I wonder how they even make money. Depending on your plan, it's $7-10 per hour, and you don't have to worry about the cost of gas, insurance, or the cost of the car and its maintenance. If you do your meat and potatoes activities without a car and just need access to one a few times a week for the odd thing, I can't imagine it's possible to beat.

[313WX]

The elimination of the property tax within the City of Detroit is being looked at, partly because it is a declining share of the city income. It is high in comparison to other municipalities and it is high in proportion to what the poorer residents can pay. To be sure, greater demand for
policing, fire, and bus services cause the taxes required to be higher.
In my opinion, if one's house is hit by scrappers/squatters, a tax credit for the complete cost of repairs and replacements should be given.

Even if the property tax is eliminated, the city still needs a dedicated revenue source to pay for policing, fire and bus services [[which, even with its decline, the property tax still makes up the biggest share of the city's revenue).

What do you propose we replace the property tax with?

[bailey]

Even if the property tax is eliminated, the city still needs a dedicated revenue source to pay for policing, fire and bus services [[which, even with its decline, the property tax still makes up the biggest share of the city's revenue).

What do you propose we replace the property tax with?

It doesn't need to be reduced to zero, just in line with it's neighbors. Wasn't cutting operating costs and debt servicing costs the entire point of Bankruptcy? Why wouldn't the residents now expect a large reduction in what they're being asked to pay?

[313WX]

It doesn't need to be reduced to zero, just in line with it's neighbors. Wasn't cutting operating costs and debt servicing costs the entire point of Bankruptcy? Why wouldn't the residents now expect a large reduction in what they're being asked to pay?

The city's neighbors don't have [[and will never have) the expenses Detroit has, so that's not a good comparison.

The reason the city filed for bankruptcy was so it could dedicate more of its declining tax revenue to services, because services couldn't be cut too much further without losing more taxpaying citizens [[the fact that half of the streetlights were out, emergency response times were over an hour and police stations weren't even open 24 hours were the breaks).

Cutting taxes will just lead to less money the city can dedicate to the already poor level of services it's able to offer...

[bailey]

The city's neighbors don't have [[and will never have) the expenses Detroit has, so that's not a good comparison.

The reason the city filed for bankruptcy was so it could dedicate more of its declining tax revenue to services, because services couldn't be cut too much further without losing more taxpaying citizens [[the fact that half of the streetlights were out, emergency response times were over an hour and police stations weren't even open 24 hours were the breaks).

Cutting taxes will just lead to less money the city can dedicate to the already poor level of services it's able to offer...

Well, not necessarily. What's the stat? 50% of the property owners in the city are not paying taxes now? Cut the taxes and perhaps you actually collect more as; a) those are are just saying fuck it, I'm not paying...might. b) more will look at detroit as at least competitive with neighboring communities.

[313WX]

Well, not necessarily. What's the stat? 50% of the property owners in the city are not paying taxes now? Cut the taxes and perhaps you actually collect more as; a) those are are just saying fuck it, I'm not paying...might. b) more will look at detroit as at least competitive with neighboring communities.

Maybe, maybe not.

You're assuming the rate itself of the taxes is the reason people aren't paying. How do you know it isn't because they don't feel their money's worth for the tax liability? Wouldn't it then merely be a collection and service delivery issue?

EDIT: And let's say the city did cut taxes and eat up a decrease in revenue in the short term in hopes of long term increases in revenue. What is the city going to do about service delivery levels in the mean time since there's less money to spend in the short term?

[JDKeepsmiling]

She just allocates the money differently:

"Yes, my rent in New York was twice as much as my mortgage now."

http://nextcity.org/daily/entry/movi...rdable-housing

Here is a big difference that everyone seems to miss. Here she is purchasing a home, building equity. In NYC she was renting. to compare apples to apples she should be renting here, therefore avoiding paying taxes. Or you could compare to buying in NYC .

[Bham1982]

Here is a big difference that everyone seems to miss. Here she is purchasing a home, building equity.

But people in the Detroit area haven't been "building equity". Property values are basically the same as 10 years ago. In contrast, property values in the NYC area have risen considerably.

It's a much safer bet to invest x dollars in, say, Brooklyn real estate, than Sterling Heights real estate, or really any local real estate. Much better fundamentals.

One advantage of the Detroit area, however, is that the real estate is so cheap, basically anyone can become a homeowner, and even if you aren't building equity, you're keeping your payments constant for 30 years, while renters keep paying more and more.

[Eber Brock Ward]

But people in the Detroit area haven't been "building equity". Property values are basically the same as 10 years ago. In contrast, property values in the NYC area have risen considerably.

It's a much safer bet to invest x dollars in, say, Brooklyn real estate, than Sterling Heights real estate, or really any local real estate. Much better fundamentals.

One advantage of the Detroit area, however, is that the real estate is so cheap, basically anyone can become a homeowner, and even if you aren't building equity, you're keeping your payments constant for 30 years, while renters keep paying more and more.

This is not correct. If you bought in the 7.2 a year or more ago, you've probably gained quite a bit of equity. Take Woodbridge, for example, where intact houses were going in the $60k-$90k range in 2012, and now regularly appraise and close for around and a bit below $200k.

[Willi]

Almost everything around NYC is an island, including Long Island and there is a river between Jersey and NYC. Tolls up the Yazoo with infrastructure costs to match for utilities, etc.
Everything gets passed down to little guy who just pays, and pays, endlessly.

[wolverine]

If you're lucky enough to land one of the limited job openings downtown, don't have kids and don't do much in-store shopping, then you wont't need a car.

In Michigan's real world, you're most likely going to be working in Southfield/Dearborn/Auburn Hills/Warren/Troy, where reliable transportation will be a must to reach these places if you live in Detroit. You're also going to need a car to reach the major retailers in the suburbs/on the edge of town. And your kids will likely have to travel quite a distance to attend decent schools

I think the take-away message here is that big cities will always be expensive places. Real estate seems to be first thing on people's minds rather than the ancillary costs of living like paying taxes, driving or taking transit, insurance as well as time and convenience. My cost of renting a pricey small apartment in Chicago, means not having a car, but I do get convenient public transit, great services and plenty of restaurants and shopping. In other words, I'm paying for location and a great urban experience. Detroit is the complete opposite. You can buy a great piece of property and have a great hobby fixing it up and plenty of space...plus parking is cheap. But what about services? What about proximity to nightlife and shopping? Safety? 24 hour full service Grocery store within walking distance?

You can compare all sorts of cities but rarely will you find a place that offers it all with great value. You just need to find a place that suits your interests. Unfortunately, it didn't work out for the author of the article.

[Dumpling]

Here is a pie chart for the City of Detroit income:

http://www.detroitmi.gov/Portals/0/d...ie%20Chart.pdf

The property tax chunk is less than ten percent. On a low income paying the property tax PLUS upfront repair costs for a scrapped and squatted house OR for money borrowed to repair the scrapped and squatted house would be onerous. A damaged vacant house in a nice area
brings down the value of neighboring houses by an estimated $7000 per house. I don't know exactly how many neighboring houses would be affected, but let's say, three houses in back of
the damaged house, one house on either side, and three houses across the street from the
damaged house are affected to the $7000 level. This is $28,000 of appraised home value
lost from the adjacent houses. I think if you weighed the tax loss [[given that property tax
is still being collected) from that effect against a full tax credit for a scrapped/squatted house to be fixed up it will come out to be the same.

[313WX]

Here is a pie chart for the City of Detroit income:

http://www.detroitmi.gov/Portals/0/d...ie%20Chart.pdf

The property tax chunk is less than ten percent.

I wasn't including non-tax revenue in my response to you earlier...

[canuck]

I think the take-away message here is that big cities will always be expensive places. Real estate seems to be first thing on people's minds rather than the ancillary costs of living like paying taxes, driving or taking transit, insurance as well as time and convenience. My cost of renting a pricey small apartment in Chicago, means not having a car, but I do get convenient public transit, great services and plenty of restaurants and shopping. In other words, I'm paying for location and a great urban experience. Detroit is the complete opposite. You can buy a great piece of property and have a great hobby fixing it up and plenty of space...plus parking is cheap. But what about services? What about proximity to nightlife and shopping? Safety? 24 hour full service Grocery store within walking distance?

You can compare all sorts of cities but rarely will you find a place that offers it all with great value. You just need to find a place that suits your interests. Unfortunately, it didn't work out for the author of the article.

In a bloody nut freaking shell.

I think though that beyond the problems that have plagued Detroit to the point where there are abysmal conditions like high crime, lack of transit, a ghettoized populace, underperforming schools, and the rest; at one point, there is investment by people who have decided to defy the cliché and will stick it out. A big round of applause for Sumas, EastsideAl, etc... who continue to stake their claim on Detroit the way countless people have done for three centuries now.

If you look at the numbers Eber Brock Ward presents for Woodbridge for instance, it can be pretty encouraging. Just imagine a series of tweaks that would revive interest in the city in an explicable way like say, an imaginative tax abatement program for residents and homeowners whose investments are insecure until someone gives them a break to start the ball rolling. Nixing 4 or 5 grand a year on property tax for three years might do wonders to small scale resident investors and developers alike. The important thing is not to expect or even provoke an unstable boom so that overbuilding and dumb speculative practices undo the valuation of overall investment.

A Dan Gilbert can imagine a day where tweaks in the system can deliver real promise in Detroitland, I am sure of it, otherwise he would not have put so much effort on attracting corporate HQ's and personnel downtown. Of course on the face of it, it is much easier to coax a company into moving 300 folks to offices in the midst of a business district than attracting individual investors in some unsavory parts of the metropolis but it is a matter of time and effort on an other scale.

Detroit's biggest fault is the racial divide, and it will disappear.

The rest of the portrait is not an easy one to fix but it is surmountable.

Always keep in mind that the metropolitan region is wealthy, and that the resources around the city are symbiotic, that the recentering of downtown as the preeminent business district will be an excellent way to vivify the inner city.

[Dumpling]

What do you propose we replace the property tax with?[/QUOTE]

That one is kind of tough to answer! It's why we have casinos. It's why we have such expensive parking tickets. It's why cars are impounded. Not lovely, but they do bring in money.

My personal preferences [[naming my poisons here) for replacing the property tax would be
first, each household annually gets a summary of services and the estimated cost of each service used along with descriptions of ways that the services are being optimized AND how each household can optimize the services themselves. [[Fire safety, health checks, gun safety,
trash cleanup tips). Include a feedback form for further input. Some traditional city services could be provided with a co-pay fee.

I would increase the state sales tax and would have a state graduated income tax too
[[biting bitter pill) and then increasing state revenue sharing to the city rather than
have the property tax in this instance. Or [[biting the second bitter pill) reducing city
worker wages some more rather than have the property tax in this instance. Or, if
you happen to be an out of state business or a new business relocating to Detroit,
please know how wonderful you are and not a bitter pill at all.

[Hypestyles]

the cost is serious, one way or another.

Side note: More diverse housing options are needed, throughout the broader neighborhoods. Overwhelming numbers of single-family homes. More quality apartments, lofts, condos, etc. options are needed, beyond downtown, midtown and corktown.

[animatedmartian]

the cost is serious, one way or another.

Side note: More diverse housing options are needed, throughout the broader neighborhoods. Overwhelming numbers of single-family homes. More quality apartments, lofts, condos, etc. options are needed, beyond downtown, midtown and corktown.

Quality is the keyword here. There's plenty of apartments and townhomes throughout the city. But good luck finding any that aren't trashed or hasn't been updated within the last two decades.

[FlyOnTheWall]

What do you propose we replace the property tax with?

I would increase the state sales tax and would have a state graduated income tax too [[biting bitter pill) and then increasing state revenue sharing to the city rather than have the property tax in this instance.


Wonderful! You would steal money [[sales tax) from all the poor little towns all over Michigan to support the poor city of Detroit. Then, of course, you would take some of the poor little towns' revenue sharing as well. Let's talk about this.....

Detroit's median yearly income is about a thousand dollars higher than the small town that I live in. Why do you wish to make us even poorer? You seem to think that everyone outside of Detroit is a rich, WE AIN'T. We be poor also. We can't afford to pay for Detroit's screw-ups!

Detroit politicians dug the hole you are in, now Detroit needs to fill in that hole on their own.

Detroit is in the position it is in because of politics and the people's vote for the powers that have been and are in charge of Detroit's financial situation. BTW That is the people of Detroit's votes, not the rest of the 8 to 9 million or so of other Michigan voters. You really get very little sympathy from us as we didn't vote for those politicians in Detroit, Detroiters voted 'em in, not us.

Think about it!!!