Detroit Property Tax Highest In The Nation......

[Honky Tonk]

Are you getting your money's worth?

http://www.npr.org/2015/05/27/410019...-arent-helping

[ndavies]

Yes, the things we're best at just keeps growing. Just one more thing we're number one in. It was also reported in the last couple of weeks, We're the number one city for population loss in the country and the worst city to start a career in.

[emu steve]

Yes, the things we're best at just keeps growing. Just one more thing we're number one in. It was also reported in the last couple of weeks, We're the number one city for population loss in the country and the worst city to start a career in.

True, but where is Detroit going to get money to operate from?

Commercial valuations and tax rates are too high?

Residential valuations and tax rates are too high?

How does a city which has been de-populated manage to collect enough revenues to survive?

How much taxes are levied on a residential lot without a house [[demolished) on it?

How much taxes are levied on a surface parking lot or a vacant building which might be condemned?

[professorscott]

True, but where is Detroit going to get money to operate from?

Commercial valuations and tax rates are too high?

Residential valuations and tax rates are too high?

How does a city which has been de-populated manage to collect enough revenues to survive?

How much taxes are levied on a residential lot without a house [[demolished) on it?

How much taxes are levied on a surface parking lot or a vacant building which might be condemned?

The question about "money to operate" brings up the real question: what should a city like Detroit actually "operate"? Detroit is still attempting to operate a city government based on having a population of over a million, a robust economy, wealth within the city and so on. None of these things is any longer the case nor are any of them likely to be the case in the near term.

Detroit does not need more money so it can continue to operate a bloated bureaucracy and lots of departments that nobody needs. Detroit needs to figure out what actual services it needs to provide in order to attract and retain residents and businesses, and drop everything else.

The notion that it is okay to simply keep raising prices because nobody is shopping at your business anymore is, simply, insane, and the fact that the "business" is a city and not a retail shop doesn't make it any less insane.

[Hermod]

The question about "money to operate" brings up the real question: what should a city like Detroit actually "operate"? Detroit is still attempting to operate a city government based on having a population of over a million, a robust economy, wealth within the city and so on. None of these things is any longer the case nor are any of them likely to be the case in the near term.

Detroit does not need more money so it can continue to operate a bloated bureaucracy and lots of departments that nobody needs. Detroit needs to figure out what actual services it needs to provide in order to attract and retain residents and businesses, and drop everything else.

The notion that it is okay to simply keep raising prices because nobody is shopping at your business anymore is, simply, insane, and the fact that the "business" is a city and not a retail shop doesn't make it any less insane.

When the emergency manager was in charge and had carte blanche, he should have gone through the city offices carrying a meataxe and a stack of pink slips and gotten some rationality in city staffing. Too many friends and family have burrowed in to comfortable jobs with no real purpose.

[Mikeg]

Home values in the city of Detroit are negatively impacted by the city's high property tax rate.

Property taxes are capitalized into house values because of simple economics: all else being equal, the lower the property taxes on a house, the more someone will be willing to pay for it.

If the present value of the tax payments on "House A" located north of Eight Mile Rd. is $10k less than the present value of the taxes on an otherwise identical "House B" located south of Eight Mile Rd., a rational purchaser will bid $10k more for "House A". Therefore the seller of "House B" will have to lower their asking price by that amount to be competitive in the real estate marketplace.

[MSUguy]

When the emergency manager was in charge and had carte blanche, he should have gone through the city offices carrying a meataxe and a stack of pink slips and gotten some rationality in city staffing. Too many friends and family have burrowed in to comfortable jobs with no real purpose.

One the city has laid off around 1/6 it's employees of it had in 2010. Two, one the biggest focuses on during trial was the lack of computer technology city departments meaning the city has very people and paper driven processes. The money freed up is being used to implement the needed tech changes. But fact that Orr didn't simply as you put it go through the city with meataxe is indicative that the reality is a lot more complicated than the myth of their being thousands of employees just sitting around doing nothing.

[mwilbert]

First let me say two things.

1) The property tax rate in Detroit is excessively high and damages the city's revival efforts.

2) I'm sure the city has staff it doesn't need, to do things it shouldn't do, and that problem should be addressed as rapidly as possible.

Now let me say that I don't think these two things are at all strongly connected. The city isn't collecting an excessive amount of property tax revenue and blowing it on a large number of employees. It doesn't actually collect that much property tax revenue, despite the high rates, because of the very high rate of non-payment and the low valuation of most of the property. And despite the bankruptcy, the city still has a lot of legacy costs that don't have much to do with current staffing levels.

Also, consider the composition of the property tax. Most of it doesn't go to the city government. I couldn't find the current numbers, but a few years ago, only about 40% of the property tax went to the city, and a bit less went to the DPS, which hasn't been under the control of the city for a long time. The rest goes to Wayne County, Wayne county educational institutions or the State, with a little bit going to various authorities.

I would love to see Detroit reduce unneeded staff, rationalize property assessments, improve collection rates, and lower the tax rate, but if the city cut the city property tax rate to zero Detroit property taxes would still be quite high.

[MSUguy]

Breakdown of Detroit's property taxes:

City of Detroit 33.4984
Wayne County 7.9220
Wayne County Community College 2.4769
Huron Clinton Metropolitan Authority 0.2146
Wayne County Intermediate School District 3.4643
Detroit Board of Education 30.9323
State of Michigan 6.000
NET MILLAGE RATE 84.5085

[Honky Tonk]

One the city has laid off around 1/6 it's employees of it had in 2010. Two, one the biggest focuses on during trial was the lack of computer technology city departments meaning the city has very people and paper driven processes. The money freed up is being used to implement the needed tech changes. But fact that Orr didn't simply as you put it go through the city with meataxe is indicative that the reality is a lot more complicated than the myth of their being thousands of employees just sitting around doing nothing.

Have you worked for the City? I have. I don't have a count, but there are people, and lot's of them, "working there" that couldn't possibly get away with doing what they do, anywhere else. Your post would be like the captain of the Titanic announcing "we've reduced the size of the hole by 1/6". It's not the lack of computer technology, it's having the skill to implement it effectively.

[Shai_Hulud]

Breakdown of Detroit's property taxes:

City of Detroit 33.4984
Wayne County 7.9220
Wayne County Community College 2.4769
Huron Clinton Metropolitan Authority 0.2146
Wayne County Intermediate School District 3.4643
Detroit Board of Education 30.9323
State of Michigan 6.000
NET MILLAGE RATE 84.5085

So it looks like we need DPS to file for bankruptcy for any hope of relief. Which does not sound to me like a bad idea anyway.

[renf]

Cities are established and, to some degree, subject to the control of the state legislature. The system we have for supporting local government in Michigan is basically unfair. When the public schools in Kalkaska went broke and shut, the state eventually changed the way we support the actual funding of many aspects of public education. It is not a perfect system but it is better than having every school district supported by property taxes on properties in that district.
We need to consider a similar change in the way we support local government. Property tax rates should be the same across the state. That revenue should then, be dispersed to cities and local governments on the basis of their population size and any specific needs the legislature thinks should be taken into account.

[ndavies]

So it looks like we need DPS to file for bankruptcy for any hope of relief. Which does not sound to me like a bad idea anyway.

Only non homesteaded properties pay the 30+ mills for schools. Residential owners get 18 mills of operating cost knocked off their primary residence when they homestead the property. it was the deal the state made when the sales tax went up to 6%.

And just so you can compare the tax rates in your favorite other Michigan city.

http://www.michigan.gov/documents/ta...e_480472_7.pdf

[ndavies]

Cities are established and, to some degree, subject to the control of the state legislature. The system we have for supporting local government in Michigan is basically unfair. When the public schools in Kalkaska went broke and shut, the state eventually changed the way we support the actual funding of many aspects of public education. It is not a perfect system but it is better than having every school district supported by property taxes on properties in that district.
We need to consider a similar change in the way we support local government. Property tax rates should be the same across the state. That revenue should then, be dispersed to cities and local governments on the basis of their population size and any specific needs the legislature thinks should be taken into account.

Why should my small town, that acts fiscally responsibly with it's money, be punished for another cities overspending. Unless you are giving me control over your budget I am unwilling to cough up that much extra cash.

If you want me to pay for it, you better give me control over what happens. There would be a ton of city projects I would be saying no to.

[emu steve]

The personnel problem with the city of Detroit isn't conceptually difficult:

1). Restrict by filling a percentage of vacancies in departments or skill areas.

2). Increase hiring in other areas, such as IT.

In the federal government, Congress does the line items and pretty well dictates staffing level by area or function [[e.g., IT, budget, legal, etc.). The cabinet secretary is at the mercy of Congress. He/she can't say: increase IT staffing by 150; cut budget analysts by 50; legal by 75; etc.

In the city of Detroit, let's hope the Mayor and City Council are more functional then what we have in Washington [[which isn't functional at all). They should be able to set staffing by department and job title and salary or grade levels.

All they need to do is say let's attrite 50 here and add 50 IT staff in departments X, Y and Z.

[corktownyuppie]

[[1) Property Taxes are too high.
[[2) The level of service is not where it needs to be.

Ok, now that we got that out of the way....I call BS on the methodology of property tax rankings. Yes, I agree that they are too high. And, yes, as a percentage of the property values, they are astronomical.

But Detroit is not a normal market. If you actually priced out property taxes per square footage of property and square footage of the lot, I'd say it's actually not bad.

Same with these rankings on "Best/Worst places for college grads to move to, or start their jobs". I'd say that for 137 sq. miles out of the 144 sq miles, that's probably true. But I'm presuming that if you're a young college grad, you aren't thinking about moving to Davison and McNichols.

[313WX]

Same with these rankings on "Best/Worst places for college grads to move to, or start their jobs". I'd say that for 137 sq. miles out of the 144 sq miles, that's probably true. But I'm presuming that if you're a young college grad, you aren't thinking about moving to Davison and McNichols.

Detroit is more than downtown/midtown.

Why should Detroit be given special treatment versus other cities [[as far as only considering a very minute portion of Detroit while the entirety of other cities is considered in those rankings)?

[ndavies]

Unfortunately Detroit needs to become a "normal Market" before the city will grow. You will not get new construction of private residences with the tax rates so high. Nobody is going to pay new construction prices and have outrageous tax rates on top of it. That is why every for new or refurbished property built in the city in the last 20 years came with a huge tax break.

If you build a $250000 house, It's SEV will be $125000. 125000[[SEV) * 66[[Homesteaded mills) = $8250 a year in property taxes if you homestead it. $10625 a year if it's a second home.

That same house in Novi would be $4375 homesteaded, That's almost 1/2 Detroit's rate. That's a difference of $333 difference a month between the 2.


Every for sale property built in Detroit in the last 20 years came with an NEZ and every rental property came with a different acronym property tax break. [[I can't remember the acronym off the top of my head)

[Scottathew]

Breakdown of Detroit's property taxes:

City of Detroit 33.4984
Wayne County 7.9220
Wayne County Community College 2.4769
Huron Clinton Metropolitan Authority 0.2146
Wayne County Intermediate School District 3.4643
Detroit Board of Education 30.9323
State of Michigan 6.000
NET MILLAGE RATE 84.5085

MSUGuy, you're missing some! The Zoo and DIA should be in there!



For comparison, here's the breakdown for a house I own in Warren [[Center Line School District):

MACOMB COUNTY DEBT	0.005
MACOMB VETERANS	0.04
HURON-CLINT PARK	0.2146
SMART	1
ZOO AUTHORITY	0.1
ART INSTITUTE	0.2
WARREN OPERATING	8.7724
CITY ROAD IMPROV	2.1
EMS	0.2923
LIBRARY	1.3373
SANITATION	2.555
ACT 345 POL/FIRE	4.9848
POLICE OPERATING	0.9746
FIRE OPERATING	0.9746
POL & FIRE OPER	4.9
RECREATION	0.9746
MACOMB CNTY OPER	4.5685
MCC OPERATING	1.4212
MCC DEBT	0.105
MAC INT SCH DIST	2.943
STATE ED TAX	6
CENT SCH OPER	18
CENT DEBT/SF	3.05
TOTAL	65.5129

Also, there is no income tax in Warren.

SEV on the house is 27K. Annual taxes are about $1,800 total.


In Rochester Hills [[Rochester School District) the total millage rate is 32.7491

[ABetterDetroit]

MSUGuy, you're missing some! The Zoo and DIA should be in there!



For comparison, here's the breakdown for a house I own in Warren [[Center Line School District):

MACOMB COUNTY DEBT	0.005
MACOMB VETERANS	0.04
HURON-CLINT PARK	0.2146
SMART	1
ZOO AUTHORITY	0.1
ART INSTITUTE	0.2
WARREN OPERATING	8.7724
CITY ROAD IMPROV	2.1
EMS	0.2923
LIBRARY	1.3373
SANITATION	2.555
ACT 345 POL/FIRE	4.9848
POLICE OPERATING	0.9746
FIRE OPERATING	0.9746
POL & FIRE OPER	4.9
RECREATION	0.9746
MACOMB CNTY OPER	4.5685
MCC OPERATING	1.4212
MCC DEBT	0.105
MAC INT SCH DIST	2.943
STATE ED TAX	6
CENT SCH OPER	18
CENT DEBT/SF	3.05
TOTAL	65.5129

Also, there is no income tax in Warren.

SEV on the house is 27K. Annual taxes are about $1,800 total.


In Rochester Hills [[Rochester School District) the total millage rate is 32.7491

54K in Warren? Michigan's 3rd largest city? Over a third of the house payment paying the property tax? Before PMI or homeowner's insurance, not good news at all in this market. This post is proof that this is not a "Detroit problem" but actually a Michigan problem.

Lansing will NOT collect a local income tax via withholding but is completely willing to cut local revenue sharing, charge 18% interest on delinquent property taxes, and help push for foreclosure. All brought to you by the same ass clowns who thought we would vote a tax increase on ourselves last month because they wouldn't address a serious road problem for decades. They will sit around on their collective asses watching more Michigan real estate get taxed into ruin because they wouldn't dare let any local municipality in the state touch their sacred revenue stream.

[Scottathew]

54K in Warren? Michigan's 3rd largest city? Over a third of the house payment paying the property tax? Before PMI or homeowner's insurance, not good news at all in this market. This post is proof that this is not a "Detroit problem" but actually a Michigan problem.

My mortgage on the house is for a loan of 100K. Originally I bought the house for 155K. I'm hoping to sell it for 85K when I pay it down that low. For now, I'm renting it out for $1,250 a month.

[Király]

Wah, wah, wah. Property taxes are high. Meanwhile, you've got some of the cheapest housing in the country. What you spend on taxes is more than offset by what you save in rent or mortgage payments.

The guy in the article complains about $36,000 in commercial property taxes in Detroit vs the $32,000 he would have paid in New York. At the same time he boasts about buying his building for $400,000, which would probably have cost $20 million in New York. Boo hoo.

I live in a city of 600,000 where houses start at $1 million and go up from there. I know I will never own so much as a condo here. Wanna trade your low price/high tax situation for mine?

[ndavies]

Wah, wah, wah. Property taxes are high. Meanwhile, you've got some of the cheapest housing in the country. What you spend on taxes is more than offset by what you save in rent or mortgage payments.

The guy in the article complains about $36,000 in commercial property taxes in Detroit vs the $32,000 he would have paid in New York. At the same time he boasts about buying his building for $400,000, which would probably have cost $20 million in New York. Boo hoo.

I live in a city of 600,000 where houses start at $1 million and go up from there. I know I will never own so much as a condo here. Wanna trade your low price/high tax situation for mine?

The problem is Detroit is not competing against your town. It is competing against it's suburbs. We are trying to get Detroit to grow once again. The only way to do that is to make it competitive with it's own suburbs. It charges twice as much tax as it's surrounding neighbors and can't offer anything close to equivalent services.

Most middle class families are not going to move into Detroit with it's high taxes, crappy schools, crappy fire/police, terrible housing stock and lack of jobs. They'll buy a place in the suburbs that offers better versions of all of those things.

[EastsideAl]

And how, exactly, would a reduction in property taxes and cuts in city personnel [[which inevitably means cuts in services), make that situation any better?

mwilbert is correct, the problem is much deeper and more complicated than 'cuts in personnel = lower property taxes'. A major problem in the city is that an ever decreasing number of the city's properties are paying an ever increasing share of the taxes. So many properties in the city are now non-paying, but still need some sort of service, even if it's only demolition or mowing. And then there's just the fact that big old cities always have higher fixed costs, which means that property taxes [[and other taxes) are almost always higher in cities anyway. These factors are not the result of mismanagement, but just an ongoing reality of demographics and life in a city like Detroit.

Depressing revenue even further too, is the reality of the long decline in property values, which reduces assessments, and means that the millage needs to be higher to collect anything like what has been collected in the past. While, at the same time, an aging infrastructure and the side-effects of abandonment demand ever more money. This does become somewhat a self-fulfilling cycle: higher property taxes = lower property values. But a an even greater lack of city services [[which are extremely reduced as it is) would almost certainly hurt property values even more. So the circle is a vicious one, and talking about it solely in terms of reducing high property taxes ignores at least half of the reality of the situation.

I also very much agree with renf and ABetterDetroit that, at its root, this is really very much a statewide problem. One that is writ large in Detroit due to its size and circumstances, but one that also does bite, or will soon come to bite, most of the larger, older communities in the state in the ass. Our methods of funding our schools and our cities simply must change for the future economic health of this state.

[ndavies]

Cutting property taxes will allow property values to increase. House values increasing will once again return the total collected tax revenues at least to current levels.

If you can get people building new houses you greatly increase tax revenues. Some of those empty lots would begin paying taxes. It's the whole IDEA between the NEZs and the temporary commercial tax break. My point is you'll get tax revenue growth if you make it economically feasible to build new in the city.

High taxes cap the amount of money a consumer can afford to pay for a house. If you have $2000 a month to spend to on a house and 1/2 of that goes to taxes you can only afford a certain price house. So they can buy a tiny shit house in the city and give half my money away in taxes or they can spend the same payment and buy something larger that will appreciate in value somewhere else.


Duggan put in place NEZs around the city to lower taxes, Tax collection rates went up.