The American Civil Liberties Union and the NAACP Legal Defense and Educational Fund filed a civil lawsuit Wednesday against Wayne County and City of Detroit, aiming to shutter the county’s annual tax foreclosure auction that includes thousands of owner-occupied properties.
"Wayne County and Detroit are creating a human catastrophe by tossing thousands of homeowners into the streets for inability to pay unlawfully assessed taxes," ACLU Legal Director Michael J. Steinberg said in a statement.
“This short-sighted practice not only violates federal law, it destabilizes families, destroys neighborhoods, and undermines the economic recovery of the region."
The lawsuit, filed on behalf of seven Detroit residents and four neighborhood organizations, claims the Wayne County treasurer’s annual auction violates the federal Fair Housing Act, disproportionately impacting African-Americans across the county. The foreclosure rate in black neighborhoods is more than 15 times higher than predominantly non-African-American areas, the complaint states.
Compounding the litany of problems, the lawsuit said, are over-inflated appraisals scattered throughout Detroit.
“The City of Detroit has failed to conduct properly the legally mandated property assessments for at least two decades,” according to the 50-page complaint, filed in Wayne County Circuit Court. “Further, after the values of homes began to drop precipitously in 2008, the City of Detroit failed to reduce the assessed values of the homes to match the actual True Cash Values, a fact which city officials have acknowledged.”
Last year, Detroit’s mayor, Mike Duggan, launched a city-wide reassessment, which is expected to wrap next year. In a statement issued Wednesday, City Treasurer David Szymanski said 2013 property assessments were legitimate, backed by sales data, and “consistent with home values across the city.”
“The City of Detroit, in partnership with the Wayne County Treasurer’s Office and others, has been taking unprecedented steps to help prevent foreclosures and keep families in their homes,” Szymanski said in a statement to The Detroit News. “This has been one of the mayor’s highest priorities. We successfully sought legislation to reduce penalties and interest and create workable payment plans that have helped to keep more than 27,000 homeowners in their homes in just the past year.
In a separate statement to the News, Detroit’s top lawyer, Melvin “Butch” Hollowell, said the lawsuit is “meritless,” adding that it would violate the city’s bankruptcy-exit plan approved by a federal judge in late 2014.
“City agencies have met with representatives of the ACLU on a number of occasions to share information, and to analyze their position,” Hollowell said in a statement. “After very careful review, the city is confident that not only is the ACLU’s claim fatally flawed, as any potential claim was discharged in bankruptcy, but it is also recklessly irresponsible. It would violate compliance with the plan of adjustment, indefinitely prolong state oversight of City operations and threaten basic city services to all Detroiters."
But one of the named plaintiffs in the case, Spirlin Moore, a 77-year-old Detroit resident who’s nearly deaf and illiterate, says he is being steamrolled by the inflated assessment of his home. The city valued his home in 2013 at nearly $23,000, the complaint says — nearly 10 times what the ACLU says it’s actually worth.
The city levied a $2,000 property tax bill on Moore, “based on the over-assessed State Equalized Value,” the complaint said.
Moore, who the complaint said relies on a caretaker and moved to Detroit from Alabama in the early 1960s, couldn't afford to foot the cost.
“Mr. Moore’s outstanding water bill was added to his taxes in 2011, 2013, and 2013,” the complaint says, adding that he currently owes $5,700 in unpaid property taxes, which he can’t pay.
So: Moore's house is subject to the foreclosure auction.
"Wayne County's tax foreclosures have the most severe impact on the county's African-American community," Coty Montag, deputy director of litigation for the NAACP Legal Defense and Educational Fund, said in a statement.
The two-count lawsuit seeks a preliminary and final order to halt foreclosures and the sale of owner-occupied homes in the county, “without regard to whether a property has been over-assessed.”