First, the new arena for the Detroit Red Wings looks to be going ahead - the groundbreaking ceremony has come and gone.
http://www.freep.com/story/money/business/2014/09/25/red-wings-ilitch-ar...
And a somewhat lengthy article on the bankruptcy here
http://www.detroitnews.com/longform/news/local/wayne-county/2014/11/13/d...
The Daily Mail has some fascinating photographs of Detroit from the air, showing how the once mighty metropolis has become islands of city living surrounded by urban decay and slowly returning countryside.
[b]Wayne County Exec. Warns of State Takeover, Bankruptcy[/b]CHICAGO - Wayne County, Michigan's newly elected executive, Warren Evans, Thursday delivered a grim picture of the county's fiscal position, warning that a state takeover and bankruptcy are both on the table without major structural fixes.
The county, home to Detroit, is on track to run out of cash by August 2016, a date that Evans called "financial Armageddon."
Wayne also faces what auditing firm Ernst & Young called a "liquidity crisis" within the next six months, by August 2015.
"Even with all of the funds pooled together, we're going to get to the area where we just don't have enough to pay the bills," said Evans at a press conference Thursday where he presented the Ernst & Young report outlining the county's financial picture.
"It's a bad cash picture. One of the big requirements for bankruptcy, and that's an ugly word, is your cash position; if you don't have the cash it's one of the triggers."
Wayne County for years has run a structural annual deficit, now estimated at $50 million. It has an accumulated deficit estimated at $161 million and a pension plan with a funded status down to 45% from 95% ten years ago.
.....
Wayne County needs to come up with roughly $70 million a year to cover the structural general fund shortfall and begin to shore up the pension fund, Evans said. That includes $50 million to cover general fund expenses and $20 million for pensions that would come from the general fund.The Ernst & Young report warns the county faces a "liquidity crisis" as soon as August, when its pooled cash is expected to dip to $35 million. It's expected to reach negative liquidity by June 2016, according to the report.
"The county's liquidity position will continue to deteriorate in the next 12 to 24 months without further action," the report said.
.....
The report blamed operating deficits on a 21% drop in property tax revenues since 2009; "significant legacy expenditures" of near $100 million annually driven by "unsustainable" pension and retiree health care costs; and budget overruns in the sheriff and prosecutor's office......
The county is clinging to its investment-grade ratings from Standard & Poor's and Moody's Investors Service, which rate it BBB-minus and Baa3, respectively. That's one notch above speculative grade. Fitch Ratings rates the county speculative BB-minus.
http://www.bondbuyer.com/news/regionalnews/wayne-county-exec-warns-on-st...
Have to say that I'm suprised that S&P and Moody's continue to rate the county as investment grade. Especially since [url=http://www.bloomberg.com/news/articles/2015-02-03/s-p-ends-legal-woes-wi... just got nailed with a $1.5 billion (yes, that's with a "B") fine[/url] because of the ratings that they gave to any number of subprime mortgage bonds.
I don't want to start another thread but I have said that Chicago is likely to be the next major city to go down. And it looks like it's about to happen.
https://ca.news.yahoo.com/exclusive-chicago-rating-downgrade-could-end-s...
Chicago drew closer to a fiscal free fall on Friday with a rating downgrade from Moody's Investors Service that could trigger the immediate termination of four interest-rate swap agreements, costing the city about $58 million and raising the prospect of more broken swaps contracts.
The downgrade to Baa2, just two steps above junk, and a warning the rating could fall further still, means the third-biggest U.S. city could face even higher costs in the future if banks choose to terminate other interest-rate hedges against fluctuations in interest rates. All told, Chicago holds swaps contracts covering $2.67 billion in debt, according to a disclosure late last year.
[i]etc ...[/i]
City of Detroit retirees covered by the general retirement system are beginning to see pension cuts take effect with their March check.
Retirees reported that they received notices in the mail on Friday. The March checks, as well as paperwork for those who use direct deposit, show that the cuts are taking place now.
The March 1 date had been targeted as the time to begin the cuts, though some earlier reports suggested the move might have been delayed until April 1.
[i]etc ...[/i]
http://www.freep.com/story/news/local/detroit-bankruptcy/2015/02/27/detr...
Back to [url=http://www.npr.org/2015/03/30/396317153/mass-tax-foreclosure-threatens-d... mess[/url] that's Detroit.
In Detroit, tens of thousands of people are facing a deadline Tuesday that could cost some of them their homes. That's when homeowners have to make arrangements to either pay delinquent property taxes — or risk losing their home at a county auction.When Detroit emerged from bankruptcy last year, it did so with a razor-thin financial cushion. It desperately needs every bit of tax revenue it can muster.
Earlier this year, county officials sent out 72,000 foreclosure notices to homeowners behind on property taxes — 62,000 of them in Detroit alone. They say about 18,000 of these properties are occupied, but fewer than half of those homeowners have paid all of their tax.
So officials like City Councilman Gabe Leland are knocking on doors in Detroit neighborhoods, reminding residents that the window to pay taxes is quickly closing.
......
But Wayne County Deputy Treasurer Eric Sabree says a moratorium is out of the question because Detroit's property tax revenue is already spoken for."We pledge all the penalties and fees in our bond pledges to borrow money," he says. "We can't do a moratorium on police protection or fire protection."
Chicago is in dire straits - no news there.
But this is news:
If Chicago or another Illinois municipality let its pensions run dry, either willfully or not, would that municipality be obligated to pay the pensions’ obligations? ‘Yes’ has been the widely assumed answer, but it’s in fact an open question, and the answer has monumental implications.We were the only ones who saw the significance at the time, but buried in a few articles a couple weeks ago was mention that Chicago now claims it is not legally liable. On May 12, we wrote, as a comment on a link to a Chicago Tribune article, “This highlights an important issue: What, if any, entity is on the hook if pensions aren’t paid? The state is for its five pensions, but the answer is unclear for many others, knowledgeable lawyers have told us.”
Since then, I’ve checked with more good lawyers with municipal expertise, including one who is a trustee of one of the biggest Illinois pensions. They don’t know the answer. I’ve checked with a few folks in the municipal bond industry. They generally assume the municipality would be liable but shrug off the issue. They think it has only long term implications and they are more focused on near term cash liquidity. They are wrong to dismiss it.
.....
Here is why the question is so crucial. If there is no underlying liability of the municipality to pensioners, then:• Pension reform, with much flexibility, could be accomplished easily by letting them go dry but replacing the loss to pensioners with something else in amounts determined by the municipality to be fair and affordable.
• In a municipal bankruptcy, pension obligations almost certainly wouldn’t even be included. It would be unlike Detroit, where the unfunded liabilities were treated like other unsecured debt of the bankrupt city (although that other debt ended up settling for larger losses than pensioners sustained). The annual payments scheduled by Springfield would be recognized as debts in the bankruptcy, but, again, those can be changed if Springfield chooses.
• The argument that pensions are a separate entity eligible for a separate bankruptcy proceeding would be strengthened. That argument has been discussed before but it would be hard to make if municipalities are liable.
.....
But the same, open question applies not just to Chicago but to some 650 other police and fire pensions for other Illinois municipalities. Mr. Brown did not address those. And how about pensions for Cook County, RTA, CTA, MWRD and others? To my knowledge, the same question needs to be answered for them as well. What about Chicaago Public Schools? Is the district, which is an entity separate from Chicago, liable for its pension? Dunno. My own look at the question for all of these, as an admittedly rusty former-lawyer, yields no clear answer, but I am currently inclined to think the city’s position is quite reasonable. There are multiple statutes under which pensions were authorized by the state, so the answers may vary.About the only place where the answer may be clear is with the five state pensions. Lawyers have told me they have no doubt that the state is liable for its pensions, though they cannot point to the authority offhand.
http://www.wirepoints.com/an-absolutely-crucial-issue-for-chicago-other-...
The Illinois Supreme Court forced the state Friday to find another way to fix the nation's worst government-employee pension crisis, ruling lawmakers "overstepped" by enacting a law that slashed retirement benefits to confront a massive budget deficit.
In a unanimous decision that frequently scolded state policymakers, the seven justices declared that the measure former Democratic Gov. Pat Quinn signed into law 18 months ago violates the state constitution because it would leave pension promises "diminished or impaired."
. . . .
The Supreme Court's ruling dealt with a lawsuit filed by retired employees, state-worker labor unions and others. It also was watched closely at the local level by city officials — including in Chicago, facing its own pension crisis — and school boards struggling with fewer dollars.
josh, agreed - I saw that as well. The question I posed is not what the law says about benefit levels but rather who is responsible for making up any funding shortfalls (for the record they are far worse than those articles even begin to suggest).
As an aside, we've just seen the Teamsters in the US send out notices cutting benefits to retirees ("best" part is that they did so under a law that they spent millions of dollars lobbying for).
As an aside, we've just seen the Teamsters in the US send out notices cutting benefits to retirees ("best" part is that they did so under a law that they spent millions of dollars lobbying for).
Are these benefits to retired Teamsters members, or retired Teamsters employees?
As an aside, we've just seen the Teamsters in the US send out notices cutting benefits to retirees ("best" part is that they did so under a law that they spent millions of dollars lobbying for).
Are these benefits to retired Teamsters members, or retired Teamsters employees?
http://www.washingtontimes.com/news/2015/may/20/teamsters-spend-big-on-p...
The Teamsters have begun informing retirees and current workers that their pension benefits may soon be cut, the final ironic twist to a lobbying campaign that saw the union spend its own members’ dollars to win the right to shrink their retirement pay.The somber notifications began going out from the Teamsters Central States Health and Welfare Pension Fund this spring, a decision that could ultimately affect 410,000 current pension participants and a total of more than 10 million U.S. workers nationwide. Cuts could begin as early as next year.
The cuts were made possible after the lame-duck Congress late last year passed the Multiemployer Pension Reform Act (MPRA), enabling any multiemployer pension fund to cut benefits to workers and current retirees if the plan is underfunded by at least 20 percent.
Multiemployer pension funds are commonly used by big unions and are maintained by one more or more collective bargaining agreements while operating under a board of trustees.
The Teamsters pension fund has been struggling with severe shortages for years, even as the union continued to pour millions of dollars into political election efforts and Washington lobbying.
In 2014 alone, the union and its affiliates spent nearly $5.9 million on lobbying and political contributions, and one of its main legislative targets was passage of the pension reform law that finally gave it the right to start reducing benefits, according to the lobbying reports it filed with Congress.
snip ...
“Like many of our nation’s multiemployer pension funds, Central States Pension Fund has become severely underfunded and is headed toward financial failure if we don’t take immediate, decisive action,” said a CSPF letter dated April 8.
“Baby Boomers are retiring in record numbers and the union workforce has been steadily declining for years. As a result, the Fund currently has more than three times as many retirees as active members — so, fewer contributions are coming in than benefits being paid out. To put this into perspective, for every $3.46 that the Fund pays out in pension benefits, only $1 is collected from contributing employers, which results in a $2 billion annual shortfall. Clearly, that math will never work,” the letter said.
etc ....
Thanks for the information. That looks like a really ugly situation in which the Teamsters have grossly betrayed their members. Of course, this has always been one of the most corrupt unions, so I guess we should expect this sort of thing.
The Washington Times? What's the matter, Fox didn't have a story?
For a more balanced account:
http://www.labornotes.org/2015/04/teamsters-mount-grassroots-campaign-bl...
The Washington Times? What's the matter, Fox didn't have a story? For a more balanced account: http://www.labornotes.org/2015/04/teamsters-mount-grassroots-campaign-bl...Only one question. Absent those cuts where is the money to pay those pensions going to come from?
From a letter sent out by the Teamsters' pension fund (quoted in the earlier link)
“Like many of our nation’s multiemployer pension funds, Central States Pension Fund has become severely underfunded and is headed toward financial failure if we don’t take immediate, decisive action,” said a CSPF letter dated April 8.
“Baby Boomers are retiring in record numbers and the union workforce has been steadily declining for years. As a result, the Fund currently has more than three times as many retirees as active members — so, fewer contributions are coming in than benefits being paid out. To put this into perspective, for every $3.46 that the Fund pays out in pension benefits, only $1 is collected from contributing employers, which results in a $2 billion annual shortfall. Clearly, that math will never work,” the letter said.
Of course that statement ignores the fact that, if the pension had been adequately funded in the first place there would have been sufficient monies set aside to cover those future payments. It sounds like they're trying to explain the problem to members as if the pension was a PAYGO (i.e., Pay As You Go) arrangement as opposed to a "real" pension fund.
On the subject of Multi Employer Pensions
A pension is supposed to provide a stable foundation for a long retirement. But, in some cases, that foundation can be shakier than people realize.The Canadian Commercial Workers Industry Pension Plan has just provided a disturbing reminder of the shocks that are possible.
CCWIPP announced last month that the roughly 24,000 people who are collecting benefits from the plan will have their pensions cut by 10 per cent beginning in July, while those who are still working and contributing to the plan will suffer a 20-per-cent reduction in the pension benefits credited to them.
The CCWIPP had suffered one black eye in the past, although of a relatively minor nature. In 2009, the Ontario Court of Justice found nine of the plan’s trustees guilty of failing to supervise the plan’s investment committee, which made investments in Caribbean hotels and resorts that were larger than permitted by regulation in 2002 and 2003. Although there was no proof the fund suffered any financial loss as a result, the trustees were each fined $18,000.By themselves, the plan’s investment returns didn’t appear to be a cause for great concern: They averaged a respectable 7.8 per cent from 1979 to 2013, and 8 per cent over the most recent five years of that span.
However, those results weren’t sufficient to keep up with the plan’s goals. At the end of 2012, the plan’s annual report stated it was only 67-per-cent funded on a going-concern basis – in other words, assuming the plan were to continue indefinitely – and only 31-per-cent funded if the plan were to be wound up immediately.
http://www.theglobeandmail.com/globe-investor/personal-finance/retiremen...
Detroit teachers’ rolling strikes shut down more than 60 schools
A wave of teacher absences described by an activist as rolling strikes shut down more than half of Detroit's 100 public schools Monday, keeping thousands of students at home as the "sick-out" entered a second week.
A handful of high schools were forced to close last week due to teachers calling in sick. But the action Monday was more dramatic as a greater number of the district's roughly 4,000 teachers stayed home, forcing at least 61 schools to keep their doors shut on Monday.
The Detroit district with 46,000 students has been in turmoil, struggling with millions of dollars in debt, large class sizes, poor morale among staff and declining enrollment.
The protest is organized not by the city's teachers' union but by a group of activists calling themselves Detroit Teachers Fight Back. They said in a press release that their actions are to "shed light on unsafe and subpar learning conditions and demand resolution."
The school district is drowning under $3.5 billion of debt and needs to be rescued by the state of Michigan, according to a report released on Wednesday by Citizens Research Council of Michigan, a nonprofit public affairs group. The district has been under state oversight since 2009, but continues to struggle financially....
The school district ... needs to be rescued by the state of Michigan ...
[url=http://www.statedatalab.org/state_data_and_comparisons/detail/michigan]M... isn't exactly the poster child for financial health[/url] - they don't have the financial wherewithal to do that.
abnormal
..i see the issue as one of remedy. a city finds itself in financial straights. what do you do? how this was approached was by implementing a shock doctrine meaning a transfer of wealth upwards takes place. us politics are ruthless and have been for many years. today more so than in any other time as the right has captured the agenda. plenty of money to bail out the rich, plenty of money for perpetual war. tough love for those facing crisis. to argue that the money isn't there won't fly in the face of many years of tax cuts, privatizations and the elimination of rights.
..there is a better way.
epaulo13, regardless of what "better way" is chosen there's still the question of where the money is going to come from.
..abnormal that is what the struggle is about. it has been shown time and again an organized people can force things to happen where it has been claimed that the cupboards were bare.
Flint Doctor Mona Hanna-Attisha on How She Fought Gov't Denials to Expose Poisoning of City's Kids
Emergency for Democracy: Unelected Manager Who Caused Flint Water Crisis Now Runs Detroit Schools
Which still doesn't say where the money is coming from.
We know who should pay: someone else.
"Sorry that things went all pear-shaped for you when everyone stopped wanting to own a muscle car; here's some of our tax money, because kids in our schools are already wiping their asses with iPods. And we cannot forget how, in the 60's and 70's and 80's, you insisted that we take tax money from you while you were thriving and we were just getting by.
Yours truly, Lansing Michigan."
Which still doesn't say where the money is coming from.
..this is a false question. the syder regime is blocking in democratic process to answer that question when in fact there are solutions. an example..although this report is global it applies to the issue at hand.
The 1% Economy: The World's Richest 62 People Now Have as Much as Poorest 3.6 Billion
quote:
Oxfam faults a global financial system that has "supercharged the age-old ability of the rich and powerful to use their position to further concentrate their wealth." The report singles out deregulation, privatization and offshore tax havens that have let trillions of dollars go untaxed.
...
..recent reports
Detroit Student: "I Want to Be Able to Go to School Without Worrying About Being Bitten by Mice"
On Wednesday, 88 of Detroit’s roughly 100 public schools were closed in the latest mass teacher "sickouts" protesting underfunding, black mold, rat infestations, crumbling buildings and inadequate staffing.
..and
Detroit Rocked by Teachers' "Sickout" Protesting Dire Conditions Under Emergency Management
We discuss the sickout and the state of Detroit’s schools with two guests: Victor Gibson, a retired Detroit public school teacher and active union member, and Russ Bellant, an education advocate and the former education director for the stationary engineers union, where he trained engineers working in the Detroit Public Schools.
epaulo, that still doesn't answer the question of where the money is going to come from.
Absent a global change in tax laws the money you refer to is not accessible (and even if it were you still have to figure out how to get the money to Detroit).
..i've already answered that abnormal as best i can. the folks from detroit will not rest until the powers that be come up with it. it is up to those powers to find it.
And if they can't??
I don't think it's unreasonable to ask "what's supposed to turn Detroit around?"
It'll be "money" of course, but to be spent on what? Streetlights and firefighting services and teachers and... what? I'm not thinking of politico-platitudes like "an investment in HOPE". More like, if the federal government said "OK then, here's a few billion dollars", what specifically should or could that be spent on that would get Detroit spiralling upward instead of downward?
And if they can't??
..the reality is if they won't not can't. then this needs to play out. and i anticipate my posting of many more observations as this struggle grows and deepens.
magoo
..as always it begins with talking with the folks in detroit in a meaningful manner.
magoo..as always it begins with talking with the folks in detroit in a meaningful manner.
Uh, can you flesh that out any??
magoo..as always it begins with talking with the folks in detroit in a meaningful manner.
Uh, can you flesh that out any??
..the state has had an agenda and as i have pointed out above the snyder regime is blocking any democratic process for detroit folks to have imput. from the very start of this thread the response to detroit's finacial troubles has been a forced top down process. this approach has to change imho.
Detroit: Students Stage Walkout in Solidarity with Teacher "Sickouts"
In Detroit, dozens of students have staged a walkout in solidarity with teachers who have been protesting underfunding, black mold, rat infestations, crumbling buildings and inadequate staffing. Detroit Public Schools are under the control of unelected emergency manager Darnell Earley—none other than the unelected emergency manager who presided over the water contamination in Flint. This comes as a judge has again denied the school district’s request for a temporary restraining order to force the teachers to end their sickout protests.
We know who should pay: someone else.
"Sorry that things went all pear-shaped for you when everyone stopped wanting to own a muscle car; here's some of our tax money, because kids in our schools are already wiping their asses with iPods. And we cannot forget how, in the 60's and 70's and 80's, you insisted that we take tax money from you while you were thriving and we were just getting by.
Yours truly, Lansing Michigan."
Snyder is too busy poisoning people in Flint to even give that response.
Which still doesn't say where the money is coming from.
Uh, you raise taxes. Not exactly rocket science. That there's not the will to do that doesn't mean the money isn't there.
Which still doesn't say where the money is coming from.
Uh, you raise taxes. Not exactly rocket science. That there's not the will to do that doesn't mean the money isn't there.
Raise taxes? On who? And how?
Raise taxes too much and people will leave the city so total tax revenue actually decreases. So you have to increase tax rates more which means more people move. Same goes for businesses. It's no accident that one of the largest employers here is located immediately outside of city limits. Leave the building via the side door, walk ten feet, and you'll actually be in the city. The same thing goes for people - move that few blocks to put yourself outside of city limits and voila, no city taxes.
Detroit should get state and federal money. If state taxes have to raised, so be it. If Detroit were in Iraq or Israel, you can be sure the federal government would spend whatever it takes to bail them out,
Michigan doesn't have the money either. The state is already underwater. .
It has the money. It just doesn't want to collect it.
Speaking of taxes, Minnesota and Oregon, with the third and fourth highest top income tax rates in the U.S., placed first and seventh in job growth in 2015. Note that Michigan has a flat income tax rate, on the lower end of states that have income taxes.
http://www.gallup.com/poll/188870/minnesota-top-state-job-creation-index...
http://taxfoundation.org/article/state-individual-income-tax-rates-and-b...
It has the money. It just doesn't want to collect it.
Don't know how you can say that. What exactly do you think they should do? As I said, increase taxes too much and people and businesses leave. End result is less tax revenue, not more.
It has the money. It just doesn't want to collect it.Don't know how you can say that. What exactly do you think they should do? As I said, increase taxes too much and people and businesses leave. End result is less tax revenue, not more.
Privatization on Steroids: Emergency Manager Who Switched Flint Water Resigns From Detroit Schools
quote:
THOMAS STEPHENS: Yeah. It’s a racist policy. And under the emergency management statute, the elected school board in Detroit has no power at all. The emergency manager has all the power. They only have the power that he chooses to give them, and he’s given them none. And, you know, this is why I’m in a group called Detroiters Resisting Emergency Management, that formed out of the appointment of Kevyn Orr in Detroit in March and April of 2013, is because, you know, the Flint River catastrophe is really the realization of our fears. The idea that—and this goes back to that environmental justice experience in the '90s that I referred to earlier, too. The idea that a white Republican governor in Lansing appointing a single individual—of whatever race—to, you know, run a city, without accountability to anybody except the governor and with the power to override laws and contracts, was bound to be harmful to these communities. And it's turned out to be, unfortunately, for—especially for the children of Flint and also the children of the Detroit Public Schools, even more harmful than we feared.
Guess you didn't bother reading my post above.It has the money. It just doesn't want to collect it.Don't know how you can say that. What exactly do you think they should do? As I said, increase taxes too much and people and businesses leave. End result is less tax revenue, not more.
Yes I did. But even if Michigan increases taxes (and collects more tax in the process) the state has it's own problems which it's going to have to resolve before it can attempt to bail out Detroit. And let us not forget that education isn't the only problem that Detroit has.
..seems detroit is not the only city to be taken over. this excellent video report deconstructs the corporate agenda. and education is the organizing hub that people rally around like detroit. and water issues like flint.
In this episode of teleSUR's Days of Revolt, Chris Hedges discusses the corporate takeover of Salinas, CA by a multi-billion dollar agricultural industry, and the ways in which a radical city councilman and a civil rights attorney have been able to fight against it
..democracy now devoted this whole show to flint. i post it here because the core of the problem is the same as detroit. and it delves into the making and role of the unelected manager. also we see how people are organizing themselves and what battles they are fighting. well worth the watch. transcript will be out later and there is audio as well.
The Poisoning of an American City": Special Report on Flint's Water Crisis
"Here's to Flint": An Unprecedented Look at the Battle for Clean Water in Flint From the ACLU
As voters head to the polls in four states today, with Michigan seen as the top prize, the ongoing Flint water crisis has become a major campaign issue for Democrats. The crisis began when an unelected emergency manager appointed by Michigan Governor Rick Snyder switched the source of Flint’s water to the corrosive Flint River in an apparent bid to save money. Today, in a Democracy Now! exclusive, we broadcast the ACLU of Michigan documentary "Here’s to Flint," produced by Michigan Journalist of the Year Curt Guyette and filmmaker Kate Levy. The film tells the inside story of how local residents, journalists and scientists organized to uncover the water contamination crisis that has sparked congressional hearings, the resignations of public officials and a national debate about the impacts of austerity and infrastructure decline in the United States.
Move over, other prominent and respected cartoonists whose names I can’t quite recall at this moment, because there’s a new top dog in town: Iain MacIntyre, a 10-year-old from Flint who traveled to Washington, D.C. to watch his governor Rick Snyder testify before Congress today.
Snyder is in D.C. to face the U.S. House Committee on Oversight and Government Reform, which is questioning him about the state’s handling of the Flint water crisis. According to the Detroit Free Press, the EPA will “place the blame squarely on the state; criticizing decisions not only by state regulators but by Snyder’s hand-picked officials in Flint.”
Iain MacIntyre is there, too. His family is one of five which traveled along with the AFL-CIO and the activist group Flint Rising to attend the hearing, and MacIntyre drew the devastating caricature you see above while watching Snyder testify.
http://gawker.com/americas-most-biting-editorial-cartoonist-is-this-10-y...
..update
As Downtown Detroit Gentrifies, Longtime Black Residents Fight Illegal Tax Foreclosures
quote:
BERNADETTE ATUAHENE: Yeah, there are three main findings. The first is that Michigan’s Constitution is clear, and supporting legislation: No property should be assessed at more than 50 percent of its market value. Other state constitutions, to the extent that they measure—that they mention property tax assessments at all, say things like the property tax assessment must be fair, uniform and equal, which means it’s up to the judge to decide legality. But because the Michigan Constitution and supporting legislation specifically say no property should be assessed at more than 50 percent of its market value, it means people like me can come in and run the numbers and determine legality. And that’s exactly what we did. So we ran the numbers from 2009 to 2015, and we found that in each of those seven years, anywhere between 55 and 85 percent of properties were being assessed in violation of the Michigan Constitution, putting into disrepute the record number of property tax foreclosures in Detroit.
The second finding is, when we broke up the data into what we call five quintiles—quintile one is the lowest-valued homes, to quintile five being the highest-valued homes—we found that in quintile one and two, in the majority of those years, 95 percent or more of properties in quintile one and two were being assessed in violation of the state constitution. But then, when you got to quintile five, which are the highest-valued homes, the majority of those homes were being—were not being assessed in violation of the state constitution.
The third thing I want to bring to your attention is, in Detroit, there’s something called the poverty tax exemption. And as you mentioned, 40 percent of Detroiters fall below the federal poverty line. And in Detroit, if you fall—according to the poverty tax exemption, you’re not supposed to be paying taxes if you fall below the federal poverty line. But because the poverty—the city failed to advertise the poverty tax exemption, because the city put several unnecessary barriers in the way, obstructing people from applying for the poverty tax exemption, we have a situation where people were illegally assessed, unable to pay the inflated taxes, foreclosed upon, for taxes they weren’t even supposed to be paying in the first place.
