Detroit officials have announced that for the first time in at least 17 years the city’s residential property values have seen a net increase, reflecting increasing property values as the city’s revitalization spreads. According to the city, nearly 60 percent of residents will see 2018 assessments rise by 10 percent or less.
Under Prop A, passed by Michigan voters in 1994, annual property assessments are tied to the rate of inflation or 5 percent, whichever is less (assessments are held to this formula until the property changes hands). For 2018, the cap was 1.02 percent (rate of inflation).
The Office of the Assessor had reduced assessments across the city for years, which meant a loss in value for Detroit properties. While the value increased to $3 billion this year from last year’s $2.8 billion, the value in 2008 was $8.8 billion. This year’s value reflects the assessed value of the city’s 263,000 residential properties.
Commercial properties within the city have also continued to steadily increase in value and are now at nearly $3 billion, and the value of industrial properties, which dropped last year, have risen from $314 million to $513 million.
Mayor Mike Duggan considers the increase a tangible example of the city’s ongoing recovery.
“This is another sign of progress. We still have a long way to go to in rebuilding our property values, but the fact that we have halted such a long, steep decline is a significant milestone,” says Duggan. “This also corresponds with the significant increase in home sale prices we have seen in neighborhoods across the city.”
To get its assessments in line with the actual market value of properties, over the past several years the city has reduced assessments and conducted the first citywide parcel-by-parcel reappraisal of real property in 60 years. John Hill, Detroit’s CFO, says he is confident that the city’s assessments are fair and reliable.
Hill notes that the work done to ensure fair assessments has led to more residents paying their property taxes. Collections have increased steadily from an average of 69 percent in 2012-2014 to 79 percent in 2015, and 80 percent in 2016. The collection rate for 2017 is projected to be 82 percent.
“With residents continuing to (receive) fair assessments, we hope to see an increase in the number of homeowners who pay their full taxes,” says Hill. “In the near term, we expect this move to keep more taxpaying residents in the city. In the long term, we believe it will help to bring in more new homeowners and help to continue growing our residential tax base.”
If a property owner chooses to appeal their assessment, the City of Detroit’s Office of the Assessor has begun the annual Assessors Review appeal process, which allows property owners to challenge their 2017 property values. The process runs through Feb. 15 in Room 804 of the Coleman A. Young Municipal Center, 2 Woodward Ave., Detroit, Michigan.
Please note that residential property owners must begin the appeals process at the Assessors Review. Commercial, industrial, and personal property owners may, if they chose, proceed directly to the Michigan Tax Tribunal. The deadline to appeal directly to the Michigan Tax Tribunal is May 31.