FILE - Foreclosure, Detroit

The Coalition for Property Tax Justice filed a federal class-action lawsuit claiming the city of Detroit, Wayne County, and state officials “eviscerated” every homeowners’ due process rights by denying them the ability to appeal inflated property taxes.

Sam Schoenburg, an attorney from Chicago law firm Goldman Ismail Tomaselli Brennan & Baum LLP, which is representing the community activists, told The Center Square that the lawsuit focused on a “mass denial of due process” stemming from a delayed mailing of property tax assessments.

In 2017, Detroit reappraised wholesale residential property taxes for the first time in 60 years, which delayed the city mailing 263,516 assessment notices on or after Feb. 14, 2017, the complaint states.

Detroit officials disagree: the Detroit News reported that City Assessor Alvin Horhn stated: "The city mailed out the 2017 notices on January 24 in an appropriately timely manner, and the city extended the appeals period by two weeks to last the entire month of February.”

But an email chain acquired through FOIA provided by the law firm contradicts the mailing date claimed by the city assessor.

The email subject was “Re: 2017 Assessment Notices-Residential.”

On Feb. 7, 2017, Horhn asked Renkim Corp. to “Please mail all the notices.”

A U.S. Postal Service receipt shows that Detroit mailed 263,516 items through Renkim Corp on Feb. 14, 2017.

Detroit city ordinance requires three tiers of administrative review for property tax appeals. If residents miss the first tier file deadline of Feb. 15, they forfeit any appeal for that tax year.

The city extended the deadline to Feb. 28, but the lawsuit says it didn’t send another notice.

Instead, a representative from the Office of the Chief Financial Officer (OCFO) announced the change at a Feb. 14 city council meeting, the lawsuit says, telling those there they should have the assessment notice by Feb. 18 – three days after the ordinance deadline.

“In other words, Detroiters could expect to have their assessments in hand by the appeal deadline printed on their notices,” the lawsuit says.

Also, state-watched assessments, as in Detroit’s case, allow property owners to appeal directly to the Tax Tribunal – the third tier – up to 30 days after receiving the notice, the lawsuit says.

When the housing bubble burst in 2008, Detroit failed to adjust property tax appraisals.

A Detroit News report estimates homeowners were overtaxed by at least $600 million from 2010 to 2017.

That report found that more than 90 percent of the over 63,000 households holding delinquent debt as of last year had been overtaxed from 2010 to 2016.

The overtaxing and nonexistent property tax appeal process augmented foreclosures, the lawsuit says.

The complaint also cites a study finding that from 2011 to 2015, Detroit assessed between 53 percent and 83 percent of residential properties in violation of Article IX, section three of Michigan’s Constitution requiring that property tax assessments can’t exceed 50 percent of fair market value.

Wayne County foreclosed on more than 100,000 Detroit properties during that period, according to the study, or one in four of Detroit properties.

Wayne County reimburses Detroit for delinquent property tax bills, the lawsuit says.

Wayne County reaped in profits, the lawsuit says, citing fiscal year 2018-2019 anticipated revenue of $10.38 million from charges, fees and fines from property tax forfeiture.

The suit seeks several remedies:

• An injunction guaranteeing every future property tax assessment notice is sent out in a timely fashion by Detroit officials and state officials.

• An injunction allowing Detroit homeowners to appeal their 2017 property taxes retroactively.

• An injunction that if property tax notices are delayed, Detroit officials and state officials, if involved, automatically extend appeal deadlines by 30 days after mailing, with clear notice to each recipient.

• Detroit officials and Wayne County pay damages determined in trial.

• An injunction requiring Wayne County to stop foreclosures for the homeowners who allegedly weren’t given enough time to appeal.

Staff Reporter

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.