FILE - Foreclosure, Detroit

State Rep. Wendell Byrd, D-Detroit, said he plans to introduce the “Pay as You Stay” (PAYS) plan that would assist low-income earners who fell delinquent in their property taxes by eliminating the penalties and interest and lowering their monthly payments, which would help about 31,000 Detroit homeowners dodge foreclosure.

“You will never eliminate the blight if people keep moving out of their houses,” Mayor Mike Duggan said at a press conference Wednesday. “I think we can agree that people below the poverty level have a right to be treated differently than the others.”

The number of occupied home foreclosures has dropped by 94 percent from 9,111 in 2015 to 514 in 2019.

Byrd told The Center Square the bill tries to keep low-income people in their homes, which fortifies the fight to stabilize Detroit’s neighborhoods.

“There’s no good in bringing people into the city and then losing them due to foreclosure,” Byrd said, adding that those people may not be replaced.

“Pay as You Stay” is a three-part plan:

1. Once you enroll, all interest, penalties and fees would be eliminated.

2. The balance due would be limited to back taxes only or 10 percent of a home’s taxable value – whichever is less.

3. The remaining balance would be paid back over three years at zero percent interest.

Byrd said this would help someone like a widowed woman in her 70s who retired and faces a diminished income with the same financial responsibilities who can keep up with her current bills but can’t pay back taxes.

Homeowners qualify for a full or partial Property Tax Exemption if a single-person household makes less than $19,303 per year, or under $28,671 per year for a four-person household.

Example #1

  • Resident Income: $814/month
  • Current Taxable Value: $10,400
  • Current Tax Debt: $11,700
  • Current Interest Reducted Stipulated Payment Agreement (IRSPA): $192/month for five years
  • PAYS Plan: $29/month for three years

Example #2

  • Resident Income: Poverty Tax Exemption Qualified
  • Current Taxable Value: $4,971
  • Current Tax Debt: $990
  • Current IRSPA: $50/month for five years
  • PAYS Plan: $10/month for three years

Eric Lupher, president of the Citizens Research Council of Michigan, told The Center Square that urban areas in Michigan like Detroit were hit hard by bank foreclosures that leaked into tax foreclosures.

“If you get behind a bit, it snowballs, reflected in the tax foreclosures carried out on a year-to-year basis,” Lupher said. “The foreclosures are down from where they were five, seven, 10 years ago, but the number of properties in tax foreclosure are still incredibly high.”

Lupher said property taxes are a small percent of Detroit’s revenue because the city gathers revenue from income taxes, casino gaming taxes and other fees.

Lupher said the bill’s cost-benefit analysis is if the city can afford to forego some of those property taxes and fees to keep people in those neighborhoods to create thriving communities.

Foreclosed properties are sold at auctions at low monetary levels, he said, and just because they are bought doesn’t mean the owners invest in those properties if that person isn’t optimistic about the surrounding property value.

Foreclosed houses are "like a cancer that affects everything around it,” Lupher said.

Even if these bills were passed tomorrow, Lupher said it could take a generation for people to return to the city, build new houses and start new families.

The bill must be passed by the House, the Senate, and then be signed by Gov. Gretchen Whitmer to become law.

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.