Full Report: Preventing Owner-Occupied Property Tax Foreclosures In Detroit: Improving Access To The Poverty Tax Exemption

December 2018

By Alexa Eisenberg and Roshanak Mehdipanah, University of Michigan School of Public Health, Ted Phillips and Michele Oberholtzer, United Community Housing Coalition

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Michigan state law (MCL 211.7u) requires local governments to make a property tax exemption available to owner-occupants who are unable to contribute to public charges by reason of poverty. This policy is commonly known as the Poverty Tax Exemption (PTE). In Detroit, local implementation of the PTE is referred to as the Homeowners Property Tax Assistance Program (HPTAP). Homeowners living near or below the Federal Poverty Level (FPL) may apply annually to this program to have their property tax bill reduced or eliminated. By alleviating household tax burden, this policy may improve housing affordability and prevent foreclosure among economically marginalized homeowners. Despite the availability of the PTE in Detroit, a low proportion of eligible homeowners gain access to this critical relief. Tax foreclosure continues to displace and dispossess owner-occupants each year in Detroit, the vast majority of whom are African Americans with low-incomes.

Through Poverty Solutions’ 2017 Community-Academic Grant, researchers from the University of Michigan’s School of Public Health partnered with the United Community Housing Coalition (UCHC) and the Healthy Environments Partnership (HEP) to understand how factors at each stage of the HPTAP application process may hinder or facilitate access to the exemption. Findings reveal that low awareness, burdensome application procedures and limited institutional accountability act as barriers that restrict access to the exemption. Many residents who were eligible for but did not receive the PTE in past years face considerable tax debt and remain at high risk for foreclosure. The intent of this report is to inform efforts that state and local governments can take to ensure that the PTE is readily available, easily obtainable, and equitably provided to all eligible homeowners, in order to strengthen this policy’s ability to prevent property tax foreclosure among homeowners with low-incomes in Detroit and statewide.

Please download the printable version (Adobe PDF) for the full content of the report.