The City of Detroit has found itself between a rock and hard place, and whatever solution it chooses is bound to anger at least one side of the debate. The question at hand is should Detroit extend tax breaks under its Neighborhood Enterprise Zone (NEZ) program?
The NEZ started more than 20 years ago as a way to help revitalize run-down communities in the city. There are three different programs under the larger NEZ umbrella, and they all give homeowners or condo owners in Detroit substantial property tax breaks (as well as other communities in the State of Michigan, but most of the activity was in Detroit).
The program is only applicable in certain areas, so not all Detroit homeowners were able to take advantage of the program, but those who were have benefitted greatly. This article by Bridge reveals one condo owner in the Westin Book Cadillac pays under $500 a year in taxes for a condo he bought in 2008 for more than $300,000.
But Morin said his love for this high-rise downtown condo (in the Book Cadillac) is in jeopardy. The tax break that helped lure him to Detroit expires in seven years, threatening to turn his tiny tax bill – under $500 a year on a condo he bought for more than $300,000 – into a $12,000 millstone that he said could drag down his property value.
The City of Detroit has benefitted, as well. Lower property taxes have been a major lure to new Detroiters. They’re helping to attract new residents.
But the tax breaks are set to expire in seven years.
If these tax breaks, that are major draws for newcomers, expire, will the city be able to attract as many residents? Will the residents currently living in Detroit leave when their tax breaks aren’t renewed?
What about the homeowners in Detroit who don’t get to take advantage of the NEZ? They pay the full value of their property taxes, which is no small thing in Detroit. The city has one of the highest property tax millage rates in the state.
In neighborhoods far from bustling downtown, there will likely be little sympathy for Morin and his fellow condo owners at the Book Cadillac.
“You knew what you signed up for when you did it,” said Brian Ferguson, who lives near Schoolcraft and Southfield on the northwest side of Detroit.
As Detroit continues to enjoy economic and population growth, is it time to let the tax breaks expire, or should the city find a way to help homeowners who haven’t received any tax breaks while gently raising rates for NEZ homeowners? Or change the property tax levels for everyone?
Check out the article by Bridge to get in the weeds on this. It’s a lengthy read, but worth it.
