ACLU, NAACP Class Action Lawsuit Invokes Fair Housing Act Against Wayne County, Michigan Over Allegedly Inflated Property Tax Assessments; Complaint Also Cites Constitutional Due Process Considerations Concerning Method Of Granting Homestead "Poverty Tax Exemption" Which Reduces Tax Burden By Half Or Eliminates It Entirely For Qualified Impoverished Homeowners

In Detroit, Michigan, The Detroit News reports:

• The American Civil Liberties Union of Michigan and the NAACP Legal and Education Fund [last week] sued to stop the Wayne County Treasurer from auctioning hundreds of owner-occupied homes for unpaid taxes this fall, arguing the foreclosures were illegal.
  
  The county’s tax sale violates the Federal Fair Housing Act by disproportionately foreclosing on black homeowners,(1) a process driven by Detroit’s inflated city tax assessments, said ACLU Legal Director Michael Steinberg. The suit, filed [last week] in Wayne County Circuit Court, names Wayne County Treasurer Eric Sabree, the county and the city of Detroit as defendants.
  
  “Wayne County and Detroit are creating a human catastrophe by tossing thousands of homeowners into the streets for inability to pay unlawfully assessed taxes,” Steinberg said in a press release. “This short-sighted practice not only violates federal law, it destabilizes families, destroys neighborhoods and undermines the economic recovery of the region.”
  
  The city taxed the home of one ACLU client at risk of foreclosure as if it was worth $40,000, while a private appraisal paid by the ACLU pegged its value at $9,000.
  
  The controversial auction has drawn critics for years, who say residents are losing properties because of tax bills that bear little relation to market value. The sale has attracted hundreds of out-of-state speculators and local investors who buy for as little as $500, and many don’t pay tax bills either.
  
  The treasurer has processed more than 140,000 foreclosures countywide since 2002, according to Loveland Technologies, a company that studies tax foreclosure.
  
  The ACLU is asking the court to halt the sale of all properties that are owner occupied, an estimated 1,530, and stop future foreclosures until the city can properly assess them, according to the lawsuit.
  
  A total of 5,600 homes headed to the tax sale in September are occupied, which includes renters.
  
  The plaintiffs, seven homeowners and four neighborhood associations represented by ACLU attorneys, are also asking the lawsuit be designated as a class action for all homeowners affected.
  
  ***
  An investigation by The Detroit News in 2013 concluded that Detroit was over-assessing homes by an average of 65 percent, according to a review of state tax appeals. The series prompted state regulators to overhaul Detroit’s Assessment Division.
  
  Steinberg said he believes “a huge percentage” of people on county payment plans are defaulting because they can’t afford them.
  
  The lawsuit also argues that the Detroit Citizen Board of Review’s process to grant poverty exemptions has violated homeowners’ due process rights by not giving them a reason for their denial. And some ACLU clients didn’t receive a response at all, according to the lawsuit.(2)
  
  Poverty exemptions can lower or eliminate tax bills if owners qualify.
  
  ***
  The ACLU, and NAACP Legal and Education Fund were joined by lawyers from the Washington, D.C.-based Covington & Burling LLP in the lawsuit filing.

For more, see ACLU, NAACP sue to stop Wayne County tax auction.

For the lawsuit, see Morningside Community Organization, et al. v. Sabree, et al.

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(1) See ACLU, NAACP LDF Sue Wayne County to End Racially Discriminatory Tax Foreclosures in Detroit:

• The [Fair Housing Act] bars not only intentional housing discrimination, but also neutral practices that have an adverse disparate impact on people of color. The Wayne County Treasurer's practice has a significant disparate impact on African Americans in the county. The complaint alleges that the tax foreclosure rate in predominantly African-American neighborhoods in Wayne County is 10 to 15 times higher than the rate of foreclosures in predominantly non-African-American areas.

(2) Ibid.

• Plaintiffs also allege that the City of Detroit has violated the due process rights of impoverished homeowners who are entitled by law to a "poverty tax exemption," which reduces a qualified homeowner's tax burden by half or eliminates it entirely. The complaint alleges that, prior to 2016, Detroit's process for eligible homeowners to apply for the poverty exemption was convoluted, difficult, and in some cases, impossible. Many of those who succeeded in submitting a timely, complete poverty exemption application never received a response from the City regarding the decision on their application or were denied for reasons that were arbitrary and capricious.