Unpaid property taxes soar

Metro Detroit tab hits all-time high; counties, homeowners feel pain.

Amy Lee and Jim Lynch / The Detroit News

Unpaid property taxes are at an all-time high in Metro Detroit, leaving county coffers short and putting more residents at risk of losing their homes.

A weak economy and lack of jobs are being blamed for the rise in unpaid property bills in Wayne, Oakland and Macomb counties.

Property owners who fail to pay taxes for three years in a row are at risk of losing their homes through foreclosure, when the county assumes control of the property and auctions it off to pay down the balance.

Unpaid property taxes rose 29 percent in Wayne County, about 17 percent in Oakland County and about 33 percent in Macomb in 2006 compared to 2005. In total, the three counties are trying to recoup some $415 million in unpaid property taxes.

"This is a huge, huge problem and we need to find ways to deal with it," said Ted Phillips, executive director of the United Community Housing Coalition, a nonprofit group that helps Detroiters stave off foreclosure. "And next year, it's going to be even worse because you'll have more people coming through the pipeline."

The Wayne County treasurer's office this month sent 148,856 notices to property owners declaring them delinquent on their 2006 taxes. The $271 million in unpaid tax levies for 2006 is up 29 percent -- or $61 million -- from 2005 unpaid property taxes.

"The adverse economic climate that lingers within the county, rising mortgage rates, unemployment and increased medical costs, have strained the financial resources of Wayne County residents," said Treasurer Raymond Wojtowicz.

Lack of jobs takes toll

A bleak economy has about 7.1 percent of Michiganians out of work as of last month, according to the Michigan Department of Labor and Economic Growth. Statewide, more than 42,000 jobs were lost between April 2006 and April 2007.

The lack of work also is prompting residents to move from Michigan in search of better opportunities, creating a glut of available real estate and streets dotted with "for sale" signs. In fact, more people moved out of Wayne County between 2005 and 2006 than any other county in the United States, save four Gulf Coast counties that were pummeled by Hurricane Katrina.

A northwest Detroit resident, who asked not to be identified because she didn't want it known that she couldn't pay her taxes, said financial woes began for her and her husband about six years ago when they were forced to close a generations-old city business.

Later, the woman was involved in a car crash. Soon after, they learned the husband was battling a terminal illness. The couple, who have lived in their home for the last 40 years, now face eviction due to three years of unpaid property taxes.

"We struggled for a while there without an income and then things jumped from bad to worse," she said. "You reach a point where you are buried and you can't get out."

The couple are working with local community housing advocacy groups to pay off the nearly $8,200 they owe.

"I'm trying to do something, anything, to pay it off," she said. "I'm just trying to keep our heads above water."

The economic strain, though perhaps most visible in Wayne County, also is being blamed for a rise in delinquencies in Oakland and Macomb counties.

"It's a sign of the times," said Macomb County Treasurer Ted Wahby. "Like everywhere else around the state right now, the economy is driving this. You have a tremendous number of people out there who aren't working."

Macomb works with taxpayers

Last year, Macomb's tax office issued 26,000 delinquent notices valued at $33 million. This year, 31,000 notices are being sent out with a value of $44 million.

Despite the increases, Macomb County hasn't been forced to foreclose on any homeowner since 1997. Wahby said the county works with its delinquent taxpayers to come up with payment plans.

"We haven't had to take an occupied house in years," he said. But with payment plans and the county's efforts to help residents meet their fiscal responsibilities, Macomb has been able to collect 100 percent of its delinquent taxes.

The strain is forcing more elderly residents to seek help at Macomb County's Senior Citizen Services Department so they can arrange their finances to pay delinquent tax bills, said Karen Bisdorf, the department's assistant director.

"They are looking to find more creative ways to pay their other bills, housing costs and prescription medicine, to help them meet their obligation for delinquent taxes," she said.

Many Metro Detroit retirees, such as former Chrysler Group workers, find recent changes to retirement plans force them to prioritize which bills get the most attention.

"They know they aren't paying their taxes and they realize there will be consequences," Bisdorf said. "But they weigh their options and in some cases, they decide it might buy them the most time to be delinquent on property taxes instead of their other bills."

Officials in Oakland County mailed about 48,700 tax delinquency notices to homeowners this month, a 17 percent increase from last year when 41,500 notices were sent, according to Keith Sawdon, chief deputy treasurer for Oakland County.

That's roughly $100 million in delinquent taxes this year compared with $95 million last year. Of those 41,500 slips sent last year, about 8,300 were pre-forfeiture notices, which result in about 400 auctioned parcels a year.

"It has gone up a bit," Sawdon said. "We do everything we can to work with someone. We refer them to other agencies for help. People are just having a tough time paying."

Detroit News Staff Writer Jennifer Chambers contributed to this report. You can reach Amy Lee at (313) 222-2072 or alee@detnews.com.