Matt Helms

Detroit Free Press

Many Detroit homeowners will see their property tax assessments drop 5%-15% this year, although bustling downtown and Midtown will see an increase of 5%, city officials said Monday.

It's the latest adjustment in Detroit's three-year effort to reassess every one of the city's 220,000 homes, something that Detroit's chief assessor, Gary Evanko, said the city hasn't done in at least 45 years. Officials want to ensure that property tax assessments more closely match home sale prices in a city deeply scarred by the subprime mortgage foreclosure crisis.

City officials said large portions of northwest, north and northeast Detroit will see 15% reductions, while the southwest, near west and lower east parts of the city will see reductions around 5%. Some of the city's more stable neighborhoods — Boston-Edison, Indian Village and Sherwood Forest — will see increases of 15%, reflecting rising sale prices. But assessments on 95% of homes in the city will go down.

Existing homeowners will not see the full increases because the state's Headlee Amendment limits annual property tax hikes on homes to the rate of inflation, currently running less than 1%, until there is an ownership change.

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Mayor Mike Duggan said he expects that large, wholesale neighborhood reductions will end after the next tax year, with the city assessing homes individually.

"If you're thinking about buying a house, I would say this is the year to do it, because it's very unlikely, we're going to see assessment reductions like this next year" because real estate prices citywide are stabilizing and growing, Duggan said at a news conference Monday.

The assessments are based on two years of property sales, Duggan said, and include sales in 2013 that were far lower than prices homes were fetching in 2015.

Last year, the city lowered assessments significantly across town, with some areas — including the northeast and near-west — seeing 20% reductions. Twenty of the city’s most stable neighborhoods — including Grandmont-Rosedale, Green Acres, Sherwood Forest, Palmer Woods, Indian Village and Boston-Edison — went without reductions because city officials said real estate prices had rebounded and were matching city assessments.

The citywide reassessment of residential property taxes is part of Detroit’s long-term strategy to stabilize city real estate after it was hammered in the national economic meltdown and the foreclosure crisis.

The goal, officials say, is to make the city more attractive to homeowners with more realistic assessments that reflect actual sale values of homes in a city with one of the highest millage rates in Michigan. That, in turn, will encourage more people to pay their taxes — significant in a high-poverty city where as many as half of all residential property tax bills went unpaid in recent years.

Collection rates are rising, Duggan said. In 2014, 67% of homeowners paid their property taxes. That number rose to 72% in 2015 and is expected to be 78% in 2016.

The reduction in assessments was factored into the city’s bankruptcy exit plan, the plan of adjustment that governs the city’s finances after it emerged from insolvency. Last year, the city said it was already ahead of projections. Detroit was expected to see property tax revenue decline from $120 million to $102 million, but instead it came in at $115 million. Duggan said the city is on track to be $10 million ahead of projected property tax revenues in the current fiscal year, as well.

City Councilman Gabe Leland said the relief is important for Detroiters who want to stay in their homes and avoid foreclosure. He called the city's property taxation and mortgage relief "a big step going against that trend."

Karen Johnson Moore, who lives in northwest Detroit, said the lower assessments are a chance to "add another layer of opportunity to our neighborhoods, in an area where we have been working hard to make sure that we stabilize our neighborhoods." She said the lower assessments will make home ownership more affordable.

Homeowners who choose to appeal their property tax assessments may do so by going to the City of Detroit's Office of the Chief Financial Officer's Office of the Assessor, in Room 804 at the Coleman A. Young Municipal Center at 2 Woodward Ave. The appeals go through Feb. 15.

Contact Matt Helms: 313-222-1450, mhelms@freepress.com or on Twitter @matthelms