Paul Egan

Detroit Free Press

LANSING — Detroit Mayor Mike Duggan assured state lawmakers today the city of Detroit doesn't want to give real estate speculators a break on the property taxes and interest they owe but is deeply concerned about 20,000 owner-occupied homes in the city that face foreclosure in the coming year.

Of about 62,000 Detroit homes facing foreclosure next year, about 30,000 are vacant, and "I have pushed the treasurer to foreclose on the vacant properties," Duggan said. More than 10,000 others are rental properties, and "I don't have a lot of sympathy for landlords taking rent payments and not making their tax payments."

But pushing residents out of the homes they own because they can't pay their taxes plus the 18% interest charged in delinquent accounts doesn't help anybody, he said.

After hearing from Duggan and other witnesses, the Senate Finance Committee unanimously voted out House Bill 4882, sponsored by Rep. Phil Cavanagh, D-Redford Township. A companion bill, House Bill 5421, sponsored by Rep. John Walsh, R-Livonia, is already through the committee and on the Senate floor.

Both bills have already passed the state House.

Together, the bills give county treasurers the authority to allow homeowners to pay their back taxes over five years, cutting interest payments to 6% from 18%, and capping the amount of taxes owed at 25% of the home's value. The bills have a sunset of June 30, 2016 to deal with a one-time problem, so they won't encourage owners to shirk their tax payments in the hopes of getting a break in the future.

Though Detroit and Wayne County are the focus, the tools set out in the bills are available to all county treasurers around the state.

Lawmakers and municipal planners are in agreement it is better to have owners in their homes on payment plans than a glut of vacant houses susceptible to scrappers, blight, squatters and criminal activity.

This year, the Wayne County treasurer began foreclosure proceedings on 76,000 properties, including 62,000 in Detroit, capping three years of increased efforts to collect back taxes.

"A lot of times it's the interest and penalties that are really the killer," Cavanagh told the committee.

"This is really important," said Sen. Mark Jansen, R-Grand Rapids, a member of the committee. "We need to get really creative and make sure we stop the hemorrhaging."

Duggan said the Detroit Land Bank in January is set to take possession of thousands of homes that were foreclosed on this y ear, including at least 3,000 homes that were owner-occupied. Those homes aren't covered by this legislation but officials are trying to work out a plan under which those owner-occupied homes would also not become vacant, he said.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.