A new program backed by Detroit Mayor Mike Duggan, Wayne County Executive Warren Evans and Wayne County Treasurer Eric Sabree could offer significant relief to impoverished Detroiters who owe back taxes.

And it if works, thousands of Detroiters facing displacement could keep their homes.

In nearly a decade of writing about the damage caused every year by the Wayne County Tax Foreclosure Auction, this is the first good news I've been able to report.

The Pay As You Stay program, which requires the state Legislature's approval, would allow county treasurers to dramatically reduce the back taxes owed by homeowners who qualify for a state-mandated poverty exemption, Detroit CFO Dave Massaron said Tuesday.

For the payment plans currently offered through the Wayne County Treasurer's Office, the median monthly payment is $110, Massaron said. For a homeowner paying off tax debt via the new program, the median monthly payment would be $20.

The Pay As You Stay Program would wipe out fees and interest associated with the back-tax debt for qualifying homeowners, and cap the amount of taxes owed at 10% of the home's taxable value, about half the home's market value. Homeowners would have three years to pay off the remaining debt, interest-free. Homeowners who are able to pay off back-tax debt immediately would get an additional 10% discount.

This is a real change in the way Detroit and Wayne County have handled tax foreclosure, and it acknowledges something advocates for impoverished Detroiters facing tax foreclosure and this newspaper have argued for years: the value of occupied homes in a city that's lost too many.

This isn't quite the retroactive poverty exemption some had advocated for, which would have allowed eligible homeowners to wipe out all their property tax debt. That's an idea that never got traction with Sabree, or Duggan, who worries that tax forgiveness wouldn't be fair to Detroiters who did pay.

But this is pretty close. And it's a big deal.

Homeowners who believe they qualify for the poverty tax exemption must fill out an application. Those who pass the assessor's office preliminary vetting must then ask the Detroit Board of Review, which can grant a full or 50% exemption.

Homeowners granted either exemption will be eligible to enroll in the Pay As You Stay program, including those who are already in a county payment plan.

It's hard to overstate the harm the foreclosure auction has caused to Detroit and to Detroiters: Around 17,000 occupied homes were auctioned between 2014 and 2018. Because the average Detroit household has roughly 2.6 residents, that's about 39,000 Detroiters displaced over four years. This year, around 500 owner-occupied homes were sent to the auction, a record low.

A Quicken Community Loans Fund survey found that roughly 90% of Detroit homeowners with back taxes were eligible for the poverty exemption. But few know the exemption exists, something the city effectively acknowledged last year, settling a lawsuit brought by the ACLU on behalf of homeowners who should have been exempt from property tax.

Because the poverty exemption isn't retroactive, a homeowner who qualifies in the current tax year can still owe for past years, and can lose a home to foreclosure over those old taxes, even if he or she would have been eligible for the exemption.

That's part of the problem with the annual tax foreclosure auction: Some Detroiters have lost homes over back taxes they shouldn't have had to pay.

County treasurers currently offer payment plans, but with fees and interest payments frequently exceed what delinquent homeowners can afford.

More:How Detroit's mistakes cost this woman her home

More:Demolishing homes won't cure Detroit's blight problem. Here's what we're doing wrong.

The new program acknowledges that.

One home Massaron offered as an example has a taxable value of $10,400, but the owner owes $11,702 in back taxes. The owner's income is $814 a month. Under the county's existing payment plan, the delinquent homeowner has to pay $192 a month for five years. Under the new plan, it's $29 a month over three years.

"We've been pushing for some sort of retro (poverty exemption) for a long time," said Ted Phillips, executive director of the United Community Housing Coalition, a nonprofit that works directly with tax-delinquent Detroit homeowners.

"When we get to the auction, we see that most of the homes being sold are low-income households that shouldn’t have had to pay taxes in the first place. This looks like a good edit, maybe in a little different way than we envisioned, but a good edit that would have the same results, and save hundreds, if not thousands from potential foreclosure."

This year, about 3,510 poverty exemptions had been granted by July, a city spokesman said last week, compared to 5,836 last year. Massaron hopes the prospect of a lower tax bill may encourage more homeowners to apply for the poverty exemption.

Here's what happens next:

State Rep. Wendell Byrd, D-Detroit, previously introduced legislation that would have made the poverty exemption retroactive. Massaron said he expects Byrd to amend the previously introduced bill to replace the retroactive poverty exemption with the Pay As You Stay Program as early as Thursday.

Then, it's up to the GOP-controlled Legislature.

House Speaker Lee Chatfield, R-Levering, and Senate Majority Leader Mike Shirkey, R-Clarklake, signaled this summer that they're open to allowing local treasurers this kind of flexibility. Massaron said he's hopeful that the Legislature will approve the program by the end of this year.

The city needs time to do outreach, to get eligible homeowners signed up for the poverty exemption.

Because the county treasurer starts to foreclose on homes in March.

Nancy Kaffer is a Free Press columnist. Contact: nkaffer@freepress.com.