The property tax delinquency rate for Detroit landlords receiving Section 8 payments is 26%. An estimated $5 million is owed on 757 of 2,914 properties that housed tenants through the Michigan State Housing Development Authoritys program. It's yet another challenge for a city that has struggled for years to collect back taxes.
A Detroit News investigation found several layers to the problem. Some property owners collected checks through the state's Housing Choice Voucher program until they faced foreclosure and then sold the properties to buyers, including tenants, who became saddled with the tax debts.
Other landlords avoid losing properties by appealing assessments and getting them lowered below the $1,600 threshold the county has set for foreclosure. Still others let properties fall into foreclosure, then buy them back at tax auctions that do not require buyers to pay back taxes.
Landlord Lamont Hunter has received nearly $40,000 in five years to rent a brick bungalow through the program. He's never paid a single Detroit property tax bill. When the bill reached $12,400, Wayne County foreclosed. Hunter then wiped away the debt by re-purchasing the home at a tax auction for $600 - without losing his $650 monthly rent check from the state.
Section 8, funded by the U.S. Department of Housing and Urban Development, typically pays most of the rent bill for needy families directly to landlords. An estimated 7,500 families receive rent help in Detroit through programs administered by the state and the Detroit Housing Commission. Openings to participate are limited and tenants often contribute a small amount toward rent based on income.
While the city's property tax delinquency rate for landlords receiving the subsidy is 26%, Wayne County's is just 6%, according to state and county data.
State officials don't monitor property tax debts from the program because there is no federal requirement to do so. Detroit Housing Commission officials require that the tax bills are paid when a landlord enters the program but dont monitor after that.