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Detroit Overtaxed Residents by $600M, Causing Foreclosure Crisis. Residents Are Now Fighting Back.

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In Detroit, a showdown between progressive lawmakers and the city is taking on racist housing policies that robbed African Americans in Detroit of their homes and widened the racial wealth gap. On Thursday, the Coalition for Property Tax Justice announced a class-action lawsuit against the city of Detroit, Wayne County and the state of Michigan in response to unfair property tax foreclosures. One in four Detroit properties have been subject to property tax foreclosure, a level comparable only to tax foreclosure rates during the Great Depression. According to legal experts, many of the foreclosures were caused by illegally inflated property taxes that violated the state’s Constitution, which says that no property can be assessed at more than 50% of its market value. Detroit is now 80% African-American, and 40% of the city’s residents live below the federal poverty line. But as downtown Detroit becomes increasingly gentrified, thousands of the city’s longtime residents, mostly African-American families, have lost their homes to foreclosure for property taxes they should not have been paying in the first place because the poverty tax exemption excuses those in poverty from paying. From Detroit, Michigan, we’re joined by Democratic Representative Rashida Tlaib of Michigan, who has worked on this lawsuit from before the time she entered Congress, and Bernadette Atuahene, a professor at IIT, Chicago-Kent College of Law, and research professor at the American Bar Foundation. She is a member of the Coalition for Property Tax Justice, and her forthcoming study, to be published in the UC Berkeley Law Review, is titled “Predatory Cities.”

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Transcript
This is a rush transcript. Copy may not be in its final form.

JUAN GONZÁLEZ: We begin today’s show in Detroit, where a showdown between grassroots activists and the city is shining a spotlight on racist housing policies that robbed African Americans in Detroit of their homes and widened the wealth gap. On Thursday, with the support of Democratic Representative Rashida Tlaib of Michigan, the Coalition for Property Tax Justice announced a class-action lawsuit against the city of Detroit, Wayne County and the state of Michigan in response to unfair property tax foreclosures. One in four Detroit properties have been subject to property tax foreclosure, a level comparable only to the foreclosure rates during the Great Depression. And according to legal experts, many of them were caused by illegally inflated property taxes that violated the state’s own Constitution. Even though Detroit tried to fix the problem in 2017, it’s still overvaluing the lowest-priced homes.

This is lifelong Detroit resident Sonja Bonnett speaking during a press conference on Thursday. In 2015, her home was illegally foreclosed by Wayne County, which includes the city of Detroit.

SONJA BONNETT: [inaudible] you right now what I tell the community every time I go out. It feels very personal to lose your home. You feel like you did something very wrong, like you just couldn’t keep it together. But once I was informed by Professor Atuahene that the city illegally and unconstitutionally took my home, oh, it lit a fire. And we began fighting. And this is where this fight has brought us. So, I want to leave you with a couple of things today. Number one, this is an 85% black city. This would not be happening if this city was 85% white. You better believe that. Two is, land is so very important. And they are stealing your land. We cannot let them get away with this yet again, because Lord knows they’ve stolen enough land.

AMY GOODMAN: Detroit is now 80% African-American, and 40% of Detroit’s residents live below the federal poverty level. But as downtown Detroit becomes increasingly gentrified, thousands of Detroit’s longtime residents, mostly African-American families, have lost their homes to foreclosure for property taxes they should not have been paying in the first place because the poverty tax exemption excuses those in poverty from paying.

Well, for more, we go to Detroit, Michigan, where we’re joined by Democratic Congressmember Rashida Tlaib of Michigan, who has worked on this lawsuit from before the time she entered Congress. And we’re joined by Bernadette Atuahene, a professor at Chicago-Kent College of Law and research professor at the American Bar Foundation, member of the Coalition for Property Tax Justice. Her most recent study is titled “Predatory Cities,” forthcoming in the UC Berkeley Law Review later this month.

We welcome you both to Democracy Now! Congressmember Tlaib, you went back to Detroit for this major news conference. Talk about why this is so critical in your town, in your city of Detroit.

REP. RASHIDA TLAIB: You know, I represent the third-poorest congressional district in the country, out of 435 congressional seats in the nation. And the human impact of what it feels like to not be offered the same equal rights that the majority of other Michiganders were getting — I mean, the due process of being able to get notice, to be able to have the right to appeal, but also the right to your home assessed every year as required by not only the city charter, but the Michigan state Constitution. So many of my residents, before I ever got elected, were coming to the Sugar Law Center for Economic and Social Justice saying, “Something’s not right here. I don’t know. Why did I get this after the deadline? What is happening here?” And when we filed a FOIA, we found out 260,000 Detroiters received the notice either late or even past the deadline. And it was devastating, the fact that they didn’t even get the right to appeal it. And what we hear from the city administration and those folks that are in power to make the change is, “Well, it’s their fault. They didn’t do anything about it.” But you didn’t give them the option to do anything about it.

So that’s why I’m really commending the coalition and what we call the Detroit’s professor over here, Bernadette, for pushing forward and speaking truth. I think that’s what’s been really hard. You heard from a mother recently of seven children, and she felt like she did something wrong. And when she finally felt — you know, heard the data, heard that she was actually cheated out of her home, it felt liberating in some sense, that she wasn’t the one that was in the wrong. She shouldn’t feel ashamed. The city of Detroit and those in power should feel ashamed.

JUAN GONZÁLEZ: And, Congresswoman, I’d like to ask you, in terms of how this crisis is affecting not just Detroit, but across the nation, in terms of the wealth, especially of African Americans and Latinos, because of the seizures of their homes, and especially resulting from after the 2008 mortgage meltdown, when so many other people went underwater.

REP. RASHIDA TLAIB: Yeah, and that’s one of the key things, is, you know, homes are economic stability. But many folks — just the historic nature, not only from Chicago to other really beautifully historic cities, majority-black cities, what you know is these are homes that families have been in there generations.

BERNADETTE ATUAHENE: Yes.

REP. RASHIDA TLAIB: Generations after generations. You could probably go back and — I remember I was telling Bernadette this. There was this woman who was born in her home, senior citizen in her seventies, and loses her home for less than $1,000. I mean, it’s devastating to see something so ripped away from you. But yes, economic stability is so tied to homeownership. And the fact of the matter is, it’s not only what happened here with this tax foreclosure crisis and, you know, I think, illegal taking; is that we also see that big banks, mortgage industry, others, there are still institutional, systemic racism within their processes. We see it with settlement cases all across the country over and over again. I remember specifically in Financial Services Committee hearing about a whistleblower within Wells Fargo that was saying that he was taught and trained that if somebody came in with an accent, to give a higher interest rate. So, our communities of color all across the United States are facing barriers after barriers and these structural kind of racist approaches and processes.

To me, what happened to many of my Detroit neighbors, in not being offered due process and getting their homes taken away from them, was completely wrong. The devastating part of it, too, was, after I got into the United States Congress, when I found out millions of dollars that was sent to Detroit to handle the — to address the blight, to address this housing crisis. When I found out that Detroit was — and I already had known this — Detroit was responsible for much of that. So, the federal government is trying to fix an issue that was created by the own city administration is wrong. Look, it’s in the charter. It’s the law of the land in the city. You’re supposed to assess people’s homes. Walking away from your responsibility and your duty, saying that, “Oh, everybody got a notice,” but you gave them notice after the deadline that they could actually appeal, is simply wrong. And I think if you ask anybody across this country, the access to fairness and due process is so key.

And that’s why I think the class-action suit is important. Not only do we have to fight in the streets to tell the truth and tell our stories, also onto the House floor of Congress or many other local governments, but also through the courts, do we have to demand that we’re treated with respect and dignity. To take people’s homes away from them, where their children live, their neighborhood, everything is ripped from them, all because somebody decided they didn’t deserve it, they didn’t deserve the process or equality and due process that everybody else gets around the state.

AMY GOODMAN: Professor Bernadette Atuahene, you teach at Illinois Institute of Technology, at the law school there. You’ve done deep research into the racial wealth gap. If you can talk about the facts and figures behind this lawsuit, what it has meant, and how the Detroit mayor is currently responding to the class-action suit and dealing with this illegal seizure of tax money or throwing people out of their homes?

BERNADETTE ATUAHENE: Yeah. Thank you, Amy. So, the first thing I want people to know is, in Detroit, we have one in four homes that have gone through property tax foreclosure. One in four. We haven’t seen this number of property tax foreclosures in American history since the Great Depression. So the real question is: What is going on?

And so, I’ve done research that shows that between 2009 and 2015, anywhere — in each of those seven years, anywhere between 55 and 85% of properties were being assessed in violation of the Michigan state Constitution, which clearly says no property is to be assessed at more than 50% of its market value. And then, when we looked at which houses were being overassessed, we found that 95% or more of the lowest-valued homes were being overassessed, while the highest-valued homes were actually being underassessed.

And so, the next study we did is because anytime you do research in Detroit and you don’t deal with race directly, you’re doing everyone a disservice. So, the next study we did is we looked at Wayne County. And we looked at all the municipalities of Wayne County, and there’s three that have a supermajority of African Americans, 70% or more — Detroit, Inkster and Highland Park. And each of those majority-black cities were being subjected to these unconstitutional tax assessments and foreclosures at a greater rate than the majority-white cities.

The third and final study we did looked at the relationship between these unconstitutional tax assessments and foreclosure rates, because, in fact, there’s lots of things that can cause foreclosure, right? Poverty, a death in the family, etc. And so, we needed to hold all of those variables constant to really isolate the effect of this one variable of unconstitutional tax assessments on foreclosure rates. And we’re able to say that 10% of these historic rates of tax foreclosure in Detroit would not have happened but for these unconstitutional property tax assessments. That’s 10% of all foreclosures. And when you look at just the kind of lowest-valued homes, we are able to say one in four, or 25%, of those foreclosures would not have happened but for these unconstitutional property tax assessments.

The city and the mayor, in specific, their response to this overwhelming empirical evidence of illegality is to say, “You know, if you thought you were being overassessed, you should have in fact filed an appeal.” Right? So, moving the blame, the onus, from the city, to do the property tax assessments correctly, to homeowners, to saying they should have appealed. But what this lawsuit is all about, as Representative Tlaib has so clearly pointed out, is about the fact that the city did not even give people a chance to appeal. Why? Because in 2017 they mailed the property tax assessment notices late. And so, they mailed them, in fact, late, after the appeal deadline, meaning that Detroiters did not have an opportunity to appeal these illegally inflated property taxes. And that is the heart of this particular lawsuit. It is a due process lawsuit, again, just fighting on behalf of Detroiters, who are being overassessed and not given an opportunity to fight back.

JUAN GONZÁLEZ: And, Professor, I wanted to ask you — obviously, the superhigh assessments meant that those homeowners, especially in the poorest communities, were being required to pay more property taxes, right? We’re in a situation now — obviously Detroit was in financial crisis for many years, and now all of these reports about how Detroit is coming back. What is the real story now as to how Detroit is coming back?

BERNADETTE ATUAHENE: That’s right. And let’s just put this in context. Detroit has the highest property tax rate in the state of Michigan. It has the second-highest tax rate in the United States. On top of these already high tax rates, they’re being legally assessed — meaning, on top of the highest tax rates in the country, they are now being taxed even more. Right? And so, that’s the starting point. And when you — what was the question again?

JUAN GONZÁLEZ: About the —

REP. RASHIDA TLAIB: Well, they keep saying Detroit’s coming back, Bernadette.

BERNADETTE ATUAHENE: Oh, yes.

REP. RASHIDA TLAIB: And one of the things you should know is, if you go to my neighborhoods, they don’t think — they’re not coming back from whatever the heck that folks are saying they’re coming back from. Poverty among children has actually increased in the city of Detroit. You see neighborhood after neighborhood that’s been left behind. When they say “comeback,” they’re talking about the 7.2 miles.

BERNADETTE ATUAHENE: Yes.

REP. RASHIDA TLAIB: If you look at the census tracts, some of the wealthiest census tracts within the city of Detroit. They’re talking about billionaires Dan Gilbert and the Ilitch family, who continue to take tax giveaways from our school aid fund, while literally down the street — for their hockey stadium, for their for-profit development — while down the street we have schools that don’t have clean drinking water. We have schools that literally are closing down, these neighborhood schools that have been part of our anchors within our neighborhoods. So, it is hard, because I’ve actually had a senior citizen tell me, “Detroit’s coming back from where?” You know, and why are they continually talking about only the downtown area and the surrounding kind of areas there? It’s like an island, because anything beyond that island is real, true poverty, and people, from those that can’t afford their water bills, that literally one day their water gets shut off, the next day their children are being taken away from them, I mean, because they’re saying, “Oh, they’re negligent.” But this is the same amount of money they’re using for the for-profit industry that’s even there for foster care. They won’t even use it to help a woman get her water put back on.

I mean, the hardship that we see our families facing, these are working-class families. And even the young — the mother of seven, Sonja, she was saying that “We’re the ones out there in the restaurants that you don’t look up and look at. We’re the ones that are among you and your neighbors, that have been part of the city of Detroit for so many — so long.” But they feel very truly left behind, not only with what’s going on with property taxes, but what’s going on, the devastation over water shutoffs, the devastation of what’s happened to our education system and so forth. The disinvestment in our neighborhoods that are surrounding downtown Detroit is extremely — puts such a tremendous hardship on so many of our families.

BERNADETTE ATUAHENE: And we at the Coalition for Property Tax Justice like to think of the comeback story as a tale of two cities.

REP. RASHIDA TLAIB: Yes.

BERNADETTE ATUAHENE: Right? Because you have downtown Detroit. In downtown Detroit, the developers there are getting tax subsidies and tax breaks, when, in the neighborhoods, they’re being unconstitutionally assessed and foreclosed on at historic rates. So, when you think about Detroit coming back, again, as Representative Tlaib said, it’s about a comeback for seven square miles that includes downtown. When you look at the rest of Detroit, the majority of Detroit — and, let’s get real, black Detroit —

REP. RASHIDA TLAIB: Yeah.

BERNADETTE ATUAHENE: — there is no comeback.

REP. RASHIDA TLAIB: That’s right.

AMY GOODMAN: So, Congressmember Rashida Tlaib, I wanted to ask you about a related issue, and this is at the presidential campaign level, Democratic presidential candidate Michael Bloomberg facing criticism over this recently resurfaced video clip that shows him blaming the 2008 mortgage and financial crisis on the elimination of the long-standing racist lending policy known as redlining. This is Georgetown University President John DeGioia speaking to Bloomberg in 2008.

JOHN DEGIOIA: You’ve made some reference to the elements that led to where we are today. Could you go a little bit deeper and tell us, from your perspective, how did we get here? What are the root causes of the crisis that we’re in today?

MAYOR MICHAEL BLOOMBERG: Well, you can go back. I would say it probably all started back when there was a lot of pressure on banks to make loans to everyone. “Redlining,” if you remember, was the term where banks took whole neighborhoods and said, “People in these neighborhoods are poor. They’re not going to be able to pay off their mortgages. Tell them, your salesmen, don’t go into those areas.” And then Congress got involved, local elected officials, as well, and said, “Oh, that’s not fair. These people should be able to get credit.” And once you started pushing in that direction, banks started making more and more loans where the credit of the person buying the house wasn’t as good as you would like.

AMY GOODMAN: So, that was Mayor Bloomberg 12 years ago. Congressmember Tlaib, if you can respond?

REP. RASHIDA TLAIB: Look, you know, I think of my — even many of the folks that I serve with in Congress. Many of them are millionaires. They’re completely disconnected with the American people. Even when the federal shutdown happened, you had literally colleagues, on both sides, you know, “I don’t get it. Why are they in the food bank line? Why are the federal employees — can’t go and apply for a loan?” There is just really disconnect to understand the American people live check by check. But also there’s a disconnect that government is supposed to be about people, right? Our public tax dollars are supposed to be used to create economic stability, to increase homeownership, to create these programs that I think are a win-win for everyone. Instead, you know, you have folks with a different kind of very narrow lens, that see things through a different perspective than those that are on the ground. The majority of Americans do not live within that little bubble of the 1% and those that have.

And so, I think people like me are running for office, finally. And we’re winning because we are folks that are dealing — you know, I lived very, very humble backgrounds. I mean, I’m the eldest of 14, a child of immigrants, both my parents. My dad only had fourth-grade education; my mother, eighth grade — and just kind of building it up and working very extremely hard for that. But it’s really — it’s sad when people that are in leadership positions don’t understand that even if they don’t get it, they have to surround themselves with people that understand what it means to live in poverty in America, what it means to go to sleep hungry, what it means to live near corporate pollution and what that means to their public health. I mean, so many things of various broken systems.

And, Amy, you know this. If I open the curtain and look behind that, of all the broken system, from mass incarceration to what’s happening in our immigration system, how dehumanizing it’s become and encaging children, to what’s happening to our healthcare system, to our education system, it’s become all for-profit. People are making money off of the pain of our oppression.

BERNADETTE ATUAHENE: Yes.

REP. RASHIDA TLAIB: And that is something that I continue to speak truth to. So, no matter who’s running for office, I will demand that they talk about the P-word, which is “poverty.” I will demand that they talk about the structural problems and issues and challenges, real structural problems, that lead to people’s oppression in our country. And we have to continue to think beyond the same old recycled folks running for office. They had their chance. They did not change people’s lives for the better. Then we have to move on. They didn’t do the job to fix the structural problems that I feel like in some ways get left behind. They like Band-Aids. Band-Aids, the rain falls, it slips off. It doesn’t work. We need real structural change, so that when somebody walks in the door, they are offered an equal access to opportunities that get easily acceptable to those that have.

AMY GOODMAN: Rashida Tlaib —

REP. RASHIDA TLAIB: And so, I continue, Amy, to push back against these kinds of narratives. And, you know, I want folks that are listening to know this. Just because somebody is a billionaire or millionaire does not mean they know what’s best interest of the American people. It’s those that actually have suffered along with them that understand that suffering, that understand that oppression themselves. We need to hear more from them. We need those individuals to start running for office, because I truly believe those are the ones that people are waiting for.

AMY GOODMAN: Rashida Tlaib, we’re going to ask you to stay with us just for another few minutes, because we want to ask you about this major moment this past week when the Palestinian President Mahmoud Abbas came to the U.N. Security Council, responding to President Trump’s so-called Middle East peace plan. You’re the first Palestinian-American congresswoman. But I want to thank you, Bernadette Atuahene, professor of Chicago-Kent College of Law at Illinois Institute of Technology and research professor at the American Bar Foundation, member of the Coalition for Property Tax Justice. We’ll be back with Congressmember Rashida Tlaib in 30 seconds. And then we’ll talk about this V-Day, this Valentine’s Day, this day against violence against women and girls. Stay with us.

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