Why Don't We Blog This?

Draft version of a proposal in process. Please send thoughts and feedback to team@makeloveland.com.

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LOVETAX: Making Detroit’s Property Taxes Easy

A Simple Proposal by Jerry Paffendorf & LOVELAND Technologies

Please note all numbers used in this report are recent data snapshots that may have changed slightly in the last couple months. You can see the shape of the problem as well as the statistics we’ve gathered at http://whydontweownthis.com.

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Summary:

Detroit, which is undergoing a financial emergency, has a humungous, outsized, world-record-setting problem collecting property taxes, with nearly half-a-billion dollars outstanding and approximately 70,000 properties facing tax foreclosure. A lot of people don’t pay their taxes because they find the whole process scary, intimidating, and confusing. We can change this in 30 days using the twin super powers of the internet and simple design, if given the chance.

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The Problem:

Detroit currently has $443,818,881 owed in overdue property taxes & penalties. Of Detroit’s 316,120 taxable properties, 133,359 (42%) are currently behind on taxes.

74,319 properties are 3 years or more behind on their taxes, which under state law means they should be foreclosed and auctioned by Wayne County. The County doesn’t have the capacity to manage that many properties and its likely that 25,000 will be the number auctioned this fall.

As a property owner, when you look at the options for understanding what you owe and where you can pay, it’s simply not a clear and straightforward process. Here is where we can make a massive improvement to the system and increase city revenues while giving a better experience to property owners.

Let me keep the current description of how it currently works short: As a property owner, you’re supposed to receive letters from the city when it’s tax time. These letters don’t always reach owners (lost in the mail, sent to the wrong address, etc). People can pay by check, pay at City Hall or the County Treasurer’s Office, or pay online on the county and city website.

At first glance, it sounds like all the bases are covered: You can pay by mail, you can pay in person, and you can pay online. Check, check, and check. What else do you want?

This is where examining the actual experience of understanding what you owe and how to make payments comes into play. Because right now it is not a good experience. It is wordy and scary and leaky and slow and confusing, and it costs the city millions upon millions of dollars while pushing out Detroiters who don’t understand what’s happening.

This short document outlines in brief a dramatically better option for understanding what taxes are owed on a property, along with how to pay and get on a sustainable payment plan, and a few helpful channels for owners to seek help if they can’t pay, request that their taxes be re-assessed, and a breakdown of where the money is going.

As you read it please understand that this system could be implemented and begin increasing revenue collection within 30 days if permission is given to build it. Creation of the system we call LOVETAX wouldn’t even have to replace the existing online payment systems, it would simply be another information and payment channel, and therefore carry very little risk as an informed experiment in collecting missing revenue.

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How LOVETAX Works As A Solution:

Preliminary mockups:

• People use a computer or smartphone to go to www.lovetax.us. There they are greeted with a simple search bar and a prompt to search for the address of a property they own.

• Their search brings them to a clean page focused only that property’s annual tax dues and what, if anything, is owed in back taxes and penalties.

• There is a payment button that lets people make a one-time payment or sign up to automatically make monthly payments from their credit or debit cards (as well as where to go to pay in person).

• There is an email and text message box that lets people sign up to receive alerts when it’s time to pay taxes on the property.

• There is a succinct breakdown of where their tax money is going.

• There are options for finding help if they can’t pay and requesting that their taxes be re-assessed.

LOVETAX benefits both the financial situation of the city through increased property tax revenue collection and the residents through better, clearer information, help, and options.

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Compare To Current Online Property Tax Information & Payment Portals:

Go ahead and try to click through the whole thing:

Wayne County: http://www.co.wayne.mi.us/treasurer_payonline.htm

City of Detroit: https://www.detroitmi.gov/DepartmentsandAgencies/Finance/PropertyTax.aspx

Note that in addition to the general complexity and confusion, the very structure and length of the URL/web addresses assure that no one will reach them easily.

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What Needs To Happen To Do LOVETAX:

The code for LOVETAX is basically already written so the challenge is not primarily technical.

What needs to happen is that the appropriate city and county bank accounts and databases must open up to receive the money that comes through the site, provide the latest tax data and make a note of payments in their records.

The project needs a green light.

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Interesting Notes:

While, as you can see, the shape of the service is incredibly simple with an intentional saber rattle against complexity, it does also allow for some interesting new tax paying behaviors and the collection of data about how tax policy should be updated.

For starters, the system is so open that anybody can see and pay the taxes for any property in the city. It doesn’t have to be the owner or record.

This means that multiple people with interest in a property have an easier time collaborating on payments, and, crucially in a city with so many people who are struggling, it allows people to much more easily help keep someone in their home. On the same note, it also allows renters to easily see if the house they’re living in about to be foreclosed and auctioned (you might not believe how many times this seems to happen).

Frankly, a truly simple way to pay property taxes online might be the most effective tool to reduce Detroit’s world-record-setting tax foreclosure problem.

By allowing people to subscribe to make automatic monthly payments, the concept of property taxes can become more like predictable rent that pays for city services, rather than a twice a year money dump that people try to avoid for obvious reasons. By showing where the money’s going, and getting better at where it goes over time, it might sound crazy, but the city could get to a place where people *enjoy* paying taxes the same way they enjoy funding projects they like and improving the city.

This service can also be of critical importance in collecting the true scale and stories for why people want their taxes re-assessed. We know Detroit has outsized taxes to try and compensate for decreased population. It likely makes sense to be helpful in lowering people’s taxes to reasonable levels in order to predictably collect them rather than having so many people walk away.

This system could first be implemented in Detroit and then easily scaled to the County, Metro Region, and the entire State of Michigan.

A corresponding data dashboard for the city would help in identifying neighborhoods that need special assistance and community engagement.

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About LOVELAND Technologies

LOVELAND has deep experience in mapping Detroit’s tax foreclosure crisis and communicating with city residents about the variety of problems they face because of it. A parcel-by-parcel map of Detroit’s Tax Distress is currently up on http://whydontweownthis.com. We would like to help improve Detroit’s property tax and revenue situation as well as help prevent tax foreclosures through tools like WDWOT and LOVETAX.

Please send ideas and feedback on this draft proposal to team@makeloveland.com.

Sent to the mailing lists (you can sign up for these newsletters at the bottom of whydontweownthis.com, or follow updates on Facebook and Twitter):

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Dear WDWOT Members, LOVELAND friends, and assorted creatures at the tippy top of the animal kingdom,

Dear WDWOT Members,

Thanks for taking the red pill and becoming the very first paid members of the service! You can see the little Pet Blocks starting to fill in at http://whydontweownthis.com/membership :-)

We’ll try to refrain from over-communicating via email but you can always follow what we’re up to and reach out to us any time through http://facebook.com/makeloveland and http://twitter.com/makeloveland .

Still, we wanted to let you know about some things going on one week out from the first update of 2013 and stay in the habit of updating everyone through one channel or another:

Visit Us:

Thursday, February 7th from 7 - 10 PM there’s an open house with food and drinks at the downtown Detroit office space we share with some other great projects called the Department of Alternatives. Info and RSVP if you want to come by and meet: http://www.facebook.com/events/395934023833651/?fref=ts .

Feedback:

Please let us know at team@makeloveland.com or the feedback forum if there’s anything at all we can do to improve your experience using the service. Right now we have lots of different kinds of general users and are trying to better define and serve different use-cases. Some of you are actively making maps and surveying properties, some of you are going over foreclosure risks in your neighborhood, some of you are looking up property owners, and others (most) just check in periodically when something in the world piques your interest. Maybe one of the biggest things we’ve noticed is that we should do a better job letting you know when you’re making notes completely privately for your own record, so when you do check in you can easily scribble a note just for yourself without talking to the world. 

Meetings, meetings, meetings…

Earlier this week we met with the Wayne County Deputy Treasurer to continue our conversation about keeping our data fresh and helping prevent foreclosures. Next week we meet with the head of Detroit’s Planning & Development Department to see about updating our list of city-owned properties, and after that we meet with the Director of the Detroit Land Bank who will likely be taking ownership of the nearly 9,000 unsold 2012 tax foreclosure properties. You should know that part of our job is developing these relationships to help deliver you more and better information and utility. 

Features & Data Updates:

We’re working to get our first mobile photo app up on the Members-Only Labs section of the site. The project code name is “Blexting” and is being developed for the purpose of quickly taking and posting pictures of extremely blighted things to the map. We’re also working on a few new data layers for you to view the city through, likely city-owned, land bank-owned, and bank-owned next.

Business & Block Club Packages:

Alongside individual site memberships, we’ve been developing private, customized, multi-user WDWOT packages for businesses, large projects, neighborhood groups and block clubs, and government departments. We just signed up a large custom project we’ll be working on and are meeting with more businesses and block clubs who are interested in having a version of the service focused on their jobs and communities. If that sounds like something you’re interested in, please let us know.

WDWOT In The News:

We’ve been excited by the number of people talking about the site, particularly the tax status view, which is something no one’s really seen before. A couple of neat articles in particular:

Huffington Post Detroit: “‘Why Don’t We Own This’ Site Maps Detroit’s Housing Crisis With New Tools To Battle Back” http://www.huffingtonpost.com/2013/01/28/why-dont-we-own-this-detroit_n_2550299.html

The Atlantic Cities: “Detroit’s Property Tax Black Hole, in Map Form” http://www.theatlanticcities.com/housing/2013/01/detroits-property-tax-black-hole/4517/

Thanks:

Thanks again. We’re looking forward to continuing to develop the service beyond your expectations in 2013. Reach out anytime and share http://whydontweownthis.com with your networks when you see a need,

The LOVELAND & WDWOT Team

(Jerry, Mary, Larry, & Alex)

Posted by Jerry:

Alex and Mary from the WDWOT team hang out in the Wayne County Treasurer’s Office conference room before our meeting:

Yesterday Mary and Alex and I from the WDWOT team sat down with the Wayne County Tax Foreclosure Auction team for a wide-ranging 2-hour discussion. Among those present were County Treasurer Raymond Wojtowicz, Chief Deputy Treasurer David Szymanski, Deputy Eric Sabree, and 1/2 a dozen others from the county team.

David’s been reading all your comments on WDWOT and reached out a couple weeks ago asking if we’d like to meet. It was really great to sit down and share like that. Thanks to David and everyone in that department. I’ll say up front, again, these guys have an insane job trying to deal effectively with this sort of problem at this sort of unprecedented scale, and they really do think through the game theory and trade-offs of different approaches, but things get…complicated. 

We talked about a lllooottt of stuff, so I’m going to try and be succinct and action-oriented here with just a couple big things it sounds like we should be working on:

What’s going to happen to the 8,000 properties that didn’t sell?

Cities and towns in Wayne County have until January to decide if they want to take ownership of properties that didn’t sell. It sounds like the county will send the leftovers straight to the Michigan Land Bank, which is, we learned, also what happened to the 5,000+ leftover properties from the 2011 auction. 

Note: After last year’s auction Detroit chose not to take ownership of the 7,000+ leftover properties (out of 13,000+ auctioned for $500), at which point the county made an effort to knock on doors and find local buyers, and then tried auctioning the leftovers again for $500 per structure and $200 per vacant lot. Still 5,000 remained, so this year they just want to try to get things to the land bank. 

That’s a lot of new properties headed to the state land bank — approximately 13,000 just out of the last 2 auctions — which currently has no effective way for visualizing and communicating around their holdings…essentially the same situation as the county auction but under state control, so WDWOT can be easily pointed in this direction.

*An Additional Note written by Alex Alsup: An interesting point on the Michigan Land Bank Fast Track Authority, which I believe is the entity that will handle these properties — the Michigan Land Bank captures 50% of taxes for five years on any properties transferred out of the Land Bank. Source linked to here, in PDF form. Certainly a necessity for the function of the land bank, just a point worth noting.

We gotta check again, but I see the land bank owning 7,000+ Detroit properties prior to this, so that would put the Michigan Land Bank’s Detroit holdings at up to 20,000 which was the size of the auction that just happened.

Our homework: Go have a beer with the Michigan Land Bank and see what the plan is! Well, that and do some more surveying and conversating around the leftover properties from the last couple auctions. We want to help you and the land bank help each other get a grip on this inventory, maybe especially calling out things that need to be cleaned up or torn down and be helpful in crowdsourcing solutions.

This house that I randomly drove up to playing auction-leftover-roulette the other day is the story of many of these places, and needs dealing with now:

What’s going to happen at next year’s auction? 

Big question. One of the things we discussed is how the auction happens once a year, mandated by state law, but the systemic things around it happen every day and can be helped through better early awareness, foreclosure prevention, and preparation strategies.

It sounds like there are 43,000-some properties currently moving into 2013 tax foreclosure and bound for the auction if owners don’t get on a tax plan (which is what happens after 3 years of no property tax payments) . The vast lion’s share is in Detroit which has around 380,000 total properties, so that’s basically 1 in 10 of every lot, house, and building you see in the D.

That number is similar to 2012 year and it’s hoped that roughly 1/2 of those properties get on a tax payment plan and avoid the auction. 

To that end, as soon as we can we’re going to map and show this list, and link to an easier way for people to get on a tax payment plan. That way owners and renters alike will have a clear channel for checking the status of where they live and make arrangements if all isn’t right. Hopefully this will also help housing and neighborhood groups in identifying and reaching out to people who may be at risk of tax foreclosure. You’ll be able to just type in your address or cross-streets and see what’s about to fall off the edge of the tax map.

That’s a lot of writing, so I’ll be quiet for a minute.

Don’t forget, at 6 PM on Wednesday, November 28th, LOVELAND is doing a big Model D and UIX event on the auction and Detroit land called “No Property Left Behind” (details and Facebook RSVP are here). Looks like more than 100 people are RSVP’d so far, and David said he or Eric from the auction team will try to make it, too, which is great. 

As always, to be continued…

Posted by Jerry:

As we digest the data, stories, and ideas from the auction, here’s the raw financial big picture, excerpted from a Q&A thread on WDWOT called “How would you redesign the auction?”

image of Detroit made out of numbers by Alex B Hill:

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…Also think about the financial collection gap in the current approach, where the unprecedented scale of Detroit’s tax foreclosures really throws off the curve. This year’s auction generated approximately $50,000,000 in bids, which appears to leave an approximately *Quarter Billion Dollar* deficit in tax revenue the county says it’s owed.

Since 2,000 tax foreclosed properties were withdrawn from the auction after starting with 22,500 — presumably because the owners got on some sort of tax plan — the totals originally owed may have changed somewhat, but there will also be some bids where the money doesn’t actually come in:

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• Sum of all back taxes originally owed on all 2012’s tax foreclosures in all Wayne County: $275,521,615 
• All back taxes owed just Detroit: $239,845,800 
• All back taxes owed everywhere else: $35,675,815

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• Total money bid at auction in all Wayne County (Round 1 & 2): $49,975,566 
• Total money bid in just Detroit: $32,525,044 
• Total money bid elsewhere: $17,450,522

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***Countywide collection gap: $225,546,049***

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You can see some county stats including the number of properties sold (11,972) and unsold (8,686) athttp://whydontweownthis.com/us/mi/wayne

And Detroit stats (10,570 sold and 7,907 unsold) athttp://whydontweownthis.com/us/mi/wayne/detroit

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We should add the total back taxes owed to the dashboard, too, for easier comparison — had to add up totals from individual cities.

I remember when Macomb County decided to sell all its 627 tax foreclosure auction properties to one bidder without competition for $4.8 million a little bit back, the reason given was that the county just needed to cover back taxes owed, and since the buyer was willing to pay, their duty was done without needing an auction. (Map and link to news story athttp://whydontweownthis.com/us/mi/macomb ). If raw financials are the driving duty, and if the gap is really is in the neighborhood of $225,546,049, we gotta get Wayne County on kickstarter.com. Jeepers.

48 hours after the start of the auction there are 8,027 bids on 3,921 properties totaling $3,245,376 across all Wayne County. You can follow the live bid feed at whydontweownthis.com/bids. The first properties start ending tomorrow morning, with properties ending in waves through Friday, so it’ll be interesting to see what kind of spikes that causes.

For those playing the No Property Left Behind home game, there are currently 14,561 Detroit properties without a bid.

Among those currently left behind is this building at 3551 Michigan Avenue that caught my eye because I pass it pretty frequently and wonder what the heck is going to happen to it, and when. Bill’s Blue Star Disco Lounge, west of Corktown not too far from downtown:

And from above:

Aaand from behind: 

This would be a pretty straight-forward example of a problem property that needs to be dealt with like I wrote about the in the Deal With It, Detroit article on Huffington Post.

Interestingly, just next door the 3461 Michigan Avenue property has a $500 bid (the green and brick one):

And from above. Anybody know a roofer?:

A WDWOT commenter says about the property:

Spiffy Mcspoonful: This building was broken into a day before the auction started. Previously it’s been secure for 15 years. Windows are now missing from upstairs, you can hear water flooding the basement. Both side doors are wide open. Assume this building has been completed stripped! If you want it first thing to do is shut off what at the street, secure the doors.

15 years. And someone breaks in today? Very curious to see what, if anything, happens to the block. If you know anything more about the area please post. It maaay be time to deal with it.

Posted by Jerry:

Published on the Huffington Post: Deal With It, Detroit.

Deal With It, Detroit: Five percent of the city’s properties are for sale at $500 auction right now, with 1/2 not expected to sell. So what happens next?

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With new web-based tools for managing the process alongside hardworking organizations who’ve been doing work like this for a long time, we can now efficiently match the people with resources with the people in the neighborhood who have the local knowledge of the big, hard problems that need solving.

Posted by Jerry:

Hey! Who you calling an online tool? Oh, right, the website. :-)

The Detroit News ran an article about WDWOT and the auction called “Online tool helps buyers navigate auction.”

I get quoted as saying: 

“We are trying to build a better Detroit through transparency,” he said. “The city is just so bad at that. There is an uninformed people and an uninformed marketplace, which makes it somewhat impossible for a democracy and a market to function properly.”

Alex says:

“What guides us here is the radical position that public information should be taken to the public.”

Alex needs to get his head checked if that’s really his attitude. Take it to North Korea, bub. 

Oop, wrong script.

The sharing will continue until the public is informed.

Post and pic by Jerry:

Today the Free Press has an article titled “Taxpayers, nonprofit foot bill for ads supporting incumbents in metro Detroit.” Turns out this also involves the Wayne County tax auction. Here’s an excerpt, emphasis added:

Advertisements or flyers from political candidates in the month before elections generally are paid for with money from the candidates’ supporters.

But taxpayers and a nonprofit group are helping carry positive messages from three incumbent county officials in Oakland and one in Wayne County. And it’s perfectly legal — at least for now.

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Oakland County Treasurer Andy Meisner, a Democrat, has spent $60,000 on TV ads over the last three years that tell homeowners about the tax foreclosure auction and how to avoid foreclosure.

Wayne County Treasurer Raymond Wotjowicz, also a Democrat, has a similar program and has an advertising budget of $300,000 to try to publicize the auctions to get rid of homes that are now owned by the county because property taxes hadn’t been paid.

Both men are prominently featured in TV commercials. Each said the ads more than paid for themselves through increased sales of tax-foreclosed homes.

“For years, we lost money in our auctions. Last year, when we started advertising, we went up to $33.5 million in sales and paid taxes,” said David Szymanski, Wayne County’s chief deputy treasurer. “That’s a pretty good return on investment.”

Meisner noted that the $60,000 ad buy brought in more than $22.6 million in auction sales and homeowners paying their delinquent taxes.

“The return on investment speaks for itself,” he said. “We took a very difficult time, when the county stood to lose a great deal of money and we’ve made lemonade from lemons.”

Last year was the second year that the tax auction happened online via Bid4Assets, and the first year that Why Don’t We Own This? mapped and tracked it.

We did it for free as a public service, and I remember after the auction someone calling and saying, “So when are you getting your check from the county, you must have made them $20 million.”

Well, we don’t know about that, but it is interesting.

Mary and I listen to WDET radio everyday, and they’ve been running the commercials saying that “in an effort to stabilize neighborhoods” they’re having the tax auction so please visit treasurer.waynecounty.com to see what’s going on. But no matter how many people follow an ad to the site, they won’t be able to see what’s going on. You go from here with the one tiny link to auction info:

To a page where you have to scroll way down to open up a 1,684 page PDF and spreadsheet that provides a text link of properties sorted by auction ID.

Similar story from the Bid4Assets site.

And to step back:

The total back taxes the county is trying to make up for at this year’s auction is roughly $250,000,000, or a quarter-billion dollars in Detroit alone. At last year’s auction they got $20-and-a-half million back from Detroit, which came from 1,133 people buying 5,815 out of 13,050 Detroit auction properties we tracked on WDWOT.

That’s a huge gap, both in money and in people not understanding what’s going on and in properties left behind. Just thought it was interesting that advertising is where the return on investment focus was, and how big the revenue gap is. I gotta go have a beer with the county auction guys. If anyone can hook that up please let me know.

Twitter.com/WDWOT now tweets public posts and bids from whydontweownthis.com/feed.