‘Pay As You Go’ designed to reduce residential tax foreclosures
By SUE SUCHYTA
Sunday Times Newspapers
While Taylor City Treasurer Michelle Tocco recommended the city consider the “Pay As You Stay” tax foreclosure prevention program, Allen Park City Treasurer Maureen Armstrong recommended the city opt out.
The Wayne County PAYS program is designed to prevent owner-occupied home foreclosures for Wayne County residents who owe back property taxes.
Once a homeowner is enrolled, interest, penalties and fees are eliminated. The balance due would be limited to back taxes or 10 percent of a house’s taxable value, whichever is less. The balance would be paid back over three years at zero percent interest, making the plan affordable to more people.
House Bill 5124, which Gov. Gretchen Whitmer signed on March 4, amends the General Property Tax Act, and reduces the redemption amount for delinquent taxes on a parcel of property under certain circumstances.
Until July 1, 2023, the bill applies new provisions to property for which delinquent property taxes remain unpaid, including property forfeited for delinquent taxes, located in a local unit of government that is participating in a payment reduction program under the bill.
While there are fewer foreclosures now than occurred during the Great Recession, many foreclosures still occur every year. The legislation reduces the redemption amount for delinquent taxes under certain circumstances.
Tocco said the program is for qualified residents who have been approved, based on income eligibility level, for a property tax exemption by the assessor’s office.
“If they owe back taxes to the county, they could have a large portion of their taxes owed forgiven,” Tocco said. “It’s a great program. We have 49 residents that qualify for it. Basically, they will never pay more taxes than the value of their home.”
However, Armstrong recommended that Allen Park opt out of the PAYS program.
She said the bill Whitmer passed allows the county treasurer to extend tax reductions to poverty tax exempt residents.
“So, the way it goes is a resident who has a house in your city goes to their assessor, gets the tax exemption for poverty, they are awarded that at a board of review, and what that does is it reduces their taxable value,” Armstrong said. “So, at our level, once the taxes are calculated, they are getting a reduction in their taxes.”
She said that once the property becomes delinquent, it goes to the county, and at that level, the county steps in and allows them to apply for PAYS, which helps the homeowner to keep their home.
“At that level, they reduce the money that is due to all entities – to our schools, to RESA (Wayne Regional Educational Service Agencies), to the city, to the county,” Armstrong said. “At first, I thought it was a really good program, because it was saving people from losing their homes. But after going to a meeting and discussing this with other cities, I didn’t think that it was a good idea for the city of Allen Park to be a part of this.”
She said there is no way for the city to “get the money back.”
“We are giving a reduction already, when we give them a tax exemption, then we are going to get another reduction, and once you opt into this program, then you can’t opt out,” Armstrong said. “Currently, we have nine parcels in the city that are tax exempt. Two of those parcels are delinquent. One has been delinquent three years, and one is delinquent with just the summer 2019 taxes. So, it appears as though our residents, our homeowners, are taking advantage of the tax exemption at our level.”
She said the state has other programs that a person can opt into if their taxes are delinquent. She said, depending on the economy, more than nine parcels could become qualified for the tax exemption program in the future, and the PAYS program.
“Ultimately, our taxes are reduced even more,” Armstrong said. “It is my suggestion, to the mayor and council, to opt out of this program. Let people know the county is willing to work with them.”
The county stopped foreclosures during the coronavirus pandemic, she said, and they have other reduced interest rates and payment plans.
“As long as they keep up on it, the county is willing to work with them,” Armstrong said.
Allen Park Mayor Gail McLeod said the program looked good at first glance, but further research revealed some of the drawbacks.
Armstrong said many other city treasurers are also recommending the opt out position to their cities.
The Allen Park City Council unanimously approved the resolution to opt out of the PAYS program at its March 17 meeting.