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Tax bumps and rolls

The importance of being Wayne County treasurer

MT Photo: Bruce Giffin
Wayne County Treasurer Raymond Wojtowicz on the campaign trail in Dearborn Heights.
Challeneger Cavanagh: Raising questions.
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Published 7/23/2008

Judging from recent events, you'd think the most pressing issues in the Wayne County treasurer's race involve controversies that date back 30 or 40 years instead of a crisis that is very much in the present and has no end in sight.

For the owners of more than 200,000 pieces of property facing the possibility of foreclosure as they struggle to pay delinquent taxes, the Democratic primary contest between incumbent Raymond J. Wojtowicz and his most prominent challenger, County Commissioner Phil Cavanagh, has devolved into a nasty spectacle that borders on irrelevance.

The ugliness moved to center stage last month, when a full-page ad attacking Wojtowicz appeared in The Michigan Citizen under the headline "The Klan Burned our Homes. Ray Wojtowicz Destroyed Our Homes." The ad, according to news reports, focused on a 1971 lawsuit filed by black families forced to move from their Hamtramck homes in the 1960s because of urban renewal and freeway construction. Wojtowicz was indeed mayor of Hamtramck when a federal judge issued an opinion in the case in 1971, but he held no office when the issue began years earlier.

Cavanagh, who denies any connection whatsoever to the ad, says he thinks it was "disgusting." The ad was paid for by a group calling itself Citizens United for a New Tomorrow, which isn't registered with either the state or Wayne County.

A few weeks later, unwelcome headlines were generated when Cavanagh's wife, Lily, sent hundreds of people an e-mail listing 15 reasons why voters should support her husband in the Aug. 5 primary. Reason No. 15 — "You can pronounce and spell Phil's name." — provoked an angry response from the Piast Institute, a Polish-American think tank located in Hamtramck that characterized the e-mail as bigoted and disrespectful. Cavanagh apologized for what he described as a blunder, telling the Free Press that the list was compiled only for fun and wasn't intended to be disseminated.

Last week, the cries of hitting below the belt were from the Cavanagh camp, which protested a radio ad that accused Cavanagh's father, late Detroit Mayor Jerome Cavanagh, of being responsible for the deaths of African-Americans killed by National Guard troops during the 1967 riots.

The Rev. Horace Sheffield III, son of a late union and civil rights leader who was a political ally of Mayor Cavanagh, appeared at a press conference denouncing the ad.

"Jerome Cavanagh was a decent man," he said in a parking lot across the street from Wojtowicz's Greektown office as two of Phil Cavanagh's hired political guns — consultants Sam Riddle and Adolph Mongo — stood nearby. "To defeat the son by destroying the father is a real issue for me."

Political theater aside, raising a stink over controversies that occurred decades ago only obscures the very real issues confronting a county that leads the nation in tax foreclosures.

"We are at a crisis point," says Steve Tobocman, a Democratic state representative from southwest Detroit. "More than 200,000 of the 830,000 Wayne County property owners are delinquent on current year property taxes."

In short, nearly 25 percent of the parcels in the county could be foreclosed on if taxes aren't paid.

Wojtowicz will point out that only a small percentage of taxpayers facing the possibility of foreclosure for delinquent tax payments ever see their property taken. Last year, about 5,000 parcels were seized. More than 90 percent of them were in Detroit.

Tobocman says he's seeing the effect firsthand. In his district of 95,000 people (roughly 10 percent of Detroit's population) the number of properties that were one step from being foreclosed on jumped from "150 or so homes to more than 440" over the past four years.

To help keep that final step from being taken, Tobocman and his staff work with area nonprofits going to people's homes to ensure the occupants are aware of the fate that's about to befall them and help them find a way out of the financial mess confronting them.

The nation is reeling economically from the combined effects of oil costing $140 a barrel, a mortgage crisis that is sending waves of distress through Wall Street, and a disastrous war that has drained hundreds of billions of dollars from the nation's coffers. The auto industry is the throes of an epic downsizing, dragging the entire southeast Michigan area with it. And Detroit — which battled population loss and blight even during the boon times of the 1990s — leads the downward economic slide.

For his part, Tobocman has introduced legislation intended to make the current tax foreclosure law more lenient. Tobocman, the House's majority floor leader, is also supporting Cavanagh in the hope he will provide leadership critics say is currently lacking in the Treasurer's Office.

Cavanagh is the most prominent of 11 candidates looking to beat the incumbent in the Aug. 5 primary. Given the dominance of Democrats in Wayne County, a victory then all but assures that the primary winner will be elected treasurer when the general election is held in November.

Even so, it could be anything but a typical race. If Wojtowicz does prevail in the primary, he faces the possibility of meeting a Republican challenger who put the treasurer's office under a financial microscope four years ago. Brendan Dunleavy, then the auditor general for Wayne County, issued a scathing report in 2004 that alleged numerous failures in the accounting practices of Wojtowicz's office. No-bid contracts and unexplained wire transfers raised red flags for auditors. Dunleavy reported that a lack of information from the Treasurer's Office impeded the audit and recommended a more extensive examination of the books be conducted.

The Treasurer's Office audit wasn't the only critical examination produced by Dunleavy and his staff, creating some powerful enemies. Dunleavy says there was a "perfect storm" created that resulted in him losing his job. He filed a whistleblower lawsuit in federal court, claiming that he was being retaliated against for cooperating with FBI investigators. Although the suit was initially dismissed, Dunleavy and the county eventually settled the case, with him being rewarded a reported $350,000.

No charges were brought as a result of the information he provided to federal agents.

In an interview, Wojtowicz and Deputy County Treasurer Terrance Keith disputed some of the problems identified by Dunleavy on one hand, and questioned his motives, but added that improvements have been made in operations over the past four years.

Dunleavy isn't convinced. As a Republican, he knows there is virtually no chance of winning the general election.

"What I want to do is make sure that Ray Wojtowicz has to keep answering questions all the way into November," says Dunleavy.

But the incumbent first has to make it past August.

Working hard to make sure that happens is Wayne County Executive Robert Ficano, who is using all of his considerable power to help Wojtowicz get elected. According to a recent e-mail provided to Metro Times, all of Ficano's appointees have been instructed to show up one night a week to work phone banks and spend part of their Saturdays dropping off campaign literature in support of Wojtowicz.

"This campaign is very important to Mr. Ficano," said the e-mail.

Critics say this kind of tactic is a holdover from the well-oiled political machine put together by the late county Executive Ed McNamara.

Having held his office for 32 years, the 79-year-old Wojtowicz is disarmingly avuncular on the campaign trail. During a stop at the annual Czech and Slovak American Festival in Dearborn Heights last week, he took a few graceful swings around the dance floor and mixed easily with the pierogi-munching, beer-sipping crowd. But he's shown in the past that he can play political hardball with the best of them. In 2004, in the midst of the primary contest with Democratic County Commissioner Susan Hubbard, Wojtowicz's campaign ran a radio ad highlighting the racist policies of her grandfather, the late Dearborn Mayor Orville Hubbard.

One issue this time around is Cavanagh's contention that Wojtowicz is using the power of his office to promote himself at the taxpayers' expense.

Wojtowicz and his staff bristle at the allegation, saying their primary goal is to serve taxpayers by helping to keep them from losing their homes.

"That is the most important thing," says Wojtowicz.


Changing role

The job of county treasurer took on new significance in 1999, when the Michigan Legislature passed Public Act 123. Intended to help address the problem of abandoned property — especially in the city of Detroit — the law drastically shortened the amount of time foreclosure proceedings on tax-delinquent property could be initiated, dropping from five years down to two.

Properties that would otherwise have been a nuisance for a half decade or more if owners decided to walk away from them could, in a relatively short amount of time, be seized by local units of government and then re-sold and returned to the tax rolls.

That was the theory, anyway.

The toolbox was expanded even further in 2004 when Gov. Jennifer Granholm signed into law legislation that, according to a University of Michigan study, provided communities with better legal and financial tools to put vacant and abandoned properties back into productive use by allowing the establishment of city and county land bank authorities. These authorities were empowered to quickly gain clear title to properties (which was a cumbersome and inefficient process under the old system) in order to make the property available "at nominal prices for productive reuse in the community" and removing buyer fears that there would be unresolved claims.

But what many thought to be a good idea when the economy was strong and the housing market was healthy has taken on a different look now that state unemployment is at 8.5 percent and the housing market is collapsing.

Even in a failing economy, some county land banks are enjoying remarkable success. Genesee and Washtenaw, in particular, are held up as national models.

But Wayne County encountered a unique set of problems. For one thing, the sheer number of tax-delinquent properties is far greater here than in any other part of the state.

About three-fourths of the state's tax-delinquent properties are located in Wayne County, says Wojtowicz.

Another problem for this area is that things are so fractured: Detroit is the only city in the state with the authority to establish its own land bank. That hasn't happened because the mayor's office — under both the Archer and Kilpatrick administrations — and the City Council have never able to agree on a governance structure.

Not having a land bank only compounds the difficulty of dealing with the roughly 40,000 properties under the city's control. The state has another 9,800 Detroit properties in its land bank. The Treasurer's Office has title to 7,400 parcels, nearly all of which are in Detroit but not part of a land bank. There is, however, a county land bank under Ficano's control that moves property onto and off its rolls frequently, but generally has fewer than 500 properties, according to one estimate. So, it is possible that a developer looking to acquire property in a particular area would have to work with four different agencies or government entities, making the process more cumbersome and time-consuming.

"Ideally, there would be just one land bank," says Eric Dueweke, community partnerships manager at University of Michigan's Taubman College of Architecture and Urban Planning. "It would make planning, record keeping and negotiating much easier."

"It is a fractured process," says John George, founder of the nonprofit community development organization Motor City Blight Busters. George says his organization is working with the Treasurer's Office, which is gearing up to put lawn mowers, weed whackers, chain saws and other maintenance equipment in the hands of community groups like his so that they can assist in maintaining properties.

But, as the market is flooded with mortgage foreclosures, the number of vacant homes is growing drastically. "And what we've seen," says George, "if you don't get the tax foreclosed properties into the hands of responsible parties quickly, you soon find yourself in a situation where the homes deteriorate to the point where you have to tear them down." He equates hanging onto these properties as the equivalent to hoarding "fool's gold," because they quickly become worthless.

He sees the city facing an "emergency" situation. But, he says, "given the situation, I think the Treasurer's Office is doing the best job it can."

Toni McIlwain, president of Ravendale Community Inc., a nonprofit on the city's east side, is less charitable.

"It's a mess down there," she says about the Treasurer's Office. "I don't know if it is because they are short of staff or what, but trying to obtain property from the county is hard. It takes months and months and months. From what I see they just don't have enough manpower to make sure property is boarded up and kept safe from the criminals and squatters who know they can get in there and stay for a long time. The criminals know how the system works, believe me."

Tobocman contends the problem is that Wojtowicz and his troops are running behind the problem instead of getting in front of it.

"I think the Treasurer's Office should be focusing on having an effective tax foreclosure prevention strategy in place and an effective redevelopment and management plan in place," Tobocman says. "I see major gaps in both those areas."

"We've been talking with [Wojtowicz] about this for four years," Tobocman says. "It's been pretty frustrating."


Hitting the streets

Wojtowicz, on the other hand, touts what he describes as a comprehensive effort to inform people that they're facing foreclosure. In June he announced Phase 2 of what he's calling "Operation Normandy," described on the office's website in a June press release as a "massive door-to-door effort" to reach taxpayers most at risk of losing their homes. It is an operation that has as its foot soldiers members of local churches, community groups and neighborhood associations.

In an interview at his Greektown office, Wojtowicz gets almost misty-eyed as he talks about the sanctity of home ownership. "Keeping people in their homes is the most important issue. We're in business to save people's homes."

Even though he sees his office as being at "just the beginning of an uphill challenge" made all the more difficult by an economy that has turned sour with amazing speed, he has implemented a policy of not selling off occupied homes.


Cash flow

One fact that's not disputed is the degree to which Wojtowicz has ramped up spending to raise public awareness about the issue. Whether the spending is justified is a matter of contention.

According to Cavanagh, the Treasurer's Office spent a total of $245,000 on "media/advertisement" during a four-year period beginning in the 2003-04 fiscal year and ending with the 2006-07 fiscal year. In the six months beginning with December 2007 and ending in May, that number jumped to more than $1 million on an assortment of advertising from bus signs to radio.

Deputy Treasurer Keith says that number is not a fair comparison. He explains that state law mandates that the addresses and other information regarding properties facing foreclosure be published in a local newspaper. In previous years that paper was The Michigan Citizen, a weekly geared toward African-American readers. But the office has now begun printing the notices in the Detroit News and Free Press. That switch pushed the cost up from less than $100,000 for the weekly to $450,000 to publish in the two mass-circulation dailies.

Even taking that into account, though, the office still spent an additional $565,000 over six months. Put another way, advertising costs amounted to about $6,600 per month last year; for the first half of this year, that number (excluding the amount spent to publish the legal notices in the dailies) is about $94,000 per month, a 14-fold increase.

Keith says a new reliance on television to reach people, combined with greater urgency to get out the word because of the failing economy, justifies the increase.

Cavanagh isn't buying it. He says the increase can be attributed to a blatant effort by Wojtowicz, typically identified in the ads as being the country treasurer, to get his name out before the public in a big way — using public dollars — as this year's election approached.

"Look at how much it increased," says Cavanagh. "That should be raising some eyebrows."

The only thing that should be raising eyebrows, says the Treasurer's Office, is the number of county property owners risking foreclosure by failing to pay their taxes on schedule. The number has risen from 160,688 in 2003 to 200,389 last year.

Among the changes in recent years was one that had the county begin collecting delinquent city of Detroit property taxes because the city was woefully lax at doing the job itself — that is a big reason a change in the state law was made in the first place, and collection rates have leaped as a result.

As far as the sudden jump in the money spent on raising public awareness through advertising, Keith says no one could have predicted the bottom falling out of the economy.

Cavanagh laughs when told that, saying Wojtowicz has been quoted in the media saying his office saw these problems coming two years ago.

"He's trying to have it both ways," says Cavanagh.

"Imagine the criticism we would have taken if we just stood pat and didn't increase our efforts with things as bad as they are," says Wojtowicz, letting loose something that's not quite a laugh.

One thing everyone agrees on is that, for the foreseeable future anyway, the combination of a far-reaching mortgage crisis and a faltering economy will ensure this problem will get worse before things improve, and that a well-run program that both protects as many taxpayers as possible from losing their property and a well-mapped strategic plan for dealing with property that is foreclosed on will be vital for Wayne County and the city of Detroit to weather this storm.

"The question is: How do we manage all these vacant properties?" says U-M's Dueweke. "In the long term, at least, they can be an asset instead of a liability. But for that to happen, you have to have a coherent plan. And the county treasurer, whoever it is, could be a big part of that solution."

Curt Guyette is Metro Times news editor. Contact him at 313-202-8004 or cguyette@metrotimes.com.

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