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October 3, 2013

Report shows 1,074 Warren rentals owe taxes

Officials at odds over licensing for properties that owe the city money

By Brian Louwers
C & G Staff Writer

WARREN — They’re all licensed rentals, houses ready to make cash for their respective owners.

The problem is, the owners of 1,074 properties are apparently on the hook for back city taxes, according to Warren City Council member Kelly Colegio.

Colegio used maps prepared by the Warren Planning Department with statistics available through Macomb County to make her point during a presentation before the City Council Sept. 24.  Afterward, she called for a committee of the whole meeting to discuss in detail the city’s policies regarding rentals and, separately, the nuisance abatement process.

“All of these rental homes have a license in the city of Warren. Many of them, quite a few of them, received the licenses while they were in default, nonpayment to the city for taxes, which basically goes against city charter,” Colegio said. “While Warren residents are paying millage increases for services — which we, I think the city gives very good services: sanitation, police, fire — we have many owners of properties that are doing business as licensed registered rentals in the city of Warren that are not paying taxes. It appears to be a problem.”

Colegio said the maps showed Warren had 6,650 registered rental homes on Sept. 18. Another map showed 1,074 tax-delinquent rental properties.

The city has a total of 6,554 properties with owners that owe back taxes, according to a third map.

Warren Public Service Director Richard Sabaugh said late last month that tying rental licensing to the payment of taxes is a nonstarter for city administrators because it would diminish the city’s ability to inspect rental properties every two years as part of the licensing process.

Sabaugh called Warren’s rental ordinance “one of the most aggressive” in the state and said inspecting rental dwellings ensures compliance with codes designed to ensure property maintenance and public safety.

“Those taxes will be collected, and the people who are delinquent in their taxes will be paying a penalty to the county. We’ll get our taxes back from the county eventually,” Sabaugh said.

He said ceasing to license rental units as a way to redeem taxes is the wrong approach.

The city of Warren charges rental registration fees of $125 and $250 for single- and two-family homes, and it was expected to make $400,000 through the program annually.

Registered homes are required to be inspected every two years and must meet a list of criteria both inside and out.

A full list of the rental inspection guidelines can be viewed online on the city of Warren’s website at www.cityofwarren.org

Warren Mayor Jim Fouts declined to comment on the number of rentals in tax default or on the specifics of the presentation and said he hadn’t seen the data. He also said he hadn’t spoken to Colegio about it.

Fouts did, however, question Colegio’s premise that owners of rental properties in arrears to the city were less likely to maintain their properties. He said his administration’s citywide “blight sweeps” were designed to force compliance of both rentals and owner-occupied homes and businesses.

“I don’t think you can say that ‘A’ plus ‘B’ equals ‘C,’” Fouts said. “I think we need to look at all the facts.”

But Colegio questioned whether giving rental licenses to landlords who owe property taxes would have a negative effect on the surrounding neighborhood, where longtime residents in owner-occupied homes must maintain their tax obligations to the city in neighborhoods with a growing number of rentals.

In addition to the 6,650 registered rentals, Warren currently also has more than 5,000 vacant homes. 

“I think as a taxpayer that’s paying my share of the burden, this map is kind of an outrage, and it angers me,” Colegio said.

She also questioned the city’s nuisance abatement process and the manner through which federal Neighborhood Stabilization Program funds are used to pay for rehabilitation or demolition of dilapidated properties.

She questioned whether the funds were available for all property owners looking to perform costly rehab or demo work.

The council voted unanimously without discussion to schedule the issues of rentals and nuisance abatement procedures for a related committee of the whole session at a date to be determined.

“I just want them to fix it. That’s all. I just think that everybody should be treated the same,” Colegio said.

 

How should the city get past-due taxes from the owners of rentals?

Are you a Warren homeowner, renter or landlord? Should the city use licensing to ensure a more timely payment of taxes by the property owner? Or is it more important to get properties licensed and to collect delinquent taxes later? Should both tax payment and licensing be required to legally rent properties in Warren? Join the conversation on Facebook. Visit us online at www.facebook.com/warrenweekly

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You can reach C & G Staff Writer Brian Louwers at brianlouwers@candgnews.com or at (586)498-1089.