Jun 15, 2023 - Business

Detroit tax plan could hurt urban farms, scrapyards

City Recycling, a scrapyard near Eastern Market, is among businesses in the industry that would be affected by the land value tax change. Photo: Annalise Frank/Axios

A new tax plan to help the city's homeowners and discourage land speculation is prompting concern among urban farmers, gardeners, scrapyard owners and others whose tax bills would significantly increase, Crain's Detroit reports.

Why it matters: Mayor Mike Duggan sees the land value tax proposal he announced this month easing residents' high tax burdens while encouraging new development.

  • But with all the vacant land left behind through demolition or abandonment, many residents took it upon themselves to beautify it. And some are now concerned they could be punished for that.

How it works: Taxes on land would triple while taxes on buildings would be cut 30% under the plan.

  • Owners of vacant lots, empty commercial buildings, scrapyards and parking lots would be hit hardest.
  • Homeowners incentivized by the city to buy a total of 22,000 side lots next to their houses since 2014 would have that vacant yard space taxed higher.
  • They could also sell their lots back to the Detroit Land Bank Authority for what they paid, per the Free Press.

Meanwhile, the annual tax bill on a $100,000 home would be cut from $3,245 to $2,500.

What they're saying: Fisheye Farms owner Andy Chae tells Crain's the plan could hike the property taxes on the nine lots he owns, making it "harder to pay people a fair wage for the work that we do here."

Between the lines: Property owner Michael Kelly, whom the city has sued over holding onto more than 1,000 properties, contributing to blight and risking public health, tells Crain's the plan wouldn't change how he operates.

What's next: The proposal would first require approval from state lawmakers. Duggan then wants it in front of Detroit voters in February 2024 and rolled out over three years starting in 2025.

  • Duggan has also said he wants to support urban farmers and "work it out," per Crain's, including with an advisory group organized by city chief financial officer Jay Rising to work through various unintended consequences of the proposal.

Read the full story from Crain's Detroit

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