The city of Detroit is suing Bedrock Management Services for allegedly failing to turn over information about tenants in some rental properties.
Bedrock is the real estate services firm owned by Quicken Loans CEO and downtown Detroit’s largest landowner, Dan Gilbert. Gilbert calls what the city is asking for "confidential personal information"--and says Bedrock won't release it without a court order.
The lawsuit says that for over a year, Bedrock has repeatedly ignored requests to turn over tenant information from four downtown Detroit properties. It wants tenant information from other Bedrock properties as well.
Detroit requested that information as part of an ongoing effort to crack down on renters evading city income taxes. As the city notes in court filings, “Some residents who reside in the city of Detroit use a suburban address of a relative or friend for purposes of obtaining lower auto insurance rates and/or for the purpose of avoiding city income tax liability.”
The city says that by obtaining tenant information from landlords, it can cross-check that information with federal tax filings and go after renters who don’t show up on the city’s income tax rolls. It notes that Detroit’s 2.4% local income tax is “the largest single source of revenue for the city’s general fund.”
In April 2017, the city sent a letter requesting tenant information from one Bedrock property, 1525 Broadway. There was back and forth between the city and Bedrock, which “expressed further willingness to cooperate.” Bedrock representatives then “rewrote the tenant information request,” which the city then sent to four Bedrock properties in October, setting an extended deadline of November 30, 2017.
The city says it never received a response. The lawsuit now asks the Wayne County Circuit Court to order Bedrock and four affiliated companies to turn over all tenant information going back to 2014.
But Gilbert says the city's request is unlawful.
"We do not believe we have the legal right or contractual permission to release the highly sensitive personal information of all our tenants to any third party, including any governmental entity, without the tenant's consent to do so, or a constitutionally valid final court order," Gilbert said in a statement issued to Michigan Radio.
"Our family of companies has always been keenly aware of, and respectful of, the privacy rights of our clients and customers."
The dispute comes as Detroit is looking to expand its income-tax crackdown by compelling all city landlords to turn over tenant information, including names, Social Security numbers, and employers. So far, it’s focused on properties in the relatively prosperous downtown and Midtown areas.
The Detroit City Council would need to approve the expansion. The city says all data provided is kept confidential, and will only be used to identify non-filers and collect back taxes.
The lawsuit is also notable because it’s a point of conflict in an otherwise warm relationship between Gilbert and the administration of Mayor Mike Duggan. Among other things, Gilbert was the point man for the city’s much-vaunted but failed bid to bring Amazon’s second world headquarters to Detroit, and has received public praise and support for his efforts to re-develop Detroit’s downtown.
"We value the strong relationship our organization shares with Mayor Duggan and our city government partners," Gilbert said in his statement. "We have a dispute over this issue, and in this situation the privacy rights of our tenants must take priority."
Updated 5/14/18 at 5:25 p.m.: This story was updated to include a response from Dan Gilbert and Bedrock Management Services.