When is a Vacant Building Not Vacant?

In last week’s paper, we wrote about a loophole that has been allowing developers to convert buildings to condos while avoiding a hefty 5 percent conversion fee. They vacate a building, or at least claim it’s vacant, and then apply for a “vacancy exemption” from the Department of Consumer and Regulatory Affairs (DCRA). It may be, though, that this dodge is too clever by half. Declaring a property vacant, though, should mean the owner has to pay a special vacant-property tax rate, which is more than five times the standard fee.

Last week, Matthew Forman, federal real-estate attorney and vice president of the Kalorama Citizens Association, e-mailed Ward 1 Councilmember Jim Graham, alerting him of the contradiction. “Would you please investigate how, if the owner of 1342 Vermont is claiming the property to be vacant, they were not charged the $5/100 real property tax rate for vacant properties? The property isn’t paying the vacant tax rate and in fact is still receiving the homestead exemption, giving them a further, significant reduction in their property taxes.…In this case, it would appear that the property owner needs to be sent a bill for either the conversion fee or the back taxes - they can’t have it both ways,” he wrote. Besides the City Paper, he cc’ed Eric Goulet in Councilmember Jack Evans’ office and Thomas Branham, the District’s chief assessor.

Graham forwarded the e-mail back to Branham asking for an opinion.

“In the future,” Forman writes, “you need to make sure that the branch of DCRA that is accepting filings stating that properties are vacant is passing this information on to [the Office of Tax and Revenue] to make sure that the property is paying the full vacant tax rate.”

Forman says he has been working with the council trying to increase collection of the full vacancy tax rate, and the contradiction in the latest loophole jumped out at him. Either the property’s vacant, he says, or it’s not. “It’s just the total, perfect irony,” he says.