DC Council Kills General Vacant Property Tax Rate
Mid-summer, amidst many tax increases, the D.C. Council preliminarily approved a move to decrease the tax rate on vacant—often troublesome—properties. According to Councilmember Phil Mendelson, the higher rate was "actually mak[ing] it difficult for some property owners to sell or put their property back to use.”
Maybe so. But the decision wasn't exactly a crowd-pleaser. At the time, Ward 4 Councilmember Muriel Bowser was already working on some special language that would specifically target the empty-rowhouses-turned-neighborhood-crack-dens many of us have become familiar with.
But today, the Washington Business Journal reports a twist. The special vacancy tax rate–previously "more than 10 times the residential rate of 85 cents"—is totally gone!
[Councilmembers] did away with the vacant rate altogether, saying it had produced unintended consequences, and replaced it with a $10 rate that will apply only to blighted properties. A blighted property is “unsafe, insanitary, or which is otherwise determined to threaten the public health, safety, or general welfare of the community” because of broken walls, roofs, windows, balconies or other poorly kept features. Boarded up properties will also count as blighted."
Tidy, empty properties won't pay a dime more than tidy, occupied properties.
6:40 pm
If someone is keeping up a property, they are likely able to get a vacant property exemption. I don't think eliminating the 5% rate is that big a deal.
5:46 pm
Members who voted for this legislation should face severe repercussions when up for reelection. At the time of a recession, when the council is cutting social services, they have granted a massive tax break to slum lords. Don't let the new "blighted" property language fool you - there is already a process for blighted properties -- it's called condemnation -- and it is infrequently used. When a property is condemned, the DC government gives the property owner a certain period of time to fix the issues and, if not done, fixes the property itself and bills the owner, and, if the bill isn't paid, puts the property up for tax sale. The vacant property tax has literally revitalized entire blocks of some neighborhoods that sat vacant for 30 years and is/was on the way to finally moving other derelict owners to stop speculating or otherwise sitting on properties that could be providing housing or retail. Now, all they need to avoid the tax is windows and a roof. Meanwhile, the surrounding neighbors will be stuck with the cleaning up the mess (overgrown grass and litter, drug/prostitution activity, less eyes on the street which fosters crime) and lower property values. Outrageous!
9:18 pm
I am in agreement for the 10% rate on blighted property. In many other situations, the higher rate of 5% or 10% is unfair. For example, under the current program, developers are eligible to receive an exemption AFTER receiving a building permit. Therefore, if it took several months to put together a permit set of architectural plans and then nine months to get through the permit process, DC wanted you to pay the 10% rate until such time. A developer earnestly trying to build a project, but was held up by DCRA, financing issues, etc. could easily see the profits wiped out by the 10% rate. I don’t think the money influence is the slum lords, it is the rather powerful lobbying by larger developers who are sitting on large pieces of land and holding off on big projects until the economy and housing market improve. It is unwise to force everyone to sell their property at the same time. This actually threatens to drive home values down, just as values drop in markets flooded with foreclosure listings. Honest people do own vacant buildings and vacant land that they keep up and may have long term goals to develop for themselves or as an investment. This is a classic example of how a strategy using penalties has unintended consequences, and taking an incentive approach can revitalize a community and be win-win for everyone.
9:47 pm
Struggling Developer: The reason you're struggling is that you're an idiot.
If you have a project, all you needed was a building permit to get a vacant property tax exemption for a calendar year. And if you timed it right, you could extend the one calendar year into one and a half tax years. Why? Because OTR would apply an exemption for the entire tax half year. So you didn't need a massive architectural plan to get the property tax exemption. You just needed anything that would require a basic building permit.
Please consider a line of work that you're more qualified for. Perhaps you should practice saying "Would you like fries with that?"
3:10 am
Gee wiz. It's too bad I didn't consult an expert like yourself. It can take quite a bit of time when you own a vacant lot and you are moving as quickly as you can to acquire an adjacent parcel owned by the DC government so that you can get financing and move forward on your project. Permits for new construction can take up to a year to obtain. Try out paying exorbitant tax rates to the DC government while you deal with DCRA for months and months so that you can finally apply for an exemption. Then we'll see how you like it.
4:32 pm
Skipper, that's really not true. You can't just "get a building permit" if you're doing any kind of large-scale project, as many vacant buildings require. Electrical and plumbing permits don't count, nor would a permit to do minor work.
And to get a permit for a large renovation requires submission of plans, which an architect will take time to draw up, not to mention the 3-month-plus approval process at DCRA.
So struggling developer has identified a very real problem: DCRA provides no accommodation for the situation where someone buys a property with intent to rehabilitate it but even proceeding expeditiously and in good faith cannot start work with a permit for nearly a year.
Solution? DCRA should hold the tax payments in abeyance for a year in this situation. Make the buyer sign an acknowledgment, but provide either an exemption or a suspended exemption.
7:13 pm
I agree with Struggling Developer that falling into the no man's land between having applied for permits but having plans under review should be remedied. I do have a question, though: would a vacant lot be considered "blight"? I would think if it was free of debris it wouldn't fall into the 10% category, but I haven't read the legislation.