Housing Complex

Union Station: Don’t Tax Me, Bro

One of the District's biggest fiscal problems is the inability to tax federal property. But but it has been able to levy a "possessory interest tax" on leases at federal properties—which has long irked the Union Station Redevelopment Corporation, a non-profit that subleases the station to the New York City-based Ashkenazy Acquisition Corporation. Over the last few years, Councilmembers Jack Evans and Tommy Wells have tried to get them off the hook for the roughly $3 million they pay to the District annually, but have backed off in the face of fierce resistance.

Well, the Union Station people are fed up, and have finally sued the District on the grounds that the tax is unconstitutional.

"The District's creative but unlawful end run is expressly prohibited by the Home Rule Act, impliedly preempted by the federal statute governing the Union Station property, and unauthorized by the DC tax code," the complaint reads. "Moreover, the District's administration of its 'possessory interest tax' runs afoul of the Supremacy Clause of the Constitution and the Fifth Amendment."

The filing goes on to allege that the tax makes it harder to fund improvements to the station, including a six-year master plan that's expected to cost $450 million, $80 million of which will be born by USRC and Ashkenazy. In addition, they say, the tax is also expected to fall on the intercity bus operators who'll soon be housed within the station, making bus service more expensive for customers. Finally, they make the practical argument that passing the cost of the tax onto subtenants "increases the costs of doing business in Union Station and thereby makes it more difficult for USRC to maintain the Union Station as a fully occupied commercial center."

I'm not a lawyer, so I can't weigh in on the constitutional question. And it's true that it's a drag for a non-profit charged with preservation of an American icon to pay taxes. But it's hard to buy the argument that charging Starbucks, Au Bon Pain, or Victoria's Secret taxes on the property they occupy, just like they'd pay in any other commercial location, is somehow beyond the pale (Ashkenazy kicked the little guys out of the food court years ago). Union Station is now one of the hottest commercial locations in the city, serving as a shopping center for the H Street corridor as well as a hangout spot for all the tourists and business travelers who come through the city. I doubt Chipotle minds paying a premium to be there.

Photo by flickr user swe.anna

  • Skipper

    So if this lawsuit succeeds, does that mean DDOT's nickle & diming of intercity bus operators also comes to an end?

  • Sandra Day Bro’Conner

    it's fun to opine about the equities of lawsuits, but this post shows why legal journalism is so difficult (and boring) ... the ultimate arbiter will ignore the equities and rule on the constitutional matters, so the only way to really address this complaint is to tackle the legal issues head on.

  • Adam L

    I don't get it. Does the Union Station Redevelopment Corporation own or lease the property? Numerous sources say "own". The corporation itself may be federally chartered, but that doesn't automatically make it an agency of the federal government exempt from taxation.

  • Lydia DePillis

    @Adam L - Sorry for being unclear. The station is owned by the federal government, and leased to USRC through legislation passed in 1981. USRC then subleases to the for-profit corporation, Ashkenazy (aka Union Station Investco LLC) which manages the property. The WBJ article explains it pretty well, as does the complaint itself.

    http://www.bizjournals.com/washington/stories/2010/06/28/story5.html

  • keisha kole

    dont tax me bro
    biology and not their lack of efforts

  • Amanda brookefield

    i dont like being taxed losers dont tax union station
    http://ethicalfutures.wordpress.com

  • Native American JD

    The taxes are too damn high!

  • Eric

    Trolls must do a google news search for "taxes" every day and make it a point to comment on any article that has to do with taxes. I can't say how sick I am of hearing about everyone trying to wiggle out of paying their fair share. Maybe it's "unconstitutional" or maybe it's not. The point is that Union Station (like all other Federally-owned buildings) benefits from the local infrastructure, which is maintained through local users' fees (aka taxes). The only way we can operate as a city (and a country) is for EACH AND EVERY one of us to pay our fair share for the use of this infrastructure.

  • Sally

    Eric - Try getting the White House to pay taxes.

  • Typical DC BS

    @Sally, @Eric,

    Need to get all the politicians / cabinet secretaries, etc. to pay all their taxes as well.

  • Pingback: Union Station tax dispute is settled, also not settled

...