Housing Complex

Protip: If You Want a Building to Move Faster, Check Tax Records

Making money, because it can.

It's easy to bemoan the decrepit state of an historic building. Fortunately, the District has a couple of powerful tools to compel landowners to take care of them.

Take the building on the northeast corner of 11th and K Streets NW. Doug Jemal's Douglas Development bought it in 2003, and wrapped in one of the 32 "special signs" (read: billboard) permitted by the District, which can generate quite a tidy revenue stream. It's also part of a pending landmark nomination for the whole block, which describes the largely lost Second Empire architecture from 1875 and personal histories of the people who lived there. (Much of this was detailed in 2010 by former Ward 2 activist Cary Silverman, who has since decamped for Maryland.) 

The property is now assessed at $1,645,550, and for as long as tax records are displayed, Douglas has just paid the normal commercial tax rate, not the vacant or blighted rates. Which, if you look at the building's terrible disrepair, seems ridiculous. If it were blighted, the owner would have paid about $164,000 last year, not the $37,000 it skated by with instead.

Wondering about this, I dropped a note over the weekend to Reuben Pemberton, the hardworking chief of the Department of Consumer and Regulatory Affairs' vacant property unit. The same day, I received a call saying that his office had actually missed that property, thinking it was part of the same lot as the one next door, which Douglas also owns. DCRA dispatched one of their two vacant property inspectors to check it out on Monday morning, found that the building is in fact blighted, and will notify Douglas Development that they're in for a hefty bill.

Douglas has a couple levels of appeal if they don't want to pay that kind of money. But this seems like a pretty clear case, and if there's any justice in the world, the appeals will be denied. It's not that Jemal is a bad developer—he does beautiful historic renovations, when the right opportunity comes along. But the combination of advertising revenue and low taxes gave the company very little incentive to do anything with this one.

As a last resort: If the appeals are somehow granted, the Historic Preservation Review Board could go ahead and landmark the building, and then sue under D.C.'s demolition by neglect statute (theoretically, at least—it hasn't happened yet).

In the mean time, DCRA can't be everywhere, and likes it when you let them know about vacant properties that might not be taxed like they should be. You can email Pemberton at vacantproperty@dc.gov.

  • RT

    Excellent work, Lydia!! Thank you.

    This is a particularly egregious example, as it could be renovated and leased rather easily considering its in quite literally a trophy K Street location. It's actually fairly idiotic of them not to have renovated it years ago. I can't imagine that the cash flow from billboards could equal the potential cash flow from a fully leased building on this corner. Major opportunity cost associated with this... And the city treats Douglas like a prince, so they'd never demand anything of him. If I were the Ward 2 Councilmember, I'd be embarrassed to have that prominent corner blighted as it reflects badly on the city.

  • Devoe

    I like to see Reuben get some love on the blogs. He is great at getting properties inspected and staying in touch with communities.

  • Job

    Man, you should come around Shaw where there are tons, TONS, of blighted buildings that get blighted tax exemption. When DC is having issues with crime, transporation, services to the needy and education...BIG FAT CATS get away with murder. Thanks.

  • Hillman

    Mixed opinions on this one. 10 years seems like more than enough time to develop a property. But in a lot of instances there are good reasons for lack of development, like the entire block is being assembled, the District has put up roadblocks, etc.

  • H Street Landlord

    great work

  • http://bobcatarts.com Robert Gandy

    Why not make the building available for artist studios and artist housing? Some of us crafty bastards learned how to do carpentry, electrical and plumbing work along with our fancy artistry. Send it my way and I'll even let you keep the sign!

  • Drez

    Keep your eyes on this one. You are not the first to bring this property to DCRA.

  • Adam

    Thank you for doing that.

  • http://www.epropertytaxappeals.com/ Property Tax Appeal Process

    Nice blog for getting useful information and informative web links thanks for share .I know that the burden of property tax is very high as compared to other taxes. so that need a good strategy and a well property tax consultant to prevent form the overtaxes property.

  • been there

    Wonderbread factory *cough*cough*, all his properties next to the convention center. He's been doing this for years. I've gone round and round w/ DCRA trying to get his s&^t near my house classified properly and it never does.

    Usually the revolving dcra door looks like like:
    1. Spend 6 mo trying to get them to classify the building as blighted/vacant.
    2. 2 months later watch it appear as 'exempt' when he pulls a bs permit or puts a for lease sign on a shell
    3. 4-6 months later, next vacant report doesn't even list property, go to step 1 and start over.

    When people complain about Douglas, this is what they are talking about.

  • danmac

    @Job in 2010-early 2011 MVSNA provided DCRA with a spreadsheet of vacant properties http://tinyurl.com/6db98o9
    Reuben Pemberten acted on the list and reported at two MVSNA meetings on the DCRA actions. He has been very reponsive. If you are correct about the incorrect tax exemptions you should take them up with your local ANC or neighborhood association. On the list submitted back in 2011 by MVSNA some of the properties have been rehabed and sold or put on the market. Unfortunately some are DC owned and not subject to taxes.

  • Si Kailian

    Yes Reuben has been great with working with MVSNA. One by one the funky dumps are getting redone and it fills me with joy! The tax absolutely does work.

  • Native American JD

    Thank you, thank you, thank you.

    I wish all journalists were as diligent as you are.

  • Amazing

    Lydia -

    Does Douglas development actually pay the lower property tax on time? They typically are delinquent on their vacant properties.

  • crin

    Just get a building permit that says you're fixing the blighted conditions. Then they won't tax you at the blighted rate. Then never do the work. When the permit expires in a year, get another permit. It's a pretty big loophole. I'll be impressed when someone closes the loophole.

  • Blighted is different than vacant

    Keep in mind the difference between vacant and blighted. The former means unoccupied and is taxed at the 5% rate. There are exemptions, of course, like if is inhabitable due to construction or a recent fire, or is being probated. Blighted means it is vacant + and in poor repair. There are no exemptions for that and the rate is 10%. Why the different treatment? Because a blighted property harms considerably the neighborhood in which it sits (more than a vacant but well-maintained property), and because while it might take some time and money to occupy a property, it doesn't take that much of either to make it, at least, not look so shabby.

  • http://urbanplacesandspaces.blogspot.com Richard Layman

    wrt been there's comment, the way he describes how the process can be gamed is practiced by other property owners across the city.

  • Drez

    The cumulative time exceptions are allowed to last is 3 years.
    In practice, they run much longer.
    It's a game of running out the clock and waiting for attention to be focused elsewhere.
    In short, believe it when you see it.

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