Housing Complex

As Tax Bills Pile Up, an Abandoned House Continues to Languish


Last year, I wrote about a vexing issue that's left hundreds of otherwise desirable properties vacant around the District. Generally when a property is vacant, the city bumps the usual .85 percent residential property tax rate up to 5 percent; if it's deemed to be blighted, the levy increases to 10 percent. That's often enough to get the property owner to fix it up, or at least sell it off. But in the case of what I dubbed orphaned properties, that's not an option, because the owner can't be found. And so the tax bills and fines keep piling up, without any clear recourse.

I focused on one property in particular, the rowhouse at 430 Manor Place NW in the Park View neighborhood. The man listed as the owner, under various spellings, appears to have died in 1988, and there are no known heirs. The house has been vacant for as long as neighbors can remember. The city has hoped that someone would pick up the property at a tax sale, pay off the taxes owed, and then return the house to productive use. But that's a challenge when the taxes add up to more than the house is worth. When I wrote the story, the tax owed, including fees and penalties, was $358,274.28, while the property's assessed value was just $243,480. This year, the imbalance has only grown: While the value has inched up to $255,990 as the neighborhood's real estate has appreciated, the taxes and fees owed have shot up to $465,040. No rational person would pay so much for a beat-up property worth so little.

Which is why neighbors were surprised to see a "for sale by owner sign" appear in the front yard. So surprised, in fact, that three of them independently emailed me to alert me to the development.

But neighbors eagerly hoping that the blighted house might finally be spruced up shouldn't hold their collective breath.

Capital Buyers, LLC acquired a tax sale certificate for the property at a tax sale in 2012, but that doesn't mean the company has full possession of the house. "Right now we’re still in limbo," says Capital Buyers' William Mathis. "We’ve got some issues that we’re trying to address."

Capital Buyers paid about $23,000 at the tax sale, says Mathis, with the intent of developing the property with its sister company, A-Pro Renovation, into either multiple units or an upgraded single-family house. But first it needs to clear the tax debt, something it was hoping the city would help with by canceling some of the debt.

"Right now we’re fighting [the Office of Tax and Revenue] and special assessments to give us some relief on those numbers," says Mathis. "If the property is upside down, it makes it difficult not only for us as developers, but for anyone looking to take possession of the property."

The city is loath to reduce tax debts or sell underwater properties at junk sales, where they can be bought for less than the tax debt and returned to productive use, because it sets a bad precedent: If people know they can acquire vacant properties for cheaper, they have no incentive to pay all the taxes owed to the city. Still, as Mathis points out, the city's strategy of sending letter after letter to a dead property owner isn't particularly effective.

As a backup option, Capital Buyers put out the "for sale" sign, hoping that if the city won't knock down the tax burden, someone else might step up to buy the house. "If the city’s not willing to work with us, we may have to walk away from this deal," says Mathis, "or find someone who’s willing to pay the full amount."

But as the tax debt continues to climb, that's an increasingly unlikely outcome.

Photo by reader Lyn Stoesen

  • David G.

    This is a problem not only when the owner of the property is dead. In many cases, the owner is alive and well, but has not paid taxes in many years, during which time the tax lien has grown at the blighted rate to an amount greater than the value of the lot. There's a notorious example of this at 929-931 Kennedy Street, NW. The amount of the tax lien ($350,000 and counting) means that this property will almost certainly not sell as part of a normal tax sale. And because the city has no plans for a junk sale, the property will continue to be a blight on the neighborhood indefinitely. This situation needs to be addressed.

  • http://sherfeystudio.com Ellen

    The rising costs of greed & stupidity...

  • http://sherfeystudio.com Ellen

    There may be "Unclaimed Property" for this man's estate i.e. Social Security, etc. that may help if accessible.

  • 20002ist

    The solution is simple: foreclosure by the District, followed by rehabilitation or (preferably) a market sale. This gets it back to productive use without rewarding tax-sale arbitrageurs. It's insane the District hasn't moved on this before now.

  • @20002ist

    The District has never pursued foreclosure on their own. Too politically toxic for a council that is more interested in gaining votes through pandering rather than results. You'd have Constituent Slush Funds being used for old tax bills left and right.

  • S.E.

    "The solution is simple: foreclosure by the District, followed by rehabilitation or (preferably) a market sale. This gets it back to productive use without rewarding tax-sale arbitrageurs. It's insane the District hasn't moved on this before now."

    Not so simple........The District owns a house at 1223 Savannah St. S.E. that was rehab 2-3 years ago and still sits vacant.

  • adam

    This doesn't seem to be a hard fix:
    1) foreclose and sell it free and clear at market price; or
    2) agree to wipe out the tax debt for the fair market value, provided the current owner is barred from bidding.

    The objection that this sets a bad precedent is ridiculous. Regardless of precedent, no one is going to buy a property for more than its worth. So the city has an easy choice- take the fair market value or get nothing.

  • moe

    I believe the "for sale" sign has been put up as an attempt to change the tax status while it is "for sale". If I recall correctly the owner can reduce the penalty tax rate by "attempting to sell the property" / putting the property on the market.

  • DCCommish

    OK DC Council and the OTR are you all a bunch of freaking idiots???? When the tax burden exceeds the assessed value the city should take the property by eminent domain and turn it around. Make it the law and turn around this housing stock. STUPID OFFICALS CAUSE STUPID THINGS IN DC

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