D.C. may repeal tax increase on nuisance properties
By: Michael Neibauer
Examiner Staff Writer
March 18, 2009
The D.C. Council is poised to roll back the tax rate on vacant property that it doubled only six months ago, following blistering criticism from constituents who complain of being crushed by a punitive tax on their well-maintained but bare lots.
The District’s Class 3 nuisance property tax rate was raised from $5 to $10 per $100 of assessed value as part of the fiscal 2009 budget and applied to 3,609 parcels citywide. The goal of the tax increase, implemented in October, was to spur the rehabilitation of “unimproved or abandoned” real estate.
But many owners of vacant lots complain of being overtaxed by a rate 1,000 percent higher than the normal levy for residential property.
The Class 3 rate is “very useful public policy,” said at-large Councilman Phil Mendelson, who introduced a bill Tuesday to return the rate to $5. But the $10 charge, he said, “has brought forth quite a bit of frustration and a clear hardship.” The bill picked up six co-sponsors, including the same members who proposed the rate increase last May — Kwame Brown and Mary Cheh.
“A lot of people got caught in a bind with this,” Cheh said Tuesday.
The higher tax rate is projected to generate nearly $16 million over the next two years for District coffers. But critics say the rate defeats its very purpose, as it siphons the money owners need to rehabilitate their properties.
Chris Hauser, of the District, sold a lot on Nicholson Street Southeast to a small developer who intended to build affordable housing there until the financing pipeline dried up, Hauser recently told the council’s Finance and Revenue Committee. The owner keeps the lot clean, Hauser said, yet his tax bill exceeds his annual mortgage payment.
Rose Sahm has owned a treed lot in Friendship Heights for six years, she told the same panel. Sahm and her husband want to build a home there and are exploring financing. But the lot is now costing them $24,000 a year in taxes.
“We believe that it’s unfair that our grassy, treed lot is taxed as a nuisance property as would an unkempt, dirt-filled lot,” Sahm said.
The Class 3 rate has never been effective and should be abolished, said Ward 2 Councilman Jack Evans, finance and revenue chairman. Fines and liens are better ways to tackle nuisance properties, he added.
“We can’t point to one house that was fixed up as a result of this approach,” Evans said.
