A D.C. Council committee this week agreed to double the tax rate on abandoned and dilapidated properties, a move likely to generate millions in additional revenue while perhaps spurring land owners to renovate and develop their holdings.
“The fine system is only somewhat effective,” Ward Council Member Jim Graham said Wednesday. “What really will work is when we reach into these guys’ pockets and take their money from them.”
Neighborhood activists and elected officials have long considered the District’s more than 2,000 vacant properties to be invitations to crime, drug use and vermin.
The bill approved Tuesday in committee was designed to tackle those problems by consolidating authority for enforcement under one agency, limiting exemptions and loopholes and revising the appeals process.
But an unexpected amendment offered by Council Member Kwame Brown gave the measure a major fiscal impact: Doubling the tax on Class 3 real property, those deemed “abandoned or unimproved,” from $5 to$10 per $100 of assessed value. The District collected an estimated $27 million from the Class 3 tax in fiscal 2006.
Ward 3 Council Member Mary Cheh, chair of the public services and consumer affairs committee, said the higher tax should act as a lever “to prod [owners] to put the property back into productive use.”
A 1998 study by the D.C. Tax Revision Commission, however, found no evidence that a higher tax rate was successful in reducing the number of vacant properties, and the D.C. Building and Industry Association has argued the separate tax class imposes “substantial administrative expense on property owners and the District to produce only nominal additional revenue.”
Within the boundaries of the Mount Vernon Square Neighborhood Association are at least 100 vacant properties, said Cary Silverman, president of the organization. Not only should the District increase the rate, he said, but it also must ensure that all vacant properties are identified and taxed appropriately.
“First off, we need to have enforcement of the current law,” Silverman said. “But second, the higher tax rate still isn’t high enough. We have properties that have sat around for 30 years that haven’t been maintained or developed.”
The bill will get a hearing before the finance and revenue committee now that it involves a tax change.
