Sunday, January 24, 2010

Vacant or Blighted?

The DC Council is holding a hearing on two vacant/blighted property bills this Wednesday.  The hearing will be held at 2pm in room 412 of the Wilson Building at 14th and Pennsylvania Avenue NW. The Hearing Notice recognizes:
The higher tax on vacant properties had the desired effect of moving many longstanding vacant properties into productive use.  Since 2006, over 1,000 formerly vacant properties have become occupied.  However, as the economy entered a prolonged recession, the vacant property tax began to affect more and more property owners, many who had simply run into hard times due to the economy.... 

Last year, the D.C. Council eliminated the vacant property tax - a result of backlash from the same Councilmembers doubling the tax from $5 to $10, the Department of Consumer and Regulatory Affairs more consistent enforcement of the law, the occasional innocent owner unfairly getting hit with the higher tax, and the recession (and its impact on developers with properties in limbo). Instead, the Council kept a registration system for vacant property and applied a higher tax only to "blighted properties." Due to confusion in the new law as to how the old vacant property registration system and new "blighted" property tax work together, the Council will consider these two competing proposals.

Here is my understanding of the two bills:
  • B18-546 [PDF]: Introduced by Councilmember Muriel Bowser (D-Ward 4), it would keep the vacant property registration system, eliminate the exemptions (which only eliminate the need to pay a nominal registration fee), allow for an upward sliding scale for registration fee depending on amount of time property is vacant, simplify the citation issuance process, and require property insurance for vacant properties.
  • B18-448 [PDF], introduced by Councilmember Jack Evans, would eliminate the remaining vacant property registration system altogether and focus only on blighted determination.  This bill does not appear to be subject to the Wednesday hearing.  (Note: The hearing notice refers to B18-407, but this appears to be a misprint)
The Bowser bill is helpful, if not ideal.  On the other hand, the Evans bill would dump all the work DCRA and the Shaw and Mt. Vernon communities, as well as others across this city, have done over the past few years to form an accurate list of vacant properties. Even without a vacant property tax, this list allows DCRA to closely monitor these properties for violations (litter/dumping, overgrown grass, unsecured, illegal billboards, as well as criminal activity) and determine whether they are "blighted."

Ideally, the Council should return to something closer to the prior vacant property tax system. Here are seven reasons why:
  1. Subjecting only "blighted" and not vacant properties to a higher tax fails to recognize that even vacant properties that are in the best of condition impose additional costs on the surrounding community. The neighbors are often the ones that pick up the trash that inevitably accumulates, shovels the snow, and calls in or paint over graffiti. Blocks with vacant property are less safe because there are less eyes on the street to report crime.
  2. It is much easier to determine whether a property is vacant (objective standard - is there a lease, utilities running?) than whether a property is "blighted" (very subjective - one person's blight may be another person's palace). DCRA/OTR can expect appeals and lawsuits when it attempts to impose the tax on blighted properties;
  3. Some properties may be judged as not meeting the "blighted" standard because the neighbors, not the owners, addressed problems -- i.e. cut overgrown grass, removed graffiti, and secured the property.  Why should the owner benefit through reduced taxes?;
  4. What will happen when a property is "blighted" because it is a nuisance for months or years and when threatened with a higher tax, the owner nominally fixes it up to avoid the tax (i.e. picks up the trash and throws on a coat of paint) -- this would be an ongoing cycle;
  5. The blighted property law applies only to "improved properties" (vacant houses or stores) and not to vacant lots. Why should an overgrown, trashed vacant lot not be subject to the the higher tax while an overgrown, trashed lot that has an empty building on it get the tax?;
  6. Under current law, if a historic property is blighted and allowed to collapse through neglect, the owner would be rewarded because he or she would no longer subject to the blighted property tax; and
  7. Why, oh why, would the Council give absentee property owners a $48.9 million tax break when the city is struggling with a budget shortfall and cutting valuable services?
Instead, the city should return to something closer to the old system -- a $5 (or even $2.50) tax on vacant property, graduated increases in the tax (not the registration fee) the longer the property remains vacant (say going up to $10 only if a property is vacant for 10 years), and use of currently available fines and the condemnation process to address "blighted" properties.

Exceptions to the vacant property tax should apply only to specific circumstances in which there is unfairness.  For instance, similar to jury duty, a person who is serving in the military oversees or in a nursing home should be exempted from the higher tax. There should be no nonsense with property owners being able to avoid the tax by periodically pretending their property is for sale or obtaining permits for minor work on the property.

Finally, it is important that the city restore application of the higher tax to vacant lots, in addition to vacant buildings.

Residents should testify on Wednesday on their experiences with vacant property and the importance of providing effective incentives for absentee property owners to put properties back into productive use.

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