Friday, April 23, 2010

Doesn't Pay to Keep Property Vacant

The Washington Business Journal reports today that Mayor Fenty is on board with a system of steep graduated registration fees for vacant houses and commercial properties in the District:
The existing vacant property registration fee is $20 per residential unit or $20 per 400 square feet of commercial space. Fenty proposes to charge $250 the first year, $500 for the first renewal year, $1,000 the second, $2,500 the third and $5,000 the fourth.
According to a District spokesperson, the revenue from the fees will provide more resources for the District’s nuisance abatement program, such as site visits for enforcement purposes.

The new registration fees would replace the prior vacant property tax, which the D.C. Council abandoned after it had doubled the tax from $5 to $10 of every $100 of assessed value.  The quick and substantial increase in the tax, elimination of frequently abused exemptions, and more consistent enforcement by the Department of Consumer and Regulatory Affairs led to an outcry that led to its repeal.  The $10 tax now applies only to "blighted" properties, and very few properties meet the criteria.
“It’s really just to spur people to put their properties back into productive use,” said City Administrator Neil Albert. “It is a graduated schedule of fees that should provide the incentive not to have their properties sitting around gathering dust.”
It's not just dust.  Vacant properties are also a significant public safety issue, and particularly so when vacant they become concentrated in an area.  Even when properly maintained, when a property is vacant it means less eyes on the streets... more muggings, more shattered car windows, more loitering, more prostitution, and less people to call police and report when someone is in trouble.  It also tends to mean that the neighbors are left to pick up accumulating trash, deal with illegal dumping, and shovel the snow.

At this point, the proposed registration fees are not law -- rather, revenue estimates from the fees are included in Mayor Fenty's 2011 budget.  I testified in late January at a hearing on the legislation proposed by Councilmember Bowser that adopts this approach.
The old system was working -- and by that I mean the $5 tax with consistent DCRA enforcement. There was a need to eliminate frequently abused exceptions -- the ability to put up a "for sale" sign or take out a work permit to avoid the tax entirely.  The sudden doubling of the tax, and rare situations where it was mistakenly put on an occupied properly and the error not quickly and fairly addressed, led to its demise.
Whether the new approach will work will depend on DCRA's ability to enforce the registration requirement as well as any loopholes in the law.  For instance, if an owner can reset the graduated fees simply by showing a water or utility bill for a month or two on the property, the fee will not provide much of an incentive.  DCRA will need to be able to impose the fee if an owner does not voluntarily register the property.  Would there be a penalty for failure to register? 

It is also important to note that the current proposal does not include vacant lots -- only vacant "improved" properties, such as houses or commercial buildings. 

The law will need to recognize some legitimate situations in which it would be unfair to impose a registration fee, such as deployment in the military or long-term medical/nursing care.

1 comment:

IMGoph said...

the problem is that the city keeps changing the rules, not finding something that works and sticking with it.

the confusion is part of what's letting property owners get away with keeping their vacant properties in disrepair. from month to month, it's tough to say what rules apply, and it seems like the clock keeps getting reset for the scofflaw landlords.