Sunday, May 16, 2010

Vacant Property Tax to Make Comeback?

The Washington Business Journal reported last week that Councilmember Muriel Bowser's Committee favors reestablishing the higher tax rate on vacant properties rather than Mayor Fenty's proposal to place a graduated registration fee on owners of vacant property ranging from $250 in the first year to $5,000 in the fifth year.  Currently, there is incentive placed on owners of vacant property to put their homes or businesses back into productive use other than a $20 registration fee.

The Committee's report [PDF, see pages 69-80] concludes "The Mayor’s proposal is simply not strong enough during the beginning years to encourage property owners to action. And, a fee, because it is not tied to a predictable, preexisting payment schedule and collection scheme, is more difficult to collect."

Instead, she proposes keeping what is now called the "Blighted Property Tax," which is $10 per $100 of assessed value, as Class 3, and reestablishing the vacant property tax at the $5 level as a new Class 4.  According to the committee report, Councilmember Bowser has the support of Councilmember Evans, who serves as Chairman of the Committee on Finance and Revenue and who takes credit for establishing the tax to address the concentration of vacant properties in Shaw.  In addition, the current vacant property registration fee of $20 would be increased to $250, "a level necessary to offset the administrative and inspection costs associated with monitoring and inspecting the Districts vacant properties."

The committee report proposes few, narrow grounds to escape the tax because "previous iterations of the vacant property tax law were rendered ineffective by property owners who dodged the tax by claiming illegitimate exemptions."  It would retain exemptions, limited to a one-year term, for properties actively listed for sale and rent, undergoing construction, facing economic hardship, pending predevelopment administrative review, as well as for properties subject to probate.  All would pay the $250 registration fee.

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