Control board weighs overturning voter-approved change in tax laws

The D.C. financial control board is considering overturning a property tax appeal measure that District voters overwhelmingly approved last fall but which has drawn strong opposition from the business community.

The measure, known as Initiative 51, was approved in November by 80 percent of the voters. Applying only to commercial buildings and vacant land, it would allow taxpayers, not just the property owner, to appeal an assessment if they thought a property or building was underassessed. The measure also would make public all proceedings of the Board of Real Property Assessments and Appeals and establish an office of the public advocate for tax issues.

A wide array of business organizations opposes the initiative, along with Mayor Marion Barry (D) and the city's chief financial officer, Anthony A. Williams, arguing that it would raise costs and drive more businesses out of the District.

The control board, which has held up implementing the initiative to study its financial impact, has until Friday to decide but may act as early as tomorrow, according to Mark Goldstein, a spokesman for the board. This is the first time that the board has reviewed a ballot initiative, although earlier it stripped the city's elected Board of Education of most of its powers.

The board is reviewing the initiative under an interpretation of its federal charge to examine D.C. legislation for fiscal impact.

Some supporters of Initiative 51 say they are angered by what they see as the control board's anti-democratic actions.

"I would hope they do not overturn the votes of the people, but the people who have influence over them are the Federal City Council, the Board of Trade, the Chamber of Commerce" -- all business groups that want see the initiative struck down, said longtime community activist Lawrence T. Guyot.

Initiative 51's roots go back to 1990 and the Justice for Janitors campaign of the Service Employees International Union (SEIU). Perhaps best known for blocking rush-hour traffic on the 14th Street bridge, the campaign seeks to unionize janitors by pressuring the landlords who hire janitorial service companies.

The SEIU maintains that landlords cheat the District out of tens of millions of dollars a year by abusing the assessment appeal process. The landlords say the SEIU is harassing them as part of the organizing campaign.

When the SEIU first tried to get an appeal initiative on the ballot in 1990, the landlords, led by the Apartment and Office Building Association of Metropolitan Washington, went to court and delayed the initiative for several years. And after voters approved the measure by a landslide last year, the association continued to fight it, pulling together a wide-ranging coalition of business groups to petition the control board.

Shaun Pharr, the association's vice president for government relations, said his group believes that "a fraud was perpetrated on the voters last year" because backers of Initiative 51 made claims about savings that the building owners dispute.

"It is not undemocratic to undo the fraudulent misrepresentation that was put over on the voters," Pharr said.

Supporters and opponents of the initiative laid out their arguments at a control board hearing last week.

"The current system is flawed, ripe for corruption, appears to offer biased treatment and does not necessarily ensure that all District of Columbia property owners are paying their fair share of property taxes," said the Rev. Graylan Ellis-Hagler, senior minister of Plymouth Congregational United Church of Christ and co-chairman of the Right to Know Committee, which campaigned for the initiative last year. He and other initiative backers argued that rather than hurt the city's finances, the measure would help the District by bringing in more property tax revenue.

But the initiative could have a "chilling effect on business," said Na\twar M. Gandhi, the city's deputy chief financial officer for tax and revenue. "It requires business owners and taxpayers to open confidential data on revenue, vacancy and expenses to third parties. . . . It could also result in a considerable number of frivolous or meritless appeals, which are expensive and would cause an administrative nightmare."

The measure, he said, also could allow "the harassment of property owners and the District government by appellants with vested interests or hidden agendas."

Marie Drissel, a longtime local activist who is regarded as an expert on the appeal system, opposed the measure last year but testified at the control board hearing in favor of enacting it -- if there were regulations designed to prevent frivolous appeals.

"I was opposed, but . . . for the control board to take this on when 80 percent voted in favor is a stupid political move," she said in an interview.

No matter what the control board decides, the controversy likely will remain. If the board overturns the measure, backers could sue the board, just as the elected school board has done. If the board approves the measure, Congress still must sign off on it, and the landlords say they would lobby lawmakers to overturn the measure.

"We feel strongly enough about this," Pharr said. "We feel a fraud has been perpetrated on the city."