D.C. eyes 5% limit on asessment rise

With property assessments likely to continue to climb, the D.C. Council's Finance and Revenue Committee began reviewing several tax revision measures yesterday, including one that would limit annual increases to 5 percent.

The measure, introduced by John Ray (D-At Large) and co-sponsored by nine council members, is a response to escalating assessments, which rose by an average of 20 percent this tax year, up from 14 percent the previous year. In some parts of the city, particularly in Northwest Washington, assessments rose as much as 40 percent this year.

Putting a limit on tax assessment increases is likely to be a volatile issue in an election year, when three council members are running for mayor, one for council chairman and six for reelection. At the same time that politicians are under pressure to reduce the tax burden of D.C. residents, among the highest in the country, they are grappling with severe city budget problems.

The director of the D.C. Department of Finance and Revenue predicted that taxpayers will not see relief from the double-digit increases in real estate assessments until after 1991.

Property values "continue to accelerate" in the District, Harold L. Thomas, whose agency handles tax bills for the city government, told the committee. "You will see the assessments continue to grow. But they will moderate after 1991" because of changing market conditions, he said.

Council member John A. Wilson (D-Ward 2), chairman of the committee, predicted that despite the city's financial problems, some sort of limitation on residential real estate tax increases "will find its way into law-simply because of the political ramifications."

But he said such a measure would probably be quickly repealed given the overwhelming financial demands on the city. "I see the surge to increase the budget," Wilson said.

Meanwhile, a separate political fight is shaping up over commercial property taxes.

Last week, officials of the Service Employees International Union filed documents with the D.C. Board of Elections and Ethics to place several tax-related initiatives on the November ballot, including one that would effectively raise the tax rate on office buildings by at least 10 percent.

The measure contemplates using funds from the tax increase to increase funding for the D.C. public schools and to provide property tax relief for homeowners.

Other initiatives proposed by the union would require developers who build large office buildings to contribute to a city trust fund for affordable housing, as well as mandate increased public scrutiny of developers in their tax appeals process.

All are likely to be strongly opposed by building owners, who have been fighting the union over its efforts to raise wages for janitors. The initiatives will be reviewed by the elections board next month to ensure that they comply with D.C. law, and they must also gain the signature of at least 5 percent of registered voters-or roughly 14,000 people-before they can go on the ballot.

The union argues that its proposals are necessary because commercial offices have been underassessed by the District government, costing the city millions of dollars in potential revenue. "If we can't get an ounce of justice from these building owners, then we're going to extract a pound of flesh," said Jay R. Hessey of the Justice for Janitors campaign.

An official with the Apartment & Office Building Association of Metropolitan Washington disputed the union's analysis and said its proposals were not the proper subject matter for an initiative. "These are complicated legislative proposals that really warrant public hearings," said Executive Director Margaret O. Jeffers.

At the Finance and Revenue Committee hearing, a variety of community groups pressed the council to approve a limit on assessment increases, as well as a separate measure that would create a "split-rate" method of taxing property, with buildings being taxed at a lower rate than vacant land. Proponents say that that bill would spur the construction of housing on property that is now unused.

But Thomas said the Barry administration opposes both bills.

He said it was unclear whether the split-rate tax would accomplish the goals its proponents desire, and argued that the limit on assessment increases would shift the real estate tax burden from wealthy homeowners to those whose incomes are moderate or low.

The market value of homes in more affluent neighborhood appreciate more rapidly than in middle-income parts of the city, with the result that a 5 percent limit on assessment increases "would produce unequal benefits" favoring the rich, according to Thomas.

But Leonard C. Meeker, president of the Palisades Citizens Association, said that "it's time to put an end to skyrocketing assessments."

"This is designed to keep people in their houses," Meeker said of the 5 percent limit. "We're trying to prevent people who have been living in their houses for a long time from being taxed right out of their houses."

Washington Post
Publication Date: 
January 30, 1990