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Government and People
|Discriminatory Assessments of Single-Family Houses,
Statement to the Board of Real Property Assessments & Appeals
1. I would like to address you this morning on issues of the Constitutional guarantees of "due process of law" and of "equal protection" under the laws. I speak from 37 years of experience as a lawyer involved in litigation before federal, state and local administrative agencies and the courts and from 45 years as a concerned home-owner of this city.
2. For four years now — ever since the 1998 assessments — I have been urging OTR to assess every property in my neighborhood based upon its fair market value. For four years, OTR has stubbornly refused to do so. Instead, in its zeal to increase property tax revenues it has adopted across-the-board increases in assessments which reward a minority of home-owners while transferring the burden of increased revenues on a majority of home-owners whose only sin is that they haven't improved their properties to the degree that developers and newcomers to the neighborhood have. This is true because OTR hasn't bothered to update its records on improved properties for about ten years. Indeed, OTR hasn't even bothered to inspect properties in my neighborhood.
3. Last year, I went to Henry Riley and asked him to throw out the across-the-board increases and assess each property individually. He refused. I appealed to Herbert Huff and he, too, refused. I appealed to the CFO and the Mayor, and they didn't even respond. I appealed to this Board, and it, too, refused to take any action. Each, in turn, ducked the Constitutional guarantee that we, as property owners and taxpayers, deserve equal treatment — that the market value of our real property be determined individually on its own merits.
4. If our city officials refuse to honor the Constitutional guarantee of equal protection, we are, I am afraid, left only with the options of going to court, the Council or the Congress.
5. Our DC Code on property tax assessments starts off with the declaration that it is the intent of Congress to have —
6. Neither of these primary goals are being accomplished.
7. "Equitable sharing." I am disappointed that in the over 40 appeals by Cleveland Park home-owners to this Board, not a single decision addressed the issue of "equalization" — another word for the Constitutional guarantee of equal protection and the statute's requirement of "equitable sharing." Something needs to be done with the Board's rules so that it can exercise its authority in this area.
8. I would therefore recommend that the Board adopt a rule that if a petitioner can show he has been treated inequitably compared with his neighbors that the petitioner's prayer will be granted unless OTR, within a prescribed period of time, acts to eliminate the discrimination, either by raising the assessment on the favored property or reducing the assessment of the petitioner's property.
9. Let me give an example. Mr. Richard Nash of Newark Street complained last year that his property was assessed 97% of the price he paid for his house in 2000 while another property on Newark Street only a block away was assessed at only half of the price paid in the same year. He got no relief from this Board. The discrimination remains.
10. Due Process. Let me turn to the other problem — procedural due process.
11. OTR last year and this year has issued its notice of proposed assessments without giving any explanation whatsoever of why the proposed assessment is supposed to show fair market value. The taxpayer is then given 30 days to file an administrative appeal. But how can the taxpayer appeal from the assessment if he does not know the reason why OTR picked that particular number in the first place?
12. For those brave enough to file a first-level appeal, they get a decision from their local assessor, but again no reasons are given — although they are required by law to do so. So the taxpayer is still left in the dark.
13. I would, therefore, recommend that the Board adopt a rule of practice that if a petitioner shows that he received no written decision from the assessor on his first-level appeal that his petition to this Board will result in a default decision in favor of the petitioner.
14. Further, this Board's rules need to be revised so that even if the assessor abides by the law and issues a written decision, OTR (if it chooses to contest the appeal to the Board) must serve its response on the petitioner within ten business days after the filing of the petition and at least two weeks before the hearing on such appeal.
15. The current practice of OTR, which refuses to serve its response on the petitioner in a timely fashion, makes a mockery of the hearing before the Board, as the petitioner is usually caught by surprise by allegations never heard or seen before.
16. The current practice before the Board is also compromised by OTR's inclination to advance a totally new theory before the Board, one that was not involved in the initial assessment, and one that was not involved in the first-level appeal.
17. I speak here of the so-called "comparables" which OTR handed out on the day of the hearing in each of the over 40 Cleveland Park appeals last fall. Invariably, the Board panel gave considerable weight to these so-called "comparables," even though they have no foundation in sound appraisal and even though, in most cases, the petitioners had no fair opportunity to rebut the claims.
18. This is demonstrated in the last two pages of the materials which I have submitted. These two pages list every sale of single-family homes in Cleveland Park in the year 2001. In the second column of numbers I have converted the sales price to estimated market value of the real estate involved by deducting 10% for realtors' commissions, fix-up costs and the personal property involved in each transaction. In the third column of numbers, I show OTR's own estimate of the value of the buildings on each lot sold, as determined by its own CAMA calculations. As you can see, a great deal of the value of each property derives from the value of the lot, as distinguished from the buildings. In the fourth column of numbers, I show OTR's records of the "building area" of each house. In this regard, I should point out that the building area figures do not include basements (many of which are fully finished) and it does not include garages, porches, decks or swimming pools. In the fifth column of numbers, I show the estimated market value of the entire property (lot, building area and all of the extras) per square foot of building area — the measure that OTR used in each of its "comparables." As you will see, there is no correlation. For example, two houses on square 2075 — the 7th and 8th properties among the detached houses — were almost identical in building area. Yet, the value of the property per square foot was $276 for the real property on busy 34th Street, while it was $453 for the real property at 3311 Newark Street. There is nothing that the Board can do if OTR wishes to continue this silly "comparables" game, but the Board should not fall for this ruse in the future. It proves nothing but that OTR likes to cherry pick.
19. Also, I would like to address the question of finality and respect for the Board's decisions.
20. There were, from the point of view of the petitioners last fall, two beneficial results of the Board's recent Cleveland Park decisions.
Council Action —
Several people have pointed out to me that the across-the-board increases based on alleged increases in property values creates another kind of discrimination — the adverse effects on residents (particularly among the elderly) who see no corresponding increase in the homestead exemption ($30,000 for the past dozen years) or the senior citizen household deduction (based on adjusted gross income of less than $100,000, also set a dozen years ago).
I personally believe that the Council should increase both exemptions by 50%, to reflect inflation, bringing the homestead exemption up to $45,000 and the the senior citizen discount up to a cap of $150,000 adjusted gross income to keep in line with the inflation in property values.
Dr. Peter S. Craig
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