The assessed value of some of Washington's most expensive commercial real estate has declined or remained the same in the past four years while assessments on most single-family dwellings have soared, according to a report issued yesterday by the D.C. auditor.
While the assessed value of all residential property has jumped an average of 66 per cent since 1974, the assessed value of business properties has increased only 23 per cent, according to the report.
In addition, assessments on the city's 20 most valuable properties as of 1974, have risen an average of only 16 per cent in the past four years, the report says.
"It is quite apparent . . . that several of the major commercial properties of the District have been given a free ride for property tax purposes over the last several year," stated the report prepared by Carl Bergman, deputy D.C. auditor. The auditor's office is an arm of the D.C. City Council.
Donald Beach, chief of the city's real estate property assessment tax administration, said he had not read the report and could not explain why the assessments of almost half of the 20 most valuable properties from 1974, including The Washington Post building and the Capital Hilton Hotel, had declined or remained constant.
As a general rule, he said, residential assessments have leaped ahead of commercial assessments because intown living has become increasingly popular, accelerating the turnover of homes, while commercial development continues to lag with many old line city businesses still leaving for the suburbs.
Beach denied there is a government policy to give businesses a tax break. The disparity in commercial and residential assessment changes is simply the result of open market dynamics, he said.
He noted, for example, that two large downtown stores - Kann's and Lansburgh's - have closed down in the last few years, and until very recently office buildings had been plaged with vacancies.
In addition, Beach said, the assesed value of office buildings and hotels is determined primarily by the amount of rent collected or the income produced from the building.
"To raise the assessment (of a commercial building) $1 million takes a gross income increase of $250,000," he said. Most office building tenants are on long-term leases, and rents are not increased annually, he said.
The assesed value of single-family homes, by contrast, is determined by the price of comparable homes sold in the same neighborhood, Beach said.
Bergman said the city tax rolls show assessments actually declined in the last four years for the following properties: The Washington Post, Sheraton Park Hotel, the office building at 1025 Connecticut Ave, NW, The Towers apartment building at 4201 Cathedral Ave, NW, the Mayflower Hotel, the apartment building at 4000 Massachusetts Ave, NW and the National Press Building.
The Capital Hilton Hotel had the same $12.1 million assessment his year as it held in 1974. The Van Ness Center, a large shopping and apartment complex on upper Connecticut Avenue, had its assessed value increase only 1 per cent in the four-year period.
Of the remaining 11 properties among the top 20 in value in 1974, all had their assessments increased, Bergman said, but many of the increases occurred because of the buildings were still under construction in 1974 and subsequently acquired greater value on completion.
L'Enfant Plaza, for example, which contains an underground shopping mall, had its assessment increased by 85 per cent in four years from $37.1 million to $68.9 million up on completion. The owners now are appealing their 1978 assessment, Beach said.
Bergman prepared the report for a public hearing held yesterday by City Council member Marion Barry, chairman of the Council's finance and revenue committee.
Barry held the hearing to gain citizen and official opinion on several bills that have been introduced to case the whopping property tax increases that have hit many home owners this year.
Barry said the disparity in the late of increases between businesses and single-family homes did not surprise him but he asked Beach to send him a written report explaining how the assessors arrived at the 1978 assessments for the 20 top commercial properties cited by Bergman.
The lag in commercial and apartment building assessments "is the reason that home owners are bearing an incresing proportion of the total burden," Barry said.
Bergman said that in 1974, single-family homes and commercial properties each accounted for 39 per cent of the city's tax base of $6.8 billion. By this year, single family homes accounted for 49 per cent of what is now a $9 billion base, while commercial property has slipped to 36 per cent, he said.
Overall, the assessed value of apartment houses in the city has declined 11 per cent since 1974, Bergman said.
Beach attributed the decline to rent control. The assessed value of an apartment building is determined by the income produced by the building, and when rent control holds down the rents, the value also goes down, Beach said.
Bergman attributed part of the decline to the widespread conversion of apartment units to condominiums in recent years.