The three-story rowhouse Sam Rosenfeld owns on the 1900 block of Biltmore Street NW looks awfully similar to the one next door: same square footage, same 11 windows, same white-brick facades, same paved walkways.
To Rosenfeld, the structures seem identical. But to the eyes of the District's tax collectors, the buildings could not be more different. City assessors recently sent Rosenfeld a tax bill that estimated his property is worth $862,270. Ted Fields, who owns the unit next door, was taxed on an assessment of $231,500.
"I'm interested in why his is so low," Rosenfeld said. "The problem is why there is this discrepancy."
Officials said that the reason Rosenfeld's property was assessed at nearly four times that of Fields's building is that although both owners have divided their buildings into rental properties, Fields's five units are subject to D.C. rent control laws, while Rosenfeld's four units are not.
Because Fields is limited in how much income his property can generate, his building is worth less than Rosenfeld's on the open market, according to the Office of Tax and Revenue, which performs the assessments.
Yet such properties can fetch far more money than the tax office predicts. A six-unit, rent-controlled building on Mintwood Place in the same Kalorama neighborhood was recently assessed by the city for $365,050. But when it was placed on the market, the property fetched a bid of about $1 million -- which was then matched by the affluent tenants who lived there and had the right of first refusal to buy the property under the city's rent control laws.
Real estate agents say the Mintwood Place example is rare, but some homeowners say the example shows that the city is giving rent-controlled landlords too big of a tax break, especially in such high-rent neighborhoods as Kalorama, Adams Morgan and Dupont Circle.
"This proves my point," said Matt Forman, vice president of the Kalorama citizens association who has protested the city's low assessments of rent-controlled units. "Their approach is resulting in assessments that are dramatically lower than market value."
The way the city assesses properties has not changed much in several years, but the stakes have grown recently as assessments have soared. Many residents have been stunned by the amount of their new taxes and are skeptical of the city's assessment methods and have begun to challenge them.
Thomas Branham, the city's chief assessor, said he was initially surprised when presented with several examples of wildly different assessments for similar properties in Kalorama.
"I had the same initial reaction, which was, 'How could that be?' " he said. But after further review, he said he is confident the city used the proper assessment methods.
Most townhouses are judged according to a "market-calibrated approach" in which their values are determined by comparing them to similar buildings that have recently been sold. But those under rent control are assessed using an "income approach," in which they are assigned a value depending on how much the landlords earn in rent.
Fairfax and Montgomery counties use the income approach for larger apartment complexes. But the suburbs are not governed by rent control laws, and they generally do not have townhouses divided into apartments.
The District's rent control law, enacted in 1975, is among the strictest in the nation and covers an estimated 101,500 of the city's 160,900 rental housing units, a 2000 study found. Federally funded public housing, buildings built after 1975 and apartments owned by landlords who own fewer than five units are exempt. Designed to protect longtime tenants from large rent increases, the laws make it difficult for a landlord to remove rent control status from a building.
"When you consider a property is advancing [in value] 20 percent every year versus one that is under rent control and can only increase rent 2.1 percent, you can see the appreciation is 10 times greater for the first property under the rental laws we've got," Branham said.
Fields, who owns the rent-controlled townhouse next to Rosenfeld's property, said he is relieved. "There's no way you can have the taxes jacked up on these houses without raising the rent on them."
But if city assessors give landlords such as Fields a break because they cannot pass on the higher taxes to the tenants through rent increases, homeowners who live in their properties and do not plan to sell any time soon say that they cannot afford the soaring taxes, either.
Anne and Carlos Salinas own a four-story townhouse on 20th Street NW that was assessed at $1.2 million this year, up nearly 50 percent from the year before. The Salinases live in the top three floors of their four-story unit and rent the basement to a tenant.
The adjoining property, which is nearly identical in appearance -- albeit a bit more run-down -- was assessed at $341,500. That's because it was divided into seven rental units.
"I don't see how that could be justified," Anne Salinas said. "That house [next door] would sell for at least $700,000 or $800,000."
The Salinases have filed an appeal with the city's tax office.
Bob Cardis manages a rent-controlled building in Dupont Circle that was assessed for about $400,000, while similar buildings nearby were valued at two or three times that amount. He said he understands the city's assessment methods but empathizes with homeowners who face soaring tax bills. "My question is why -- just because you are a homeowner in a hot market -- are you penalized?" he said. "In some cases, your only option is to sell. . . . How does that benefit the stability of a community?"
That's the same question Jack Perlmutter might ask. His townhouse on Cliffbourne Place NW was valued at $814,760. His neighbor's property, which looks similar but is divided into seven rental units, was assessed at $288,900.
"That's impossible," Perlmutter said. "They've got a much better house than I do."