D.C. tax collectors say they will auction off the office building occupied by the city's Department of Housing and Community Development unless delinquent real estate taxes totaling more than $180,000 are paid by Nov. 30.
The building belongs to a subsidiary corporation of the D.C. Development Corp., which is a quasipublic arm of the housing department. DCDC and the housing department are the sole tenants in the four-story converted warehouse at 1133 North Capitol St.
Housing officials yesterday offered conflicting statements on whether the department's position was that the taxes were owed or that the building was exempt. Meanwhile, the city's tax collectors said they would continue to treat the property like that of any delinquent taxpayer -- including sale at a tax auction, if necessary.
According to delinquent tax notices from the D.C. Department of Finance and Revenue, $99,696 in unpaid taxes, penalties and interest are owed on the building from the previous tax year, which ended June 30. An additional $86,588 in taxes is also overdue for the first half of the current tax year, plus penalties and interest charges that have not yet been computed.
The notices advise that if the overdue taxes are not paid by Nov. 30, the tax collectors will advertise the building for sale. The city conducts a tax sale of delinquent properties in January of each year.
Early yesterday, housing department spokeswoman Sandy Robinson said, "Our position is that this is a mistake." She said housing officials had told the tax collectors that the building should be exempt from the property taxes.
But late yesterday afternoon, the department's chief lawyer, James Murphy, said, "We intend to pay all taxes due." But he noted, "I don't think there is any hurry to pay them," since there is a two-year period after a property tax sale during which owners can redeem their property by paying all back taxes and penalties.
"We're in the business of collecting taxes," said Jeffrey Humber, the city's acting director of finance and revenue. "It's not our concern who will pay. That's a matter between the owner and the department."
Humber said that no housing officials had talked to him or his staff about the property, and that no application for a tax exemption had been filed.
Abraham Beaton, president of DCDC, said the lease signed with the housing department two years ago calls for the department, which stations some 1,200 workers in the building, to pay the taxes.
Beaton said DCDC had recommended to housing department officials some time ago that they request an exemption. Calvin W. Rolark, chairman of the DCDC board, said the housing department is responsible for any delinquent taxes, since it is the major tenant and funds DCDC.
Ordinarily, buildings owned by the city government are tax-exempt. However, the North Capitol Street building technically is not owned by the city, due to an arrangement engineered two years ago by housing director Robert L. Moore and DCDC that was designed to let the housing department--facing a sizeable rent increase for the downtown office space it was then occupying--move into the new space as quickly as possible.
Moore and DCDC, seeking to avoid a lengthy process of obtaining approvals from the City Council and Congress, created what is in effect a paper corporation, D.C. Rehabilitation and Construction Inc., to hold title to the building. The directors of the new corporation were three former top-ranking officials of DCDC.
Under the terms of the arrangement, the DCDC-created corporation bought the building and then Moore arranged for a $3.5 million loan from the city's federally supplied Community Development Block Grant funds to renovate the building. After the building's mortgage is paid off in 10 years, the building will become the property of the city government.