The District of Columbia is moving to streamline its handling of property tax exemptions, an issue that has become increasingly sensitive since a Supreme Court decision raised doubts about the city's home rule authority.
At the same time, a District-based nonprofit organization has gone to Congress for a tax exemption, refusing to deal with the City Council despite urging by Mayor Marion Barry Jr. and advice from two Senate subcommittees.
Legislation being considered by the City Council includes measures that would set deadlines for filing tax-exemption applications, clarify the appeals procedure and establish penalties when property owners who already have exemptions fail to file required reports. A City Council staff member described the act as a "house cleaning measure" intended to "alleviate confusion" that occurs under present regulations. Now, "people don't know where to file" and sometimes file simultaneously with the Superior Court and the city government, he added.
The Jewish War Veterans, U.S.A. National Memorial Inc., which turned to Congress instead of the city for tax help, had a number of problems with the city government, according to the group's attorney, John R. Risher Jr., who is a former D.C. corporation counsel. He said, "The District of Columbia has shown an increased hostility, shortsightedness . . . and plain capriciousness" toward the veterans' group.
The organization recently purchased a new building at 1811 R St. NW, for which it sought the tax exemption. The exemption for its former building, granted by Congress in 1958 before passage of the District's Home Rule Act, covered only that structure, said Risher.
Despite the objections of the city and the Senate subcommittees, the Jewish War Veterans found sympathizers on Capitol Hill. Passage of a bill granting the tax exemption to the organization was expected this week.
D.C. Del. Walter E. Fauntroy, the city's nonvoting member of the House of Representatives, said the committee on the District of Columbia decided to send the Jewish War Veterans' bill on to the full House because of the "cloud" over city authority resulting from a 1983 Supreme Court decision that invalidated legislative vetoes.
"What was questioned . . . was whether the City Council had the authority" to give the veterans' group a tax exemption "since the city charter itself has been abrogated" by the court decision, Fauntroy said. Approval of the bill was "a one-time, nonprecedent-setting" action because Congress was expected to approve legislation this week removing the home-rule cloud, he added.
City officials and some senators did not agree with Fauntroy's view that the city's power to grant exemptions was in doubt. Mayor Barry said in a letter to Sen. William V. Roth Jr. (R-Del.), chairman of the Committee on Governmental Affairs, that "the appropriate forum for legislation exempting the Jewish War Veterans Memorial" from D.C. taxes is the City Council. "The District supports tax-exempt status for this property but opposes the enactment of this legislation by the Congress," the letter said.
When the veterans' group first appealed to Congress, "the Senate said you should go to the city government because . . . this is now a city issue," according to a spokeswoman for Sen. Charles McC. Mathias (R-Md.), chairman of the Senate subcommittee on governmental efficiency and the District of Columbia. "So they the veterans' group went to the House, and the House put in the bill."
A staff member in the office of Sen. Thomas F. Eagleton (D-Mo.), ranking minority member of the subcommittee, said the senator also felt the tax-exemption request "should have been handled at the City Council level. . . . The council should have been given a chance" to rule on the question.
The staff members for both committees said there was "no objection" to the exemption for the Jewish War Veterans, only to the congressional action.
Risher, the organization's attorney, said he applied to the Department of Finance and Revenue for a tax exemption after he learned of Barry's letter to Roth saying the city supported tax-exempt status for the property. The department rejected the request. Risher said he did not appeal to the City Council for legislation to exempt the property, as Barry suggested, because "what the council gives it can take back.
"We are talking about a national organization the Jewish War Veterans . . . dedicated to a national purpose," Risher added. "I don't understand the logic of the argument that this is not a matter of national concern."
The controversy over the veterans group's bill, and questions about a bill to amend the incorporated status of a Blue Cross and Blue Shield insurance group, which some critics said should have been handled by the city, added impetus to D.C. efforts to strengthen and clarify its property tax exemption laws.
A city bill signed by the mayor this week says groups must apply for exemptions by June 30 to get them for the next tax year, and that if requests are denied, owners have six months to appeal the decision to D.C. Superior Court. D.C. law does not now specify a filing deadline, according to a report by the City Council secretary. The council is expected to send the act to Congress this week. It will become law after 30 consecutive legislative days if Congress does not overrule it.
Other measures, part of a larger tax law amendment bill now being considered by the council's finance and revenue committee, also would change the regulations to establish June 30 as the filing deadline for tax exemptions, would impose a $100-a-day penalty on owners of tax-exempt properties after the deadline for required reports until the documents are submitted, and give the mayor authority to waive the penalties.
These three requirements probably will remain in the bill, which is now being redrafted, said John A. Wilson, the committee chairman. A major reason for the overhaul is to "establish sound criteria for issuing tax exemptions . . . ," he said, adding that there are "a lot of questions" about how tax exemptions are granted.
The Department of Finance and Revenue "has tried to tighten up" on enforcement of city tax laws, including those dealing with property tax exemptions, said Wilson. "We have so much tax-exempt property in this city, it's incredible.
"I want us to be able to collect every dime of taxes due us," he added.
The efforts to strengthen enforcement have resulted in a flurry of lawsuits against the city by religious, educational and nonprofit groups.
One law firm has 24 cases pending before the D.C. Superior Court on behalf of its clients, about half of them for universities, said attorney Stanley J. Fineman. The firm, Wilkes Artis Hedrick & Lane, has "resolved" 10 other cases in the last year and a half, either through settlements or by getting a favorable decision from the court, Fineman added.
The number of cases is "higher than normal. My view is that D.C. has attempted to get tougher and has cast a wide net that has swept in some [properties] that should be tax exempt," Fineman said. "I suspect that the tightening has also picked up properties that shouldn't be exempt."