The change in the D.C. real estate tax rate this year for single-family, owner-occupied houses was incorrectly reported in a Real Estate section articles last Saturday. It was a 12.7 percent decrease since last year, not an increase. (Published 10/3/90)
Appeals by D.C. property owners shaved $1.8 billion from this year's tax assessments, more than twice the reductions the D.C. government granted in response to appeals last year, the District reported.
The assessment reductions cut $36.8 million from property tax bills. Commercial property owners accounted for less than 15 percent of the successful appeals, but 93.8 percent of the tax reductions. The commercial tax reduction was triple last year's total.
The reductions were partly a reflection of declining property values, and partly a response to unusually large increases in assessments proposed by the District early this year, real estate tax experts said.
Even after the appeals, the total assessed value of taxable D.C. real estate increased to $45.2 billion this year from $39 billion a year ago, according to the Department of Finance and Revenue. But many properties lost value since the D.C. government stopped collecting research for this year's assessments in mid-1989, the experts said.
Amid a grass-roots revolt against D.C. property taxes, the number of homeowners who successfully appealed their assessments almost doubled since last year, and the average tax reduction from a successful homeowner appeal increased by more than a quarter despite a 12.7 percent increase in the residential tax rate, the District said.
Nonetheless, only $1.1 million of the $36.8 million tax reduction was for single-family, owner-occupied houses.
Mark Gripentrog, acting associate director of the Department of Finance and Revenue, said he "was taken very much by surprise" by the size of the tax reductions for owners of commercial property, which includes office and retail buildings.
The number of successful commercial appeals was virtually unchanged from last year, but the size of the rollbacks awarded by the D.C. Board of Equalization and Review, the tax appeals panel, ballooned.
Gripentrog said the reductions might reflect the way assessments lag behind current market conditions. The assessments, which were supposed to reflect property values at the end of last year, were actually based on data gathered by the D.C. government several months earlier.
"When the assessments were done, things were still going fairly well," Gripentrog said. "The market had not collapsed yet, as it has in the past few months."
Experts said the size of the rollbacks increased largely because the assessments themselves and the tax rate on commercial property had increased. D.C. assessors had proposed raising commercial assessments by 26 percent since last year, more than double the previous increase, Gripentrog said.
Even after the appeals, commercial assessments increased by 18 percent, while the tax rate increased by 5.9 percent.
One example was Van Ness Center, a building on Connecticut Avenue NW near the University of the District of Columbia. Last year, it was assessed at $30.2 million. Earlier this year, the District proposed a new assessment of $44.6 million. The owners of Van Ness Center argued that the property was worth only $35.2 million, and the Board of Equalization and Review agreed when it considered the appeal in May.
Consultants who help property owners appeal assessments said they were arguing in many cases that office buildings had lost value as property owners have lost tenants or discounted rents to sign new leases.
"You have more properties experiencing gloom and doom," said David Chitlik of Marvin F. Poer & Co., a tax reduction specialist.
Because assessments lag behind the real estate market, the current real estate downturn is expected to be reflected in next year's property assessments.
Gripentrog said he would be "very surprised" if home assessments increase by more than 3 percent next year, and he predicted that commercial assessments would increase by no more than 5 percent.
Fed up with property taxes and armed with more information about the appeals process, homeowners flooded the Board of Equalization and Review this year with pleas for relief.
R. Donahue Peebles, a former chairman of the board who now represents property owners in appeals, said the District has been slow to bring assessments into line with a decline in real estate values.
"Clearly, properties have declined in value. The District government has failed to recognize that to this point," he said.
Peebles said one house in the Kalorama neighborhood that was sold for $1,450,000 in 1988 was recently put under contract for $925,000.
"I am not buying property, because I don't think it's bottomed out yet," he added.
The assessed value of single-family homes in the District ended up rising by 17.6 percent, slightly more than last year's increase of 17.4 percent, according to the D.C. government.