The Honorable Vincent C. Gray
Fiscal Impact Statement: B 18-0732 "Fiscal Year 2011 Budget Support Act of 201 O"
Subtitle UI}(D}- Vacant Property Disincentivization Act of2010 Background
The proposed subtitle would create a vacant property tax at a rate of $5 per $100 of assessed property value, 55 and increase the vacant property initial registration fee56 from $20 to $250 and the renewal fees from between $10 and $60 for any subsequent years57 to $250. Specifically, the proposed legislation would define blighted properties by clarifying that vacant buildings are those for which no resident can show an intent to return and occupy,58 and establish four property tax classes by creating a Class 3 vacant property tax rate at $5 per $100 of assessed value, and a Class 4 blighted property tax rate at $10 per $100 of assessed value. 59 It would also provide exemptions from the registration fee and Class 3 tax for properties actively listed for sale and rent, under active construction, subject to probate proceedings or pendin§i predevelopment administrative review, as well for owners facing undue economic hardship. All exemptions would be limited to one year, except for the rental exemption that is limited to 90 days.
Additionally, the proposed legislation would require the Mayor, semiannually, to transmit a list of vacant and blighted properties to the Office of Tax and Revenue for the purposes of property tax billing, 61 provide notice and appeal rights, 62 and would remove criminal sanctions in the case of failure to register and pay all fees. 63
Financial Plan Impact
The proposed legislation is expected to generate $3,451,778 revenues in FY 2011 and approximately $13.5 million over the FY 2011 through FY 2014 budget and financial plan from the registration and renewal fees and new Class 3 taxes. It is estimated that the new Class 3 tax proposal would require an additional FTE at the Office of Tax and Revenue (OTR} to handle the revenue collection.
55 By amending Subsection (b-10) of the D.C. Official Code§ 47-81256 By amending the D.C. Official Code § 42-3131.09. It would provide an exception to registration if the vacant building is owned by the government of the United States or its instrumentalities or by a foreign government or its instrumentalities.
57 The current renewal fees are:
(1) One-half of the initial applicable registration fee, if paid within 30 days after the renewal date; (2) Equal to the applicable initial registration fee, if paid after 30-day period but before the receipt of notice; (3) Three times the applicable initial registration fee, if paid after receipt of the notice. 58 By amending D.C. Official Code ' 42-3131.05.
59 By amending sections 47-812 and 47-813 of the District of Columbia Official Code 60 By amending D.C. Official Code ' 42-3131.06, and repealing Paragraphs (3A) and (6) of subsection (b). 61 By adding a new section 16a to D.C. Official Code ' 42-3131 62 By amending D.C. Official Code ' 42-3131.11 and ' 42-313 l.15(a) 63 By removing the expression "imprisonment for not more than 90 days, or both" from D.C. Official Code 42-3131.10
ATTACHMENT B
The Honorable Vincent C. Gray
Fiscal Impact Statement: B18-0732 "Fiscal Year 2011 Budget Support Act of2010"
Additionally, the proposed refistration fee structure, if implemented by August 2010, could generate $94,000 in FY 2010. 4 The registration and renewal fees would be deposited into the Nuisance Abatement Fund, a special-revenue fund. The impact of the proposed subtitle is incorporated in the revised FY 2010 budget and the proposed FY 2011 through FY 2014 budget and financial plan.
Fiscal Impact of Subtitle (ll)(D) - Vacant Propel1 v Disincentivization Act of 2010 FY2010 FY2011 FY2012 FY2013 FY2014 Four Year Total
Revenues from vacant $94,000 $355,060 $323,906 $304,471 $286,203 $1,269,640 property registration feesa
Revenues from vacant
property taxb
NIA $3,182,918 $3,055,601 $3,117,000 $3,248,000 $12,603,519 Additional cost of 1 FTE NIA $86,200 $86,200 $86,200 $86,200 $344,800 atOTR
Total Impact $94,000 $3,451,778 $3,293,307 $3,335,271 $3,448,003 $13,528,359 • There are 2,448 identified vacant properties. With the assumption that the legislation would be enacted in the last quarter of FY 2010 and increased registration fees would be collected in August and September 2010, one sixth of the existing vacant properties are assumed to register with the new fee structure in FY 2010 and the rest in FY 2011; then renew their registrations every year. A 2 percent addition per year is assumed for the out years.
Additionally, due to the negative incentives, an 8 percent annual decline in the number of vacant properties is assumed, for a net annual decline of 6 percent when combined with the assumed 2 percent annual addition to vacant properties. A similar fee structure resulted in a 22 percent decline in the number of vacant properties in Wilmington, DE over 3 years. An allowance of 40 percent was made for exemptions that would reduce the revenue collection from graduated renewal fees.
b There were 2,400 properties that were in Class 3 in tax year 2009 and about 100 of those are on the DCRA list of blighted properties. 718 properties are currently identified as Class 1 with an assessed value of$241.7 million; 88 properties are currently identified as Class 2 with an assessed value of$59.0 million.
Subtitle QI}(E) - Electronic Service of Notice Amendment Act of 2010 Background
The proposed subtitle would amend Department of Consumer and Regulatory Affairs' (DCRA.) license and permit application process to require the applicants to provide a viable email address for the receif t of service of process, 65 and to allow DCRA to send electronic notices of infraction, 66'6
including notices related to business licenses and construction permits and notices requiring correction of unlawful conditions regarding abatement of nuisance property. 64 DCRA would need 60 to 90 days from the date of enactment to complete the set up and public outreach before collecting the increased fees.
65 By amending D.C. Official Code § 47-285 l.04(a) and Section 105.3 (Application for Permit) of Chapter IA of Title 12A (Building Code Supplement) of the District of Columbia Municipal Regulations. 66 By amending the Department of Consumer and Regulatory Affairs Civil Infractions Act of 1985, D.C. Official Code§ 2-1802.05 (D.C. Law 6-42; effective October 5, 1985). 67 By amending Section 3(1) of An Act to provide for the abatement of nuisances in the District of Columbia by the Commissioners of said District, and for other purposes, approved April 14, 1906; 34 Stat. 115; D.C. Official Code§ 42-3131.03(1).
ATTACHMENT B