Quarterly: Winter 2004 - GWCAR - Greater Washington Commercial Association of REALTORS

CBQ >> Winter 2004 Issue

Taxes, Lien Laws, Elections Highlight DC Council in 2004

by Mary Rudolph, Vice President of Public Policy/DC

Property Tax Relief

The DC Council passed property tax relief for owner-occupied properties in January. The new law will cap property tax increases at 12 percent and increase the homestead deduction from $30,000 to $38,000. REALTORS^®' grassroots efforts helped convince a divided Council that homeowners and prospective homebuyers were troubled by dramatic spikes in property taxes on homes all over the District.

A bill proposing a 10 percent cap, originally introduced by Ward 2 Councilman Jack Evans and At-Large Councilman David Catania, ran into opposition from Councilmembers Phil Mendelson, Adrian Fenty, Kevin Chavous and Harold Brazil. Mendelson believed that the tax cap would benefit only the wealthiest homeowners in Ward 3, and proposed an alternative of reducing the tax rates for owner-occupied properties.

The suggestion to create another tax class was rejected by most as bad tax policy. Along the same lines, Mendelson discussed other methods of giving identical tax relief to each homeowner in the District through an increase in the homestead deduction. Brazil generally supported the tax cap, but sought legislation that would recapture the tax savings in a subsequent year or upon sale of the property. He feared that too many homeowners would dispose of their property and receive a "windfall" from Evans/Catania tax relief proposal. Witnesses testified at the hearing regarding recapture provisions that mortgage markets and elderly homeowners could be hurt if the DC Council imposed this kind of uncertainty on DC transactions.

The 10% cap proposal nearly failed at the Council's January 21 legislative session until At-Large Councilwoman Carol Schwartz stepped in and proposed the 12% cap to go along with the increase in the homestead deduction.

Catania and Evans have expressed support for further tax relief, including rolling back the 2002 recordation and transfer tax increases as well as building in adjustments for inflation into the homestead deduction.

Hands-Free In DC

Bill 15-35, passed by the DC Council in January, will ban the use of a hand-held cell phone by persons driving a vehicle in the District. At hearings in October of 2003, no one testified in opposition to the Bill. The Metropolitan Police Department and the American Automobile Association supported the bill. Nevertheless, it is clear that members of the DC Council had no intention of banning drivers from any use of cell phones.

The bill contains an exception for emergency situations and allows a driver to press answer and disconnect buttons. The new law will not require drivers to purchase voice-activated phones, so long as they use a headset or ear attachment and mic while driving. Violators may be fined as much as $100, but first-time violators may have the fine waived if they can show that they immediately purchased a hands-free accessory. Under the new law, violators will not accrue points on their records.

The bill also requires MPD officers to note in accident reports if cell phones or electronic devices are present in vehicles. The bill requires DDOT to publish an Annual Report containing statistics on the association between the use of cell phones while driving and collisions or accidents. Bill 15-35 also bans the use of cell phones by school bus drivers, whether or not the driver is using a hands-free device.

District Of Columbia Budget

The District of Columbia is about to certify more than $94 million in new revenues not previously projected for FY 2004. Although Mayor Williams has not yet forwarded the budget to the DC Council, we are informed that so far the Mayor is not seeking any new business taxes. In working with the Mayor's office and with members of the DC Council for property tax relief for residential properties, GWCAR staff have reminded them of their promise last year to roll back the increase in recordation and transfer tax rates when the budget gap was closed. At this time, DC's CFO, Nat Gandhi, cites a technical flaw that prevents a rollback in FY 2004, but GWCAR staff are formulating a strategy to correct this error and have support in the DC Council for it.

Brokers Lien And Interstate Brokerage Laws For DC

GWCAR has put together a task force to review and recommend whether draft legislation regarding Brokers Liens and Reciprocity should be discussed with the DC Real Estate Board and taken to the DC Council for introduction.

DC 2004 Elections

2004 is an election year in DC. Six members of the Council are up for re-election and no qualified challengers have appeared on the horizon. At-Large Councilmembers Carol Schwartz and Harold Brazil, Ward 2 Councilman Jack Evans, Ward 4 Councilman Adrian Fenty, Ward 7 Councilman Kevin Chavous and Ward 8 Councilwoman Sandy Allen are all engaged in fundraising for the coming campaign. Over the next several months, you will certainly be contacted by some of these councilmembers for campaign contributions. If you are inclined to support the incumbents, you can advance GWCAR's issues by delivering a message along with your check.

Over the next few months, GWCAR staff will be providing you with information specific to each of the incumbents, and with talking points on issues of concern to commercial brokers.