Operating from memory, as I’ve misplaced the notes I took at the meeting, below are the discussion points from the MVT CID Consolidated condo tax forum. Attendees included the MVT CID, Madrigal Lofts, 555 Mass and two members of the Office of Tax & Revenue. The Sonata and City Vista condominiums will also be affected but did not send representatives.
Presently for office and apartment buildings the CID sends tax bills to the building as a whole. These entities then pass on the costs to their tenants. For condominiums the CID bills each individual unit owner. Over the last several years the volume condominium units has increased six fold to nearly 1200 units. The administration costs of billing 1200 condo owners twice a year are high and consume 9% of the CID’s annual budget. Additionally since many condo residents do not understand the CID tax the collection rates are mediocre – often 60% for new buildings and 80% for mature buildings. This plan for a consolidated condo tax hopes to simplify the administration overhead and streamline costs.
Residents have objections on several fronts (after the jump). I am not a lawyer so the legal-esque points may not be articulated perfectly:
- The administrative overhead the CID is saddled with is not our problem. Residents are not convinced the CID and OTR have done everything they can to improve their administrative processes. For instance several existing capabilities for collecting real property taxes are not being employed for the CID tax: Escrow and online payment. Some residents percieve that the consolidated condo tax is just government pushing their administrative responsibilities onto other entities (condo boards) rather than taking responsibility for improving the way they operate.
- Presently a condo owner delinquent on their CID tax must resolve this obligation at settlement or their sale will not consumate. If the tax was instead assessed to the building then passed along in condo fees the legality around it is different. The condo board must file a lien against the unit owner. To file a lien involves securing legal counsel and increases the condo boards administrative costs.
- Most condo by-laws state that all costs must be distributed by units par-value. The CID tax is a flat $120 tax. While in the end D.C. legislation would likely trump condo-by-laws it would create a new layer of complexity in condo fee accounting where some items are flat and others are determined by par-value.
- Condo fees are a sensitive issue for resale of your condominium. Potential buyers searching through MLS listings often rule out properties from consideration sight unseen based on listing price and condo fees. The proponents of the consolidation suggest (paraphrasing) “the net effect for the owner is the same whether you pay $10 extra a month in condo dues or $120 a year to the government in taxes.” This may be true from a personal budgeting perspective but not from a resale perspective.
I think concerned residents would like to see the CID and OTR improve their efficiency rather than saddle condo boards indirectly with tax collection. While the CID and OTR absorbed that feedback it remains to be seen how strongly it will be considered or whether they will instead stay committed to directing energy towards getting the consolidated condo tax into emergency legislation so it will take effect in Fiscal Year 2011.
Lastly, this issue is really bigger than just the MVT CID. The Capitol Riverfront, NoMA and even Downtown BIDs are watching intently and hope to jump on the bandwagon.