The blighted property at 433 Kennedy Street NW

by Cesse Ip

A blighted property at 433 Kennedy St NW has been vacant for over four years and has become a nuisance to the neighborhood, as reported last year by Petworth News. Moreover, it has been paying the vacant tax rate for the past four years, according to DC Tax records, even though DCRA has labeled it as blighted. That difference impacts how much the owner pays in taxes, with blighted incurring a higher cost.

Last year we reported on this property as part of a larger series about several vacant properties on the 400 block of Kennedy St NW, all appearing to be owned by Charles Paret, or his development company, Coloma River. Paret owns 433 Kennedy St NW, through 433 Kennedy St Holdings LLC.

According to DCRA, this property is blighted, and has been vacant for 4.5 years. DCRA defines a building as blighted if “it is unsafe, insanitary, or otherwise determined to threaten the health, safety, or general welfare of the community.”

Blighted buildings are taxed at the Class 4 rate, which is currently $10 for every $100 of assessed value, according to DC’s Office of Tax and Revenue.

Class 3 is for vacant buildings and are taxed at $5 for every $100 of assessed value. Class 2 is for commercial buildings which range from $1.65 to $1.89 for every $100. Most of us are paying Class 1 residential buildings taxes, which are $0.85 of every $100.

Despite DCRA’s blighted status, tax records show that the 433 Kennedy property was taxed only at the Class 3 rate between 2018 and 2020. Also, surprisingly, or maybe mistakenly, in the second half of 2020, MyTaxDC only taxed it at the Class 1 occupied rate. This means the owners of 433 Kennedy paid at least half of what they should have at the blighted Class 4 rate.

In real numbers, the property tax of this building was $19,797.75 for the first half of 2022. At the Class 4 rate, the tax owed would have doubled to $39,595.50. If the owners had paid Class 4 rates in 2019, 2020, and 2021, that would have totaled at least $86,708.58.

Moreover, the assessed value of the property is only 85% of what it sold for in 2017. The 2022 assessment value and total taxable rate for 433 Kennedy Street NW is $791,910. MyTax DC records show in 2017 that the building was sold for $940,000. Taxing at the Class 4 rate at the market value for this building in 2017, not accounting for appreciation, would have meant that the owners of this building would have had to pay $282,000 in taxes over three years. Tax records show that this building was charged $124,160 in taxes — plus fees and interest — for the past three years.

At this point you might be wondering, why was the building charged property tax interest? It’s because no taxes were paid on this property for two years, between July 2020 and July 2022.

After over a year of no tax payments, DC Tax sent a September 2021 notice that stated that all taxes must be paid, (at that point was $106,130), or the property would be offered up in a tax sale. Then a few weeks later, the owners of 433 Kennedy Street were notified in October of 2021 that their property was sold in a tax sale. At this point, either the owner would have to pay all owed taxes, or the Superior Court of the District of Columbia would have been able to issue a deed to whoever had bought the tax amount and they’d own the property.

While this might have been the beginning of a new chapter for 433 Kennedy St NW if the new owner turned the building around, the change of deed never occurred

Tax records show that a recent payment of $141,020.82 was made on July 18, 2022, just three days after Charles Paret co-hosted a fundraiser with other developers for mayoral candidate Muriel Bowser. (Of note, DCRA, the agency in charge of vacant and blighted housing determinations and enforcement, is under Mayoral control, and Muriel Bowser selected the current Director, Ernest Chrappah, in 2018.)

DCRA will breakup into two distinct agencies next fiscal year on October 1st, after the DC Council passed a bill in 2020, unanimously overriding a veto from Mayor Bowser. The new Department of Licensing and Consumer Protection will then take over occupational licenses and enforce consumer protection laws.

Vacant and Blighted properties in the Brightwood / Petworth area.

Regardless of whether the owners of 433 Kennedy Street were undercharged on their property taxes, vacant and blighted properties remain a problem all over the district. According to DCRA, there are over 2,200 confirmed vacant buildings in DC, and 234 in Petworth. Kennedy Street alone has nearly 30 vacant properties between Illinois Ave NW and 3rd Street NW.

Some of these Kennedy Street properties have been vacant as long as eight years, leading many to believe that developers might consider the higher tax rate just the cost of business.

Perhaps Paret also believes that high tax rates are just a cost of business, and he can count on the city, and the agency run by the mayor that he fundraised for, to continue to not enforce the correct tax rate?

No matter what, it’s a disservice to the community that these buildings are vacant and blighted, especially for so long. These could be new businesses and new homes, bringing vitality, affordable housing and more to the neighborhood. Instead, they are eyesores, and represent a loss for the community and a lack of respect by the building owners.