Thursday, March 04, 2010

H Street: Another Retail Spot?

The flow of development making its way down H Street, NE, will soon reach 13th and H Streets, a condemned two-story "office" structure at 1381 H Street that its owners hope to tear down to make room for something better. What, we don't yet know. Owner Clifford Utley has filed for a raze permit; once approved, NSD&E Inc. will pull down the dilapidated building, and Utley can set to work revitalizing his lot with a new mixed-use building, likely composed of ground floor retail with office space above. By the time a new development emerges, H Street might even have a functioning street car (legal disclaimer: don't count on that).

Utley, owner of construction company Utley Mechanical Inc., told DCMud he had previously tried to obtain permits to renovate the structure, but there was just "too much red tape" required to save the deteriorating building. Utley said his decision to raze and rebuild was partly due to what he called "exorbitant taxes" he had to pay on the property last year. The property's tax assessed value is $190,000 and has been taxed under 10% vacant property rate. According to records from the Office of Tax and Revenue, in 2009, Utley paid over $28,000 in taxes, including some back taxes and related charges.

Though his plans are still rather vague, the erstwhile developer said he is moving forward with his efforts to raze and start over. Over the next few months, Utley indicated he would figure out the financing. Then find an architect, then create a development and building design, then proceed. Seems to us as good as done. Utley assures us he will do something with the property pretty soon.

Washington, DC real estate and development news


JJ said...

Umm, maybe you guys should be a tad more skeptical about the so-called good intentions of landlords that let their properties rot unused to the point that the city has to impose nuisance property tax increases to get them to fix it up/use the property.

Did it ever occur to you guys that this landowner is just turning his property into a big hole on H St. just so he can avoid the higher taxes and that he really has no intention of building on the property?

Dig a little deeper next time before you write a post about a developer's good but curiously vague plans...

Here is a suggestion: why don't you write an article about all the dead-beat landlords on H St. who are just letting architecturally significant buildings they own rot b/c they're too miserly to fix the places. These places then turn into breeding grounds for blight and crime...

Anonymous said...

Here here to JJ's point. The "less significant" buildings get demolished by neglect, and the cropped photos highlight their bleakness. Then one day in the future, you're walking down the street and wonder where the fine grained fabric went. It got torn down piece by piece because the city couldn't see the forest for the trees.

If you pulled off the permastone and freshend up the paint you could plop this humble building on the mainstreets of Georgetown or Alexandria.

A more concrete proposal would be to reverse the tax laws that incentivize demolition by neglect, and instead incentivize maintaining your buildings with laws that have actual consequences. Protect our heritage! (please)

Tom A. on Mar 5, 2010, 8:54:00 AM said...

They both said it better than I could. We have plenty of untaxed (or lower taxed) vacant lots on H Street already.

If he were smart, he'd try to sell it to the restaurant coming in next door for part of an outdoor patio space. (I think they plan to use the space next door- behind the fence for patio seating.)

Or maybe he did already, and they said no.

skinnytree said...

Demolition through neglect exacts a terrible economic and social cost to our neighborhoods.

It is remarkable that there is no mechanism to enforce BASIC maintenance codes in DC. I strongly support the higher tax rate for derelict buildings in DC, but it must be better designed as an incentive for these deadbeat slumlord owners (i.e. NOT developers) to sell, not to raze.

DCMUD is understandably pro-developer, but it seems to me that developers would be the ones to benefit the most if these properties were sold to developers, rather than be allowed to rot or be razed and to sit idle for years and years.

Ken on Mar 5, 2010, 10:11:00 AM said...

Editor's note: Wow, sorry, I thought the last paragraph was laced with skepticism, and thought we made it clear that he was demolishing the building without an inkling of how or what to finance. Perhaps we should have been less clever and more direct. In our opinion, we are not pro-developer, we just want to catalog changes to our urban fabric. We see our jobs as pointing it out, as we did here, so that neighbors are aware of what is happening.

Richard Layman on Mar 5, 2010, 12:58:00 PM said...

In my opinion, your belief of your viewpoint:

In our opinion, we are not pro-developer, we just want to catalog changes to our urban fabric.

almost never comes across. Instead, there is a kind of glee and supra-hopeful pro-development vibe that appears to be evident in just about every entry.

Sue said...

Maybe the landlord is just a rational actor who has read the Brookings report on how to finance the H Street streetcar line. (One part of the answer is an upfront levy on local commercial property owners of 4.6% of the value of their impacted lots/improvements). Now's the time to minimize that value. It's also not the time to maximize new investment. If the streetcar does happen, expect to see changes in the zoning to allow for significantly increased density.

There's a regulatory environment here with fairly predictable patterns of enforcement, non-enforcement, incentivization, etc. that contributes to these sorts of dynamics.

Ken on Mar 5, 2010, 2:42:00 PM said...


Pro-development, generally. Pro-developer, not necessarily. We support the densification of the city in most places, especially along mass transit lines, but we often disagree on how it is approached, the architecture, and the kind of development. If it comes across otherwise we can assure you it is not gleeful cheerleading, it may be just it is the topic of our column.

skinnytree said...


Thanks for clarifying. Should have caught the sarcasm, but we were probably thrown off by the first line of the piece.

For what it is worth, I do appreciate the site and information.

Anonymous said...

I second skinnytree, I most definitely appreciate this site. Everyone's a critic it seems.

Anonymous said...

An excellent example of why I'll be writing to my City Councilman to suggest we rewrite the tax code. If you have a building you allow to be demolished through neglect, and then choose to raze, your property tax should be at 15%, or even 20%, of the last assessed value when the building was standing, effective on the 365th day after you demolished without rebuilding. A year is more than enough time for people with serious plans to get financing and permits submitted, but not nearly long enough to make it worth it to slumlords like this guy to try and kill the building to save a couple dollars.

realWashingtonian said...

First of all, demolishing the structure should not reduce his property tax by much. The tax assessment is based largely on the value of the land, and then on the value of the existing "improvements", which, as a modest-sized building, wasn't much. In fact, the assessment is $144,000 for the land, and $46,000 for the building. Even at the 10% tax rate for vacant properties,which was adopted by the Council to hasten their redevelopment, his tax bill would have been $19,000, without the fact that he had overdue taxes. The point is that the higher tax rate for vacant property will not be reduced by tearing down the current building, which just shows that the guy doesn't know what he's doing.

The Council has since reduced the rate back to 5%, and held hearings on new bills to discourage vacant land/buildings. Most of the people who came to the hearing had horror stories of innocent people getting caught in the technicalities of the 10% vacant property charge, but those are the exceptions. The Council needs to hear from people who want to see the District put incentives in place for people to fix up their properties and get them rented. Please send a note to Jack Evans or Muriel Bowser, who are the authors of the two bills, and tell them how bad it is for investment and safety to have property owners sitting around with vacant buildings/property, letting it deteriorate. If owners of vacant land have to pay twice as much property tax, perhaps that will be an incentive to get going on some rehab.

inchirieri apartamente cluj on Sep 7, 2010, 9:46:00 AM said...

After he paid $ 190 000+ $ 28 000 in taxes he can do whatevere he wants with his building. I am sure he has some plans for the deteriorating building, otherwise he wouldn't invest in it.

In response to what JJ said: "Did it ever occur to you guys that this landowner is just turning his property into a big hole on H St. just so he can avoid the higher taxes and that he really has no intention of building on the property? " My response is pretty simple: Would you pay so much for a ruin, in order to do nothing with it? If he is a business man his eyes will be on the profit. If there is an empty space will there be any profit? I don't think so.

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