Mayor & City Council

Motion Sheet April 25, 2023 Mayor and Council Meeting Consent Agenda: I move to adopt the Consent Agenda. (Mayor Pro Tem Mitchell will read the agenda items) 23-G-66 Approval of minutes from the March 21, 2023 and April 11, 2023 meeting. ACTION ITEMS: 23-O-03 Introduction of FY ’24 Budget Ordinance - An Ordinance Of The Mayor And Council Of The City Of College Park To Adopt The Fiscal Year 2024 General Fund, ARPA Allocation Fund, Capital Projects Fund And Debt Service Fund Budgets Of The City Of College Park - Gary Fields, Director of Finance The Public Hearing will be held on May 9, 7:30 p.m. in the Council Chambers of College Park City Hall  Updated 13 B Blighted Properties CITY OF COLLEGE PARK, MARYLAND DISCUSSION / PRESENTATION COVER REPORT Prepared By: Gary Fields, Finance Director Meeting Date: 4/25/23 Presented By: Kenny Young, City Manager Bob Ryan, Public Services Director Gary Fields, Finance Director Originating Department: Public Services Topic: Discussion of setting a different property tax rate for vacant and blighted properties Strategic Plan Objective: OKR 1 – Innovate and improve City services to enhance quality, value, and accessibility for all our residents. Background: Vacant and blighted properties can be residential, commercial, or industrial, and can involve a wide range of circumstances. These properties can pose a threat to public safety and can be a public nuisance. Vacant/blighted properties include abandoned buildings, unused lots that attract trash and debris, under- leased shopping strip/plaza commercial properties, neglected industrial properties with environmental contamination, deteriorating single-family homes/apartments with significant housing code violations, and housing that remains vacant for long periods of time. These properties can create a drain on City resources in a variety of ways: - reduce city tax revenues - through tax payment delinquency, reduced assessments due to lower value, and lowered property values in the surrounding neighborhood. - low occupancy rates reduce value and can be used as the basis for property assessment appeal. - added costs of enforcement, patrol, and maintenance in some cases. In the past, the City has encouraged certain types of development through tax credits. However, a tax credit can only be granted if authorized by the State. At this point, while Montgomery County is authorized to grant tax credits to blighted properties, this option is not available in Prince George’s County. The City is authorized under §6-303 of the Real Property Article to set the municipal tax rate. If not otherwise prohibited by the Real Property Article, the City may set special rates for any class of property that is subject to the municipal corporation property tax. The Real Property Article does not prohibit setting a special tax rate for vacant and/or blighted properties. Some local governments are setting higher property tax rates for vacant and/or blighted properties to incentivize and encourage property owners to properly maintain their property and/or achieve higher occupancy rates at a set standard. Two local examples are the City of Mount Rainier, in Prince George’s County, which taxes vacant developed property at a higher rate and Washington, DC, which taxes both vacant and blighted properties at a higher rate. The attachments to this report include related ordinances or information about their policies with vacant property. The City of College Park has discussed this topic in the past – in 2015. That discussion was about defining, identifying and maintaining a listing of vacant/blighted properties, but did not include imposing a special property tax rate. There are a number of questions and legal issues that would need to be addressed if the City Council desires staff to further investigate implementing a higher tax rate on vacant and/or blighted property. Attachment 1 – Discussion Topics for the Council Meeting on April 25, 2023, summarize many of those topics. Attachment 4 is a list of possible vacant properties in the City provided by Code Enforcement. These are not verified. There are 26 properties that may fall into the vacant classification. Fiscal Impact: The purpose of setting a different property tax rate is not to generate additional revenue for the City, but rather to encourage/incentivize property owners to have properties occupied and maintained. Council Options: 1. Direct staff to further investigate implementing a higher tax rate on vacant and/or blighted properties or to take no further action. Staff Recommendations: 1. Staff will take direction and guidance from City Council Attachments: 1. Discussion topics from Councilmember Adams 2. Copy of the City of Mt. Rainier’s Ordinance 04-2019 related to a higher property tax rate on vacant developed property. 3. Copy of Washington DC’s Office of Tax and Revenue information on vacant real property 4. List of possible vacant properties in the City of College Park (UNVERIFIED)  Attachment 1 Having a Different Property Tax Rate for Vacant/Blighted Properties Discussion Topics for City Council Meeting April 25, 2023 1. Prior Council Discussions (2015) and Overall Goals a. Definition and Process of Vacant Homes b. Overall Goals - compel usage of our City assets; affordable housing/commercial, economic activity, QOL. 2. Other Municipalities with Vacant and/or Blighted Property Tax a. Washington, DC b. Mt. Rainier 3. Legal Authority: a. Legal authority for the City to establish a vacant property tax b. Legal authority for the City to establish a blighted property tax c. Confirm that a vacant and/or blight property tax can be applied to all five property classes (Single-family residential, apartments, condos, commercial, industrial) or any combination of the five property classes. 4. Discuss how a vacant and/or blighted property tax would be implemented a. Typically, a vacant and/or blighted property tax would increase the City property tax levy by a certain multiplier (from 30.18 cents * 3 = 90.54 cents per $100 in assessed value). i. Example of a home worth $300k would be $905 in current City taxes; however, if designated as vacant and the vacant rate was 3x, then the property tax for the home would be $2,716 ($1,811 increase). ii. Example for a small business property, valued at $1 million, would be $3,018 in current City taxes. If designated as vacant, with that rate set at 3x, the property tax would be $9,054 ($6,036 increase). iii. Example for a large apartment complex, with a value of $50 million, current City taxes would be $150,900. If designated vacant, with that rate set at 3x the property tax would be $452,700 ($301,800 increase). 1. Note that certain commercial property that has multiple occupants (businesses) the higher tax rate would be pro-rated based on the percentage of vacancy. b. Definition of a vacant and/or blighted property. c. Process of designating a vacant and/or blighted property. i. Warnings to property owners ii. Community feedback to submit inquiries iii. City Staff time/process iv. Fiscal/Calendar year d. Appeals board for vacant and/or blighted property. i. Guidelines ii. Resident members only or allow business owners as well Attachment 2  Attachment 3 From Washington DC Website: OTR Vacant Real Property | otr (dc.gov) OTR Vacant Real Property The "Fiscal Year 2011 Budget Support Act of 2010" created a Class 3 property tax rate for vacant commercial and residential properties and a Class 4 tax rate for blighted properties in the District of Columbia. Class 3, vacant property, is taxed at $5.00 per $100 of assessed value and Class 4, blighted property, is taxed at $10.00 per $100 of assessed value. The DC Code allows for exceptions that may allow a vacant property to receive the lower Class 1 or Class 2 tax rate, provided that certain conditions are met. Vacant property owners should contact the Department of Consumer and Regulatory Affairs (DCRA) for information regarding exceptions related to improved vacant property. Roles in Vacant Property Identification The Nuisance Properties Abatement and Real Property Classification Emergency Amendment Act of 2006 made several changes to the Class 3 tax classification program. This act defined the roles that DCRA and the Office of Tax and Revenue (OTR) have in the identification and processing of vacant properties. DCRA receives complaints, identifies and processes the registration of vacant properties by owners, and administers certain fines if property owners do not register. DCRA also inspects properties, completes an annual survey of vacant properties, and certifies a list of vacant improved properties to OTR. OTR then changes the classification for the properties on the tax roll to the correct status for the appropriate real property tax year. Reporting Vacant Property Individuals can report vacant property directly to DCRA by calling (202) 442-4400 or by emailing vacantbuildings@dc.gov.  Attachment 4 Possible Vacant Property (January 2022) - NOT verified BLDG # Street Name Suffix Type of vacant property Evidence of vacancy 4503 Amherst Road Residential Confirmed unoccupied for years 4501 Beechwood Road Residential Undergoing interior cosmetic work 7131 Baltimore Avenue Commercial lot Razed building 7313 A Baltimore Avenue Commercial FOR LEASE signage 4612 College Avenue Residential Vacant during inspection in 2020 4619 College Avenue Residential Unoccupied 5013 Nantucket Road Residential Unoccupied 5011 Nantucket Road Residential Unoccupied 9802 53rd Avenue Residential Unoccupied 5014 Apache Street Residential Unoccupied 9917 Rhode Island Avenue Commercial Vacant 9927 Rhode Island Avenue Commercial Vacant 9037 49th Place Residential Overgrown 4800 Indian Lane Residential Owner Confirmation 9608 48th Place Residential Neighbor Comfirm 4910 Lackawana Street Residential Owner Confirmation 9403 Baltimore Avenue Commercial Unoccupied 9409 Baltimore Avenue Commercial Unoccupied 9624 Autoville Drive Residential Unoccupied 9702 Autoville Drive Residential Unoccupied 9592 Baltimore Avenue Commercial Unoccupied 9600 Baltimore Avenue Commercial Unoccupied 7521 Sweetbriar Drive Residential Unoccupied 7608 Sweetbriar Drive Residential Unoccupied 8006 54th Avenue Residential Unoccupied 8302 49th Avenue Residential Unoccupied  PUBLIC COMMENT 13. B - Discussion of having a different property tax rate for vacant and blighted properties From: Aubrey Batten <aubrey.batten@gmail.com> Sent: Monday, April 24, 2023 8:55 PM To: cpmc <cpmc@collegeparkmd.gov> Subject: Comment for City Council meeting Hello, I would like to submit the attached written comment for tomorrow's City Council meeting for the discussion on levying higher tax rates on vacant and blighted properties. I am a city resident. I plan to make this comment in person, but would like the references included in the record. Thank you, Aubrey Batten Dear Mayor Pro Tem and Council, My name is Aubrey Batten and I am a resident of College Park Woods in District 4. I am in support of levying fees and/or increased tax rates against vacant properties in College Park. Such a tax would increase the supply of housing and commercial space available in the city, apply downward pressure on rental rates and purchase prices, and improve the quality of our neighborhoods. I am sure that every Councilmember has their own list of known vacant properties they get regular comments about from constituents. A beautiful house across from my home has been vacant for going on four years. These vacant properties, even when kept up, contribute to the shortage of housing in our community by creating an artificial scarcity. This applies not only to housing, but useable commercial space as well. Vacant properties drive up prices significantly and contribute to the problem of rampant speculation and the siphoning off of our City’s wealth by out- of-town investors. This is not a novel approach to the housing supply problem. DC has had such a measure since 2010, with vacant properties being assessed a six-fold increase from their normal rates, and blighted properties nearly twelve-fold1. Vancouver, British Columbia implemented a vacant property tax in 2019; by the end of 2020, more than 1,000 properties that paid the tax in 2019 had been rented or sold. The city of Vancouver estimates that this tax alone will mean an addition of 18,000 new units of housing to their region in the long term2. This is not a magic bullet solution, and should be paired with other best practices aimed at increasing the housing supply and disincentivizing speculation. Importantly, if implemented, this measure must be enforced. Lax enforcement in DC meant that of their 3,000 known vacant properties, only 189 were being taxed appropriately a decade after the tax was first levied3. Code enforcement will need to make this a priority. I would also like to urge the Council to set this rate high! Please consider likely loopholes that big-time landlords will seek out to avoid this new expense. Diversified large property owners will be able to write off the increased tax as a business expense against other income and continue holding properties vacant -- unless the costs of doing so outweigh the tax advantages. I hope you support this proposal, and I thank you for your time and attention. Respectfully, Aubrey Batten