CONCENTRATED HOLDINGS. Assessor Richards in his testimony asserted that there was a much larger proportion of owners to pieces of property in the District of Columbia than elsewhere (p. 41). But the table of exhibits he furnished contradicts his contention. Washington has 3.6 parcels to each taxpayer, Philadelphia 1.3 parcels to each taxpayer, Boston 1.4 parcels to each taxpayer, Rochester, N. Y., 1.09 parcels to each taxpayer. As a matter of fact, Washington makes the worst showing among the cities presented in the assessor's table, the one most nearly approaching it being New Orleans, where the proportion is 3.06 parcels to each taxpayer. The concentration of holdings of land in the District of Columbia has maintained pace with the growth of the city, notwithstanding the splendid assistance toward home owning resulting from the beneficial activities of several large and well-managed building and loan associations. The gross underassessment of the great suburban unimproved area has encouraged the maintenance of large unbroken holdings and the asking of such prices for land as to discourage home building and owning. What activity has occurred in this latter regard has been in spite of land speculation, not because of any alleged help from it. The speculative builder is a builder rather than a land speculator; a producer rather than an appropriator. His active producing powers are associated with the speculative price of the land. But the land speculator per se is not a producer at all. He merely appropriates what others produce. He is not active; he is passive. He merely waits until the necessities of others in the community compel them to pay the owner's price for permission to use a natural element which. neither he nor any other man produced, but which was created by the Creator of the Universe. CHECKED BUILDING ACTIVITY. The gross overassessment and burden upon improvements have proved a serious handicap to the home owner and rent payer and to the building industry and the vast ramification of activities that wait upon them. Already the blow has fallen (p. 439). Building activity, as evidenced by permits issued by the District building inspector's office, maintained a high and increasing level to the month of May. From then on it has been tending downward, not only each month successively, but in comparison with the corresponding months of last year. This is the poorest summer the building industry of Washington has experienced in a number of years. FLOURISHING HOUSTON. On the other hand, your committee may very properly quote from a communication from Hon. J. J. Pastoriza, tax commissioner of Houston, Tex., as to the effect in that city of the partial exemption of improvements from taxation. Mr. Pastoriza writes (p. 440): The effect resulting from the partial exemption from taxation of personal property and improvements upon land in Houston has been magical. H. Rept. 1215, 62—2—3* In the first six months of 1912 there were 219 more buildings erected than in the first six months of 1911, and the value of these buildings erected in 1912 amounted to three times the value of the buildings erected in 1911, which goes to show that the partial exemption of improvements from taxation has had the effect of stimulating the building industry. It also has had the effect of increasing the number of land sales without depreciating the price of land. So that it appears that the assessment of land at 70 cents on the dollar of its full value and taxing it for city purposes at the rate of $15 per thousand, with an addition of the State tax of $8.60 per thousand, or a total of $23.60 per thousand valuation, will not lower the selling price of land, but will stimulate its sale at an advanced price. This makes a tax rate of 2.23 per cent on a 70 per cent valuation of land and a 25 per cent valuation of improvements. This is equivalent to a tax of $15.61 on a full valuation of land and a tax of $6.57 on a full valuation of improvements. In 1911 the assessment of land values in Houston was increased 25 per cent over the former assessment. At the beginning of 1912 land values were equalized, and all land was assessed at 70 per cent of its fair selling value. Buildings and other improvements upon land and the machinery of manufacturers were assessed at 25 per cent of their values. In fact, there was more done to relieve industry from taxation in Houston during 1912 than has been done in any other city in the United States up to date. DUPONT AND PINCHOT PROPERTIES. One interesting incident of the vagaries of assessment in the fashionable neighborhood is uncovered in the assessment on the house owned by Senator Dupont on the north side of Massachusetts Avenue, between Seventeenth and Eighteenth Streets (p. 188). The assessment on this house, one of the most notable in the northwest, was raised from $55,000 in the assessment of 1908-9 to $90,000 in the assessment of 1911-12. It was formerly the property of the late Beriah Wilkins, editor and proprietor of the Washington Post. It is very moderately assessed now. It was grossly underassessed in 1908-9. The ground was and still is assessed at $2 per foot, and that on fashionable Massachusetts Avenue, where $7, $8, and $10 per foot is the current price. For comparison, a lot at the corner of Tenth and L Streets NW., in a deteriorated neighborhood, surrounded by antiquated and shabby improvements, is assessed at $2.25 per foot. The correspondence with Hon. Gifford Pinchot (p. 455-456) discovers the fact that his magnificent home at Rhode Island Avenue and Scott Circle is underassessed some $44,000, the assessment on both ground and improvements being about 50 per cent of a conservative valuation of the property. Mr. Pinchot's public spirit in voluntarily obtaining a competent estimate of the value of his property and furnishing it to your committee is worthy of the highest commendation. THE MAN WHO PAINTED HIS PORCH. The committee calls attention to the very different but no less remarkable case of Mr. William J. Carey, a machinist in the Government Navy Yard, the assessment on whose small home was increased $500 over the previous assessment, placing a gross valuation on his property of $1,948 above the two-thirds of its real value. Mr. Carey, in simple but graphic words, describes (p. 325) his own plight as a laboring man endeavoring to rear his family in comfort, and the worse plight of his neighbors, less well situated than himself, but equally oppressed by the increased assessments. One of these was a widow and one a cripple. "Every year," said Mr. Carey, "we spend about 50 cents each for paint. We paint all the woodwork and iron porches of our houses. In the front we have little hedges. I have a little evergreen hedge. It was given to me by some friends. The painting and the hedges make the places attractive. We make it a point to make our homes as attractive as possible. The only improvement on which the assessor could raise the assessment on our property was the painting and the green hedges." 66 WAGON JUDGMENT." As showing the way assessorial "wagon judgment" worked in increasing the assessments in square after square of the small homes for the 1911-12 triennial period, the following extract from the evidence may be offered (pp. 145-146), Mr. McKenzie, one of the assistant assessors being on the stand: Mr. GEORGE. I am not raising any question as to whether the assessment now is not a true assessment. I am assuming that it is a true assessment. But my objection is that you have increased the assessment on these identical buildings 15 and 20 per cent, and in the face of the fact that these buildings are worth perhaps 15 to 20 per cent less than they were then [the preceding triennial assessment]. Mr. MCKENZIE. Yes; but not because we believe the improvements had enhauced in value, but simply to carry out the law that we shall assess them at two-thirds of their value. Mr. GEORGE. At the time of assessment? Mr. MCKENZIE. Yes. Mr. GEORGE. And you base that on what data? Mr. MCKENZIE. Our judgment. Mr. GEORGE. Is there anything on the record that will show me or any Mem. ber of Congress why these changes were made? Mr. MCKENZIE. No; because we went into the neighborhood-into the streets and asked men, and got any kind of information that we could. Mr. GEORGE. Is it a matter of judgment? Mr. MCKENZIE. Yes, sir. Mr. GEORGE. And is there nothing to go on? Mr. MCKENZIE. No. Mr. GEORGE. If you have information you can not put that information down? Mr. MCKENZIE. No; because we are in the field-in the wagon. Mr. GEORGE. Now, so far as this committee is concerned, it is a mere matter of judgment in regard to the assessors getting the true value? Mr. MCKENZIE. That is our judgment in the matter. Now, sometimes we do make a note in the field book that this property sold for a certain amount of money-just lead-pencil notes. I don't know where to look for them now. THE ASSESSOR DID NOT KNOW. One of the squares in which the small homes-not new, but old buildings have been subjected to increased assessment is No. 497, between Four-and-a-half and Sixth and G and H Streets SW. The increase was 35 per cent. The testimony shows what the assessor had to say about that transaction (pp. 147-148): Mr. GEORGE. What do you say in respect to this square 497? Mr. RICHARDS. Sixty-six houses in 1908-9 were assessed at $61,500. The same Improvements in 1911-12 were assessed at $83,000, or an increase of $21,500. Mr. GEORGE. An increase of what per cent? Mr. RICHARDS. Thirty-five per cent. Mr. GEORGE. This seems to be a huge increase? Mr. RICHARDS. Yes. Mr. GEORGE. How do you account for it? Mr. RICHARDS. Only on the fact that that square was assessed too low before. Mr. GEORGE. Who were the assessors before? Mr. RICHARDS. Well, I think the last triennial assessment was probably carried over and based on the one previous to that. Mr. GEORGE. But who were the assessors at the last triennial assessment preceding this one? Mr. RICHARDS. The same men who are the assessors now. Mr. GEORGE. Name then, please. Mr. RICHARDS. Mr. Kalbfus, Mr. McKenzie, and Mr. Trimble. Mr. GEORGE. Did they call your attention to this increase at the time? Mr. RICHARDS. No; that was made in the field. Mr. GEORGE. Have you realized that the increase was 35 per cent? Mr. RICHARDS. I have not looked into that particular square. I knew that there were squares down there in which there had been considerable increase. Mr. GEORGE. Did you know that there was any square in the whole of the District of Columbia where the increase of the assessment of old improvements was as much as 35 per cent this year over the last triennial assessment? Mr. RICHARDS. No. That would have required my adding up all the different squares and getting the squares of last year added up and comparing them. Mr. GEORGE. But this is such a remarkable increase that it ought to have come to your attention, either because there have been some extraordinary changes there or because it involved some new method; or, if you please, a new guess and new judgment. Was your attention drawn to this 35 per cent increase in square 497? Mr. RICHARDS. No. Mr. GEORGE. And the first time you realized it has just been as a consequence of this inquiry? Mr. RICHARDS. I realize that there had been a great increase in the southwest section in some of the buildings, but I had not compared any particular square. Mr. GEORGE. Was your attention drawn to square 497? Mr. RICHARDS. Not to any particular square. My attention was drawn, however, to the fact that they had increased the buildings all over the southwest section. Mr. GEORGE. Do you know of any other squares in this general section where the increase has been as much as 35 per cent in the assessment of old buildings? Mr. RICHARDS. I do not, because I have not gone into comparisons in that way. Mr. GEORGE. Have you asked Mr. McKenzie or any other of the assistant assessors whether there were any other squares in the southwest section the assessment of which has been increased as much as 35 per cent over the assessment preceding? Mr. RICHARDS. It would have been impossible for me to have asked any such question as that, because this has just been called to my attention, that there has been an increase in this particular square; but I was acquainted with the fact that there were increases all over the southwest section in regard to the buildings. Mr. GEORGE. Now, what is the nature of the buildings on square 497? Mr. GEORGE. What percentage of frame buildings, would you say? Mr. RICHARDS. About a third of them frame. Mr. GEORGE. Are those fine, substantial, durable frame buildings? Mr. RICHARDS. No; they are all old. Mr. GEORGE. Well, they are all pretty old buildings? Mr. RICHARDS. Yes; they are all what we might call a cheap class of buildings. Mr. GEORGE. The price of the houses in the assessment of 1911-12 would indicate that they are very inferior and, as a matter of truth, none of them is under 5 years old? Mr. RICHARDS. No; I think they are all old houses. Mr. GEORGE. And the brick buildings? Mr. RICHARDS. They have been there a long time, most of them. Mr. GEORGE. And the deterioration of buildings of that sort is very rapid? Mr. RICHARDS. Yes. GUESS AND GUESS AGAIN. "Our method of assessing buildings," testified the assessor, "is to arrive as nearly as possible at the cost of constructing such a building and allowing for a certain amount of depreciation for the time in which the building is assessed" (p. 67). When this assertion became the subject of inquiry in the examination, it was found to be practically without standing. The assessor's office was unable to furnish any tabulation of the standard of construction cost or any case in which the ex parte and interested statement of an owner had been analyzed and sustained from an independent source. FAVORING THE WILLARD HOTEL. Moreover, when attempts were made to apply a rule of construction cost to any building in detail, the rule failed. In the case of the New Willard Hotel (p. 131), the lowest possible construction cost of the superstructure was placed at $1,500,000. The assessment on the superstructure was but $700,000. Under the two-thirds rule. the superstructure should have been assessed at not less than $1,000,000, and the claim of the assessor that this magnificent, thoroughly maintained and enormously profitable hotel should be allowed a 30 per cent reduction for deterioration, is without justification. Another notable instance is the case of the assessment on the Cairo Apartment House (pp. 191-192). This building is assessed at $202,000 on its superstructure. On that basis a cost is indicated of less than $2 per square foot of floor space. This gives for this splendid and notable property a rate of valuation as low as that of a cheap two-story brick house in the District of Columbia. The Cairo property pays handsome dividends on a valuation of $1,000,000. It cost not less than $750,000 to erect; and while it was built over 20 years ago, its cost in a period of cheaper material was so low and its architecture so far in advance of its period that it is to-day a thoroughly modern fireproof and well-maintained property, whose superstructure should be assessed at not less than $400,000, or twice the present assessment. The cubic-foot rule applied to the New Willard was 33 cents. A rule of 50 cents applied to the Hibbs Building, on Fifteenth Street, brought out a basis of assessment below its cost, which was $240,000. The New Willard is a more expensively constructed edifice than the Hibbs Building. The advance in the cost of material since the New Willard was erected would justify an assessment at an advance of the reported cost, instead of 30 per cent below a grossly inadequate estimate. The cost factor used on the Barber & Ross Building (p. 119) at the corner of Eleventh and G Streets NW., which is merely an open-spaced well-constructed warehouse, is as high as the one used on the New Willard, an elaborately constructed modern hotel, and much above that used on the Cairo. H R-62-2-vol 5-46 |