Mr. BATES. The next year only. Mr. DENT. Yes, sir. Mr. BATES. All right. Mr. DENT. I might say, Mr. Bates, that we have had very few complaints from persons who did not know that their assessments had been raised because in view of the news items in the newspapers, they come down. We have very little trouble on that score. Mr. BATES. How many appeals do you have? You did not have any review last year, did you, to the extent of any revaluation? You are going to have it this year. Mr. DENT. We have changes every year. We had in the last 2 or 3 years increased land values all over the city of Washington. Mr. BATES. How many parcels would that embrace, roughly? Mr. DENT. I would say thousands. Mr. BATES. How many appeals have been entered either before the expiration of that date or subsequent to the actual tax? Mr. DENT. In the last 2 or 3 years, appeals have been very few on account of inflated market prices. Mr. BATES. In other words, there is no general feeling throughout the city that property is overtaxed here? Mr. DENT. Well, I would say that in the last few years the reason that we have had so very few appeals has been due to the fact that property has been selling at such ridiculous prices, in my opinion, that they would not have very much of a case. Prior to this rise in real estate prices, during the last few years since the war started, I would say between twelve and fifteen hundred each year. Mr. BATES. Out of what total assessment in the District? Mr. DENT. One hundred and forty-nine thousand. Mr. BATES. So you have had between a thousand and fifteen hundred appeals. Mr. DENT. Yes, sir. I think one of the reasons for that is because we do not-I do not know of any assessing authority in the United States that attempts-to put on an assessment equal to the selling price of a house. For instance, if a house during normal times Mr. BATES. I am afraid you are not fully informed on some other parts of the country. Of course, I agree with you that the full sales price as of today on the inflated prices would be a basis for your statement. But going back some 6, 7, 8, 10 years ago, probably in your own District, the actual sales price probably compared pretty well with your assessed value. That is some years ago. Mr. DENT. I do not want to disagree with you, Mr. Bates, but according to the National Association of Assessing Officers, the general policy of assessors is in the case of a house that sells for $10,000 during normal times to put that house on at around $8,500. Now, obviously, the purchaser who has paid $10,000 for a house during normal times believes that house is worth $10,000 or he would not have bought it in the first place; he is satisfied, therefore, with an $8,500 assessment. Mr. BATES. That is right. Mr. DENT. Furthermore, by putting it below the price, you reduce the number of appeals, otherwise, if you would put it on at the original price, you would be constantly harassed each year for reduction on account of depreciation, so, in the long run, I think the municipality does better by not putting on the top price and giving credit for depreciation each year. Mr. BATES. The reason I made that statement, Mr. Dent, as you now, you supplied me with some information from your own files. When I made the statement that your assessment was pretty nearly 100 percent in the prewar years with the sales price of the property, I note here that your assessment in the case of business property actually exceeded the sales price of the property that you gave me. Mr. DENT. That is true. Mr. BATES. Now, this schedule here, I want this part of the record, is of quite a number of cases, probably a couple of hundred cases here, Mr. DENT. About 200, I think. Mr. BATES. Two hundred were taken as sort of sample cases, not selected at all, but just picked at random from your files, and they are representative cases, are they not? Mr. DENT. I can assure you, Mr. Bates, that those cases were not hand-picked. We did not pick them with any idea of benefiting the assessor's office. Mr. BATES In other words, what I asked you to do in order to give us some idea of the background of your assessment policy here, is to pick at random a couple of hundred cases of business property, apartment houses and residential properties, given the assessed value, say, between the years 38 and 40, and the sales price of those properties during that period, and then the very same properties that were sold between 38 and 40, to give the assessed value in '45 and '47 and the actual selling price in that same period, '45 and '47. Mr. DENT. They were picked to this extent: That we started out in the low squares and went right on through and picked out property that had been sold in both of those years. So that you would have a picture as to the selling price in the 1937-38 period, and also the inflatedprice during the recent period. Mr. BATES. That is right. And then along with that, you inserted a column of the assessment that you expect to place on those properties this year. Mr. DENT. They are already on the books; yes, sir. Mr. BATES. And subsequently, I presume, they will be subject to that Equalization and Review Board? Mr. DENT. Yes, sir. We are beginning to get quite a number of appeals now. Mr. BATES. So, what I said at the outset that property values here during the prewar period when we had really subnormal conditions, the assessment was pretty well up toward the actual full value of the selling price of the property. Mr. DENT. Yes, sir. Of course, I do not believe that the period between 37 and 38 was really a subnormal period because we had a very high market in 25 to 27. Then we had the depression that we all remember-1929. And the market went to pieces in '32 and '33. Mr. BATES. That is right. Mr. DENT. It started recovering, and I think by 37 and 38 we had approached what we called a normal market again. Mr. BATES. So, you would say that the figures you presented here from 38 to 240 represented the normal period? Mr. DENT. In our opinion, yes, sir. Mr. BATES. Now then, according to this schedule, just for the record, on the entire schedule of business properties, the sales price 99538-47-8 during the past 2 years was $2,234,000. The new assessment, that is the combined assessment on those properties of $2,234,000, is $1,600,000, which gives you about a 65 percent assessment basis. Mr. DENT. That is on the present selling prices. Mr. BATES. On present selling prices, that is right. Mr. DENT. That is right. Mr. BATES. I have in mind, of course, and I am thoroughly in accord with your point of view, that in these inflated times that we ought not to have inflated assessments. If we did have that it means that in the days ahead of you if we had any recession, that you would have those conditions come back to plague you a great deal. Mr. DENT. I can give you an example of one city in this country that during the high market in 1925 to 1927 increased real estate assessments materially; they secured a considerable amount of additional revenue, and on the strength of that made large capital investments, large capital improvements. When the depression came about they had to reduce those assessments back, and they were loaded up with a tremendous bonded indebtedness, so that 51 cents out of every tax dollar was paid for interest. Mr. BATES. We had that same situation in many parts of the country, and I recall in the '27 period when the tax commissioner of my own State, operating under compulsory laws, interpreted that the assessed value should be on the fair market value rather than having the assessors applying the 100 percent rule. If we did that we would have wrecked the economy of the communities. We did not do that. These are typical examples of assessment and sales prices, and represent pretty much the general run of your assessment and conditions here in the District; is that right, Mr. Dent? Mr. DENT. Yes, sir. Mr. BATES. I want to put these in the record at this particular time. (The documents referred to were as follows:) Comparison of assessed valuations with actual sales for the years 1938–40 and 1945-47, also the assessed valuation for 1948 |