New Efforts Emerging To Activate D.C.'s 3,000 Vacant Properties

Local leaders are pushing to reawaken D.C. from its pandemic-era slumber — launching efforts to convert office buildings, attract businesses and bolster entertainment offerings to create more vibrancy on the city's streets. 

But scattered in neighborhoods across the city are thousands of buildings that both hinder that recovery and present opportunities: vacant properties.

A swell of interconnected efforts has begun to unfold to improve the city's handling of thousands of vacant properties and push them toward productive use. 

There are more than 3,300 commercial and residential properties the city classifies as vacant, about 10% of which are blighted, meaning the city has determined them to be unsafe, unsanitary or threatening the health and welfare of the community. 

As the District contends with a housing crisis and officials work to activate commercial corridors, officials say these vacant properties, which often act as a drag on the vibrancy the city is so desperately chasing, could provide a valuable resource.

“Those properties do have an impact on surrounding properties or neighborhoods,” Deputy Mayor Nina Albert said in an interview with Bisnow. “And so it is of interest to us. To me, these vacant and blighted properties are an opportunity.”

Several efforts are coming to a head to rethink how the city handles these properties. Municipal, community and private organizations are all looking at the issue as a next — and crucial — step to revitalizing the city as it continues to recover in the wake of the pandemic.

“This is a topic that people have revisited over and over and over again throughout many decades,” Advisory Neighborhood Commission 1A Commissioner Jeremy Sherman said. “But there feels like there's renewed energy on it, especially after Covid.”

Sherman is one of the founders of the new Vacant Property Caucus, which is composed of members from 18 ANCs across all eight wards. The caucus, which began holding meetings in February, is focused on improving data collection on vacant properties, promoting economic development and advocating for improved regulations.

“Those are buildings and structures that could be used for housing, for community facilities or also be used for places of business,” ANC 1C Commissioner Margaret Stevens said. “I mean, just anything that would benefit the community would be fantastic.”

The caucus is running a pilot program with the D.C. Department of Buildings in which ANCs collect and validate the agency’s data and help categorize which properties could be prioritized for more immediate activation.

The DOB has identified 250 properties that “avail themselves to a more immediate conversion,” Director Brian Hanlon told Bisnow. It looked for buildings that could most easily be acquired and converted, analyzing factors like vacancy status, how long a property has been vacant and the outstanding tax lien amount, Hanlon said.

In addition to the caucus, several ANCs have passed resolutions asking the city to reevaluate the way it handles vacant properties, including potentially increasing taxes for properties that have been sitting vacant for long periods and incentivizing sales. At least six ANCs have passed similar resolutions, according to Sherman.

“We need higher penalties for those properties that have been sitting the longest and have no viable path to a productive use,” Sherman said. “And then we also need more incentives in place and more opportunities to encourage property owners to bring in housing or bring in businesses.”

The Department of Buildings and the Office of the Deputy Mayor for Planning and Economic Development are also separately prioritizing the issue of reactivating vacant properties. 

When Nina Albert took the deputy mayor role in October, her team at DMPED saw it as an issue to prioritize, especially as it relates to housing availability, she told Bisnow. 

“What struck me about the portfolio of this is how significant it is,” Albert said. “And so here we are trying to provide homeownership opportunities, affordable rental opportunities, and we have a portfolio here of residential properties all over the city that could be occupied and could house people.”

As conversations get underway, Hanlon said the DOB is considering adjustments to the system, including tax reform to further disincentivize owners from just paying the tax and not working to fill or reactivate the properties.

Vacant properties are taxed at a higher rate than occupied properties to discourage owners from leaving them vacant. D.C. taxes vacant properties at $5 per $100 of a property’s assessed value, while blighted properties are taxed at $10 per $100 of assessed value.

Occupied residential properties are taxed at 85 cents per $100, and commercial properties are taxed between $1.65 and $1.89 per $100. 

“It is my contention that when a property's been vacant and/or blighted for a number of years, that is becoming a drag in many ways in terms of public safety, quality of life, economic value,” Hanlon said. “And I do think there's room to consider elevating of tax rates to use as a lever for encouraging owners that aren't showing good faith and that aren't moving forward. If we need to increase our ability to add pressure, I think it's appropriate that we do so.”

D.C.’s Apartment and Office Building Association, which lobbies on behalf of the real estate industry, has been engaged with DOB and DMPED on this issue, said Eric Jones, vice president of government affairs for the organization. 

“We’re all in agreement that this is something that has to be done once we get through this budget cycle and some of the other things that are more immediate,” Jones said. 

“I think there has to be a reimagining of how we examine or look at vacant properties,” Jones added. “This is a process that probably hasn’t changed since I left college two decades ago.”

Jones said it has been difficult for investors to acquire and rehabilitate vacant properties due to high interest rates and strained capital markets. 

“A deal that usually takes 15 months could take 26 months,” he said. 

Hanlon said the DOB is much more interested in seeing properties converted than collecting taxes on them, and the department works to reduce or eliminate tax liabilities for owners it sees moving in the right direction.

Under Hanlon’s leadership, the city has seen vacant properties declining. He said there were between 4,600 and 4,800 vacant properties when he took office, and there are roughly 3,300 today. 

“So we're continuing to have success in not just identifying and tracking but actually achieving what is our higher goal, which is to convert them back into productive use,” he said.

The city also has a new enforcement tool to crack down on owners who don’t keep up with the taxes on their vacant and blighted properties. 

D.C.'s False Claims Act, which was amended in 2021, now allows the city to go after vacant property fraud and, in doing so, recover three times the amount of money owed. That creates a significant disincentive for owners to disregard their duties.

D.C. Attorney General Brian Schwalb’s office used authority from that legislation against the owner of a vacant and blighted property for the first time this spring. The office won a case against an owner of a vacant and blighted apartment building at 1000 C St. NE, in a judgment that ruled the owner must pay $1.8M in back taxes, interest and other penalties.  

“Our hope is that it does stand as a very strong disincentive that will lead people to think twice to the extent they are just going to try and avoid paying vacant and blighted tax rates,” Graham Lake, who heads the attorney general's Workers' Rights and Antifraud Section, told Bisnow. 

Although Lake wouldn’t say if the AG’s office is prosecuting any other property fraud cases, he said it is an issue the office is invested in.

“It remains an issue that we, that the office, cares about,” Lake said. “We have the tools to do something about it. So I think we stand ready to certainly continue to bring in cases where that would be appropriate.”