D.C. of­fi­cials re­duce Trump ho­tel’s tax bill

Low­ered assess­ment means a sav­ings of nearly $1 mil­lion

The Washington Post - - ECONOMY & BUSINESS - BY JONATHAN O’CON­NELL jonathan.ocon­nell@wash­post.com

Pres­i­dent Trump’s D.C. ho­tel re­ceived a $53.6 mil­lion re­duc­tion in its 2018 assess­ment from the District of Columbia tax of­fice, sav­ing his com­pany nearly $1 mil­lion.

The District tax of­fice ini­tially val­ued the Trump In­ter­na­tional Ho­tel, in the fed­er­ally owned Old Post Of­fice build­ing, at $163,587,412, ac­cord­ing to a Jan. 12 writ­ten agree­ment.

D.C. as­sesses prop­erty two years ahead of when it is taxed, mean­ing that the 2018 bill is based on an assess­ment of the build­ing from 2016, the year it opened.

Ap­par­ently the ho­tel did not de­but as strongly as tax of­fi­cials ini­tially ex­pected, how­ever, be­cause af­ter re­ceiv­ing ad­di­tional in­for­ma­tion from the Trump Or­ga­ni­za­tion, the of­fice agreed to re­duce the assess­ment to $110 mil­lion, 32.7 per­cent less.

The change will re­duce the prop­erty’s 2018 tax bill from $3,020,367 to $2,029,000, for a sav­ings of $991,367.

Be­cause the Trump Or­ga­ni­za­tion does not own the build­ing — it leases the prop­erty from the Gen­eral Ser­vices Ad­min­is­tra­tion — the com­pany is re­spon­si­ble for pay­ing pos­ses­sory in­ter­est taxes, a stand-in for prop­erty taxes ap­plied to busi­nesses on pub­lic land.

In a state­ment to The Wash­ing­ton Post, D.C. Chief Fi­nan­cial Of­fi­cer Jef­frey S. DeWitt said the ini­tial assess­ment was “based on as­sess­ments on the city’s other lux­ury ho­tels and the rents paid to GSA on leases to sin­gle users for en­tire of­fice build­ings.”

DeWitt said the new assess­ment was agreed to “af­ter the city re­ceived ac­tual cost and in­come in­for­ma­tion through dis­cov­ery in the ap­peal process and we be­lieve rep­re­sents a fair value.”

A Trump Or­ga­ni­za­tion spokes­woman de­clined to com­ment.

Trump re­signed from his com­pany when he en­tered the White House but still ben­e­fits from the project fi­nan­cially, de­spite his com­pany’s leas­ing the prop­erty from the fed­eral govern­ment.

The ar­range­ment has prompted an out­cry and a se­ries of law­suits from ethics ex­perts, good-govern­ment groups and elected Democrats, in part be­cause the ho­tel does busi­ness with for­eign gov­ern­ments.

It isn’t un­usual for com­mer­cial prop­erty own­ers to ap­peal their tax as­sess­ments. Hun­dreds do so ev­ery year, through a three-step ap­peals process that ends with a D.C. Su­pe­rior Court find­ing, if the two sides can’t come to an agree­ment.

D.C. as­sessed the build­ing at $91 mil­lion in the three pre­vi­ous years, when it was mostly va­cant or un­der con­struc­tion. Tax records show that the Trump Or­ga­ni­za­tion ap­pealed as­sess­ments in pre­vi­ous years but re­ceived no re­duc­tion from the tax of­fice, an ap­peals board or the court.

Ver­non W. John­son III, a lawyer at Nixon Pe­abody in Wash­ing­ton, said that most tax ap­peals are not ef­fec­tive but that the Trump Or­ga­ni­za­tion must have pro­vided con­vinc­ing in­for­ma­tion that the busi­ness was not worth as much in 2016 as the as­ses­sors ex­pected.

“That tells me that the owner was able to show the tax of­fice that the ac­tual in­come was much lower than the District was as­sum­ing, and the District must have been re­cep­tive to that be­cause they agreed with­out fur­ther ap­peals,” John­son said.

DeWitt’s of­fice did not dis­close the in­for­ma­tion it re­ceived from the Trump Or­ga­ni­za­tion that changed the assess­ment. How­ever, ac­cord­ing to records pro­vided by the com­pany to the GSA — and made pub­lic by con­gres­sional Democrats — Trump lost more than $1.1 mil­lion in the pe­riod the ho­tel was open from Septem­ber to Oc­to­ber, shortly be­fore the elec­tion. Such losses could re­duce the tax assess­ment, ex­perts said.

Af­ter Trump won the elec­tion, the ho­tel’s for­tunes seemed to swing dra­mat­i­cally, as it earned a $1.97 mil­lion profit in the first four months of 2017, ac­cord­ing to fi­nan­cial state­ments the GSA ac­ci­den­tally posted on­line.

At­tor­ney David A. Fuss of Wilkes Ar­tis rep­re­sented the ho­tel for the Trump Or­ga­ni­za­tion in pre­vi­ous years and de­clined to dis­cuss the prop­erty. But he said that “it’s not an un­com­mon re­sult” to see prop­erty own­ers win ap­peals, par­tic­u­larly on com­plex prop­er­ties that are dif­fi­cult to com­pare.”

“Pos­ses­sory in­ter­est taxes are rather on the new side in the District of Columbia, and there’s a deeper anal­y­sis that has to be un­der­taken,” Fuss said. The same taxes ap­ply to shops in Union Sta­tion and to the Howard Theatre, a pri­vate busi­ness that op­er­ates in a city-owned venue.

Trump re­ceived 12,723 votes in the District, com­pared with 282,830 for Hil­lary Clin­ton. But of­fi­cials said his com­pany re­ceived a fair shake from the assess­ment process.

Gre­gory C. Syphax, chair­man of the D.C. Real Prop­erty Tax Ap­peals Com­mis­sion, which hears some ap­peals but did not weigh in on Trump’s 2018 assess­ment, said. “No mat­ter who they are, ev­ery­one gets treated the ex­act same way.”


The District of Columbia tax of­fice has re­duced the 2018 assess­ment on the Trump In­ter­na­tional Ho­tel by $53.6 mil­lion.

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