80 rms, grt vu, no tx; how property tax assessments let the rich rip off the rest of us.

• Author: Dance, Betsy

Last year, Kingdon Gould Jr., former U.S. ambassador to Luxembourg and the Netherlands, got a letter in the mail from the D.C. government. It was a $22.1 million tax assessment for a sweet chunk of land he owned near 9th and D Streets NW. Though the land was prime space just off Pennsylvania Avenue, Gould thought the assessment-and the tax bill it implied-were a little steep. So he called on R. Donahue Peebles. A few months later, Peebles had haggled a cool $10 million off the assessment, saving Gould nearly a quarter of a million dollars.

It wasn't the first time Gould had turned to Peebles. Gould and Blackie Auger, then co-owners of Washington's Mayflower Hotel, had hired Peebles to ratchet down that assessment too, slicing off more than $11 million. That little maneuver cost the District $200,000 in taxes, the price of drug treatment for at least 50 people. But the developers' real payoff came this spring, when the Mayflower, assessed at a modest $65.9 million, sold for more than 100 million (although fixtures, silverware, and other items were thrown in).

If death is still an inexorable standard in the District, property taxes for the rich are amazingly negotiable-especially when they hire a Peebles. While all city buildings must by law be assessed within 5 percent of market value, the 31-year-old Peebles, a friend of former Mayor Marion Barry, doesn't sweat it. Last year, he won assessment reductions from the D.C. government in almost 90 percent of the cases he brought before it-keeping millions of dollars from the coffers of the financially strapped D.C. government. But when eyebrows rise at his success, Peebles cries foul: "No one ever criticizes Michael Jordan for being the best. I'm doing nothing wrong except to be the best. If that ruffles the feathers of the WASPy business community-so be it."

But there's a difference between Michael Jordan and R. Donahue Peebles: Peebles takes the court with one hell of an inside advantage. Just three years ago, he was chairman of the D.C. government's Board of Equalization and Review (BER), the very board that reviews the appeals of developers like Auger and Gould. During Peebles's tenure, he personally oversaw the appointment of 10 of the board's 15 members-an arrangement that simplified matters for him when he became the guru of D.C. tax reduction.

Nor is Peebles the only person to work both sides of the District's tax assessment business. Thanks to a growing cottage industry of real estate attorneysmany still dizzy from the D.C. government's revolving door-city building owners sliced more than $35 million from their taxes last year, and tens of millions more every year from 1986 to 1989, when D.C.'s commercial real estate market was booming.

If that's good news for developers, it's devastating for the District, which counts on property taxes for a quarter of its budget. Last month, it announced plans to cut welfare payments to single women with kids.

But developers aren't the only ones making out at the expense of the poor. Whenever the possibility of lawyers looms large-whether in cases involving developers or simply the wealthy-defensive city estimators guess low. "Higher-priced properties tend to be underassessed more often," says Matthew Watson, former D.C. auditor. "An assessor will tend to be gun-shy on expensive properties, because underassessing means they're less likely to get an appeal and have their work questioned. It's a normal thing to avoid getting questioned as much as you can." Hence the absence at appeals court of prosperous homeowners such as magazine publisher Bill Regardie, whose house is market-valued at $1.5 million and assessed at $760,000; real estate tycoon Calvin Cafritz (MV=$2.8 million, AV=$1.5 million); and Attorney General Richard Thornburgh (MV=$475,000, AV=$249,635). Oh, and Mayor Sharon Pratt Dixon, whose assessment of $253,000 is nearly $100,000 less than her home's market value.

"Familiarity has a lot to do with it," speculates local housing attorney Eric Rome. "People tend to give good breaks to people they know." (Attorney Brendan Sullivan's assessment of $700,000-$1 million less than market value-may speak volumes about his "familiarity.") Yet Rome sees the phenomenon in context. "That's part of our system," he shrugs. "This whole town runs on that kind of juice." If you're not well known, connected, or lawyered-well, no juice.

About the same time Gould received his annual letter, another longtime resident received his. Like Gould, he thought the...