“Hang on to the world as it spins around / Just don’t let the spin get you down.”
I remembered those lyrics to Donny Hathaway’s song after becoming dizzy last week reading Chief Financial Officer Natwar Gandhi’s crafty and disingenuous response to allegations he had failed to implement a portion of the Tax Clarity Act of 2000 as written, denying the city $100 million in revenues.
The Clarity Act required the CFO to fully tax, at 1.1 percent, refinanced commercial property loans, “if the tax was not paid on the existing debt.” Two Washington lawyers — Jeffrey Mitchell, with Oldaker Law Group, and James Stanton — said Gandhi had never done that.
The lawyers’ allegations were supported by internal CFO memoranda, an analysis of government documents, and a court ruling. D.C. Councilman David Catania appeared to have endorsed Mitchell and Stanton’s interpretation. High-level government sources said Attorney General Irvin B. Nathan has privately indicated Gandhi erred and didn’t implement the law correctly. (The AG’s spokesman told me “the matter is still under review,” declining to provide any further details.)
In his letters to Councilmen Catania and Jack Evans, Gandhi glossed over those internal legal memoranda and asserted he and the Office of Tax and Revenue “believe” the Clarity Act “has been correctly implemented and that the District loss no revenue as a result.”
That’s all spin. Gandhi’s actions betray his assertions. He moved to fix what he claimed wasn’t broken. He requested Evans introduce legislation that essentially would repeal the current real estate refinancing section of the clarity law.
The “Recordation Tax on Refinances of Security Interest Instruments Clarification Act of 2011” would cover up the CFO’s failures. It also would subvert the legislature’s decade’s old desire to take advantage of the city’s robust real estate market, preventing it from applying the 2000 Clarity Act to future transactions.
Elected officials seemed unfazed by the loss of revenues — even as they squabble over money to prevent a drop in the police force.
Though he heads the committee overseeing the CFO, Evans has neither requested the council’s lawyer provide an interpretation of the Clarity Act nor has he held any public roundtable to examine the facts. He has insisted it’s impossible to collect taxes retroactively and has argued if the law were implemented, as Mitchell and Stanton have interpreted it, the tax “would be passed on to [commercial] tenants.”
Politics and self-preservation drive Evans’ disinclination.
Evans’ Ward 2 is home to much of the city’s commercial real estate. The owners of that property would be asked to pony up more money if the 2000 Clarity Act were finally implemented as written. That could mean disgruntled constituents just as Evans opens his re-election bid. The result would likely mean fewer big-business campaign donors.
So, who will step up to represent the interest of average District residents for whom proper and immediate implementation of the 2000 Clarity Act would translate into money for needed services?
Anyone?
Jonetta Rose Barras’ column appears on Monday and Wednesday. She can be reached at [email protected].
