Lawyers representing Donald Trump filed a suit against the government of Washington, D.C. on Thursday challenging a tax bill for his latest hotel project in the city.
The Old Post Office on Pennsylvania Avenue in Washington, D.C., is currently in the process of being converted into a new Trump Hotel. However, before the hotel can open later this year Trump owes nearly $1.7 million in taxes for the development, a number the suit calls “arbitrary, unreasonable and excessive.” Part of the suit’s challenge is the claim that the tax assessment for the property incorrectly treated the building as a “hypothetical, fully functional and rent-producing commercial office building.”
Trump’s attorneys are asking the court to reduce the assessed value of the property for 2015 and 2016 to its “true estimated market value,” and also want a refund on any excessive taxes, penalties and interest. While the suit doesn’t specify a value that the Trump would qualify as “fair,” it does claim that the the District of Columbia valued the Old Post Office development at a higher value than other luxury hotels in the city that are already in operation, including the Mandarin Oriental, the St. Regis and the Ritz-Carlton. After a first-level appeal to the value of the D.C. hotel, city assessors reduced their assessment of Trump’s new property to roughly $91 million, down from about $98 million.
The tax in question is a “possessory interest” tax D.C. introduced in 2000 to make money off of private companies leasing space on government property that would normally be tax exempt. Suites regarding tax claims of this sort initially go into mediation, which can take up to 18 months to get underway. Unfortunately for Trump the process is running out of time; the hotel is expected to open in September, two months before the presidential election takes place.