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Articles
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| D.C. Council members are promising tax relief |
VOICE writes, "
By ELIZABETH WIENER
Current Staff Writer
D.C. Council members are promising tax relief for small businesses, local restaurants and retailers. But finding the right formula is proving elusive.
Ward 2 Council member Jack Evans and at-large member Kwame Brown heard testimonies last Wednesday on three bills aimed at helping businesses hardest hit by a booming real estate market and city roadwork projects. Virtually all witnesses supported the concept, but officials from Mayor Adrian Fenty's administration said the bills are not properly targeted and could cause big fiscal problems.
Evans, who heads the D.C. Council's Committee on Finance and Revenue, and Brown, chair of the Committee on Economic Development, promised to work with the administration to tweak the bills into acceptable shape. They appear to have broad support within the council, but it's still not clear when they will be fine-tuned for an actual vote."
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Evans has often noted the huge burden on small businesses from soaring property taxes, which are passed along to commercial tenants, often without a comparable increase in sales. City homeowners have already received considerable relief -- through a higher homestead exemption, a cap on property tax increases and a cut in tax rates -- but the council has not yet enacted comprehensive tax relief for businesses, in part because of the staggering expense.
Especially hard hit are small businesses on commercial corridors with major road construction and small businesses in areas once considered "underserved" but that are now experiencing double-digit assessment hikes.
The first bill is intended to woo retailers, restaurants and hotels to "underserved" neighborhoods. It would offer them a laundry list of tax incentives -- a 10-year exemption from property taxes, personal property taxes and license fees -- similar to the tax breaks employed in a 1988 law to lure full-service supermarkets to neglected areas of the city.
Brown said the economic boom of recent years has bypassed some neighborhoods and that the tax incentive package is a "creative way" to woo hotels and sit-down restaurants to Georgia Avenue and parts of Anacostia, for example.
Council member Marion Barry noted his own Ward 8 still has "not one sit-down restaurant or major retailer, no boutique places to buy something as simple as stockings, no hotels." A new Giant supermarket will open this week at Camp Sims, but it will be the only supermarket in Ward 8 since a Safeway closed in 1998.
"And just across the border in Prince George's there are those retailers," Evans added. "The buying power is clearly there."
But details of the legislation troubled city officials who testified.
John Ross, a senior adviser to the chief financial officer, said that "underserved areas" are not well-defined and that the bill could give a competitive advantage to new or "substantially rehabilitated" businesses over existing small businesses that have stuck it out in poor areas.
Derrick Woody, of the mayor's planning and economic development office, said the bill "might conceivably offer" the same relief to businesses in Dupont Circle as to those in Anacostia and could also have a significant but still undetermined cost.
The second measure is designed to make up for losses to businesses on commercial corridors undergoing major road or infrastructure work, by requiring the mayor to come up with a "property-tax relief strategy" to make up for the disruption and temporary loss of customers.
It was inspired by the experiences of some restaurants and small shops on P Street west of Dupont Circle, where a yearlong construction project tore up sidewalks, limited parking and kept customers away. The construction work there is winding down, but another major "streetscape" project soon will be under way on 17th Street in the eastern part of the neighborhood, and similar projects are planned for other commercial corridors citywide.
The most damning testimony came from Michael Cooper, chief counsel in the Office of Tax and Revenue. He called the proposal "noble" but said cutting property taxes is problematic.
Cooper said his office cannot calculate the impact of "temporary and limited disturbances" on property values. "Road infrastructure construction is a short-term disturbance and would have no impact on property value," he said. "Presumably some business owners could apply for this tax relief if their street was disrupted for a day or a week," but assessors have no way to factor in "a temporary loss in sales."
He concluded that reducing property taxes to make up for short-term disruptions "is not viable" and suggested the council instead consider some type of grant program administered by the District Department of Transportation.
Evans said he was not discouraged by the testimony. "We put out a plan, you shoot holes in it," he said, acknowledging the criticisms are valid. "We will work with your offices. All of this is fixable."
The third bill is the simplest, and it drew general support. It would allow tax incentives for businesses offering "unique entertainment" downtown, and aides said it was crafted specifically to fulfill a promise to the Madame Tussauds wax museum when it opened at 9th and F streets NW.
Similar subsidies were offered to Swedish retailer H&M, Spanish clothier Zara and the home furnishing store West Elm, all now open in the old downtown Woodies building redeveloped by Douglas Jemal. According to testimony from planning and economic development officials, such incentives could give the area "enough critical mass to become a regional shopping destination" by 2012.
Meanwhile, Evans is keeping another longstanding promise to craft property tax relief for small businesses hardest hit by soaring assessments. The council set aside a pot of $11 million last spring for that purpose, and Evans has said the same sum will be available every year once a formula is hammered out for divvying up the funds.
A bill Evans introduced last month would create a sort of "homestead exemption" for small businesses, sharply cutting the rate commercial property owners pay -- from $1.85 to 90 cents for each $100 of assessed value -- on the first $3 million in assessed value. The idea is to target relief to smaller businesses, including those that do not own their own buildings but would presumably benefit from a rate cut in the form of lower rents.
Aides say that bill is a starting point and likely will be tweaked as it goes through the legislative process.
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Posted on Dec 13, 2007 03:50am.
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