Minority-owned H Street Businesses Decry Tax Increases

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Bachir Diop looked down the District’s H Street corridor at the clusters of large wooden barricades, orange mesh tape and warning signs that dominate the streetscape, evidence of the 12 blocks of construction that have closed or crippled more than a hundred businesses and properties in four years and made way for new investors to acquire property at tax sales.

“It’s devastating,” said Diop, owner of property on H Street.

Diop is among a coalition of minority-owned businesses and property owners who claim that many longtime daytime establishments have folded due to four years of disruptive construction on the H Street corridor. Many have suffered up to 100 percent loss of revenue due to customer access being impeded by road blocks, barricades, parking restrictions and zealous parking enforcement, they said.

“The construction on H Street was more devastating to my business than the crack epidemic in the ‘80s,” said Jerry Goldkind, owner of a men’s clothing store in the 900 block of H St.

Adding insult to injury, coalition members claim, tax assessments have risen as much as 350 percent in three years, forcing many businesses to end up in government tax sales.

“If the minority-owned businesses are losing 75 percent of its customers due to the construction, why would the government increase the tax rate except to push us out of business?” asked Pam Johnson, 49, a property owner.

David Umansky, public information officer for the Office of Tax and Revenue (OTR), confirmed that in 2009, there were 50 commercial and residential properties along the H Street Corridor that went to tax sale and 56 properties in 2010. However, he disagreed that taxes should not have increased.

“The recent tax increase was justified where property improvements are causing the sales prices of the properties to rise. By law, assessments are driven by recent sales. When average sale prices increase, our assessments also increase,” said Umansky. “A property tax deferral program was in place for the first-half 2010 billing which allowed property owners, upon application, to delay paying first-half 2010 taxes until the end of the tax year.”

The coalition said the government is treating the situation as if the businesses affected are making money to pay taxes. “The tax deferment referenced was ineffective due to the administrator and intended beneficiaries not understanding it or not aware of its existence,” Johnson said.

“We are not solely disputing the drastic increase in property taxes over the last three years, but the indisputable fact that taxes were increased between 200-350 percent during a four-year government-sponsored construction project, which has harmed the businesses along the H Street Corridor,” he added. “The negative ramification from the onslaught of a debilitating construction project—coupled with exorbitant taxes—is the direct cause of many of the properties along the H Street Corridor being on OTR's tax sale list and, unfortunately, several are in foreclosure court or have been foreclosed on.”

Johnson continued, “Why hasn’t the CFO raised a red flag with the mayor, Councilman [Tommy] Wells or DDOT? Why hasn’t the CFO done an economic impact study to address this problem? The mere fact that more than a fourth of the properties along the H St. Corridor have been consecutively listed on OTR's tax sale should be alarming to the CFO,” said Johnson.

The coalition proposed solutions for merchants and property owners impacted by the construction to include:
• Tax abatement from inception to completion of the streetcar project
• Maintain property taxes at pre-construction rate
• Create a property tax deduction for H Street properties comparable to the Homestead deduction
• Use tax increment financing funds to retroactively provide tax relief in the form of grants or against future tax payments
• Offer government-sponsored, no-interest loans on the assessed property value payable through property taxes
• Immediately disburse Streetscape survival funds

But the group said most council members refused to meet with them to discuss their ongoing concerns and recommendations.

The AFRO also contacted Councilmembers Harry Thomas (D-Ward 5), chairman of the Committee of Economic Development; Michael Brown (I-At Large), chair of the Committee on Workforce Development and Jack Evans (D-Ward 2) chair of the Committee of Finance. Each refused to respond and referred all questions to Councilman Wells (D-Ward 6).

“We truly believe that Councilman Tommy Wells and other members of the council are knowingly and unknowingly facilitating the forced exodus of minority-owned H Street businesses to accelerate gentrification of the area,” said Johnson.

A spokesman from Wells’ office denied the allegations and claimed the councilmember has reached out to the minority property owners.

“We have reviewed the complaints of these property owners and we have tried to help them on a case-by-case basis,” said Charles Allen, public information officer for Councilman Wells.

In the following e-mailed statement, Wells said in addition to tax deferments, the Council approved a 2008 bill that reduced property taxes on businesses valued at $3 million and less and approved $700,000 in direct assistance funds that are currently awaiting implementation by the mayor’s office.

Wells also pointed to the project’s community-wide benefits.

“Over the last several years, the District has invested millions of dollars in the H Street NE corridor – $50 million in streetscape renovation, replacing and widening sidewalks, replacing curbs, improving the street’s infrastructure, replacing aging utility lines and rebuilding the entire roadway; in addition to over $1 million in neighborhood investment funds and grants for façade improvements,” he said.