[from December 2005 issue]


The Washington Business Journal in its December 5th issue suggests this may well be the case. The writer of that commentary points to the disappearance of so many of the neighborhood’s small businesses over the years and their replacement with the national and international retail and restaurant chains -- establishments “that would seem more at home in a mall have been moving into Dupont Circle pretty regularly for years” -- not that we need to be reminded of that.

While what is stated is true, the tone of the piece somehow suggests that it is all the fault of those of us who live in this neighborhood; that, for example, somehow the disappearance of “dilapidated-but-useful movie theaters” is something we might have had control over if we were on the ball. First of all, we never thought the theaters in the neighborhood were dilapidated -- the writer is making it sound like our “decidedly no-longer-funky” neighborhood had theaters more reminiscent of the Haight in San Francisco or, even worse, like the nasty ones of just a couple of decades ago in Times Square. The dynamics of the film industry determined this, nothing that we did or did not do.

Okay, so what’s the real beef here about our neighborhood? The writer states that “no business or community groups have shown the political will to try to push through a zoning overlay that would limit uses such as banks on prime retail corners.” After all, it’s banks and big chains that can afford the crazy rents; if a another bank for Connecticut Avenue would somehow now become impossible to open on a prime corner does anyone really believe that a “funky” little dress shop could do so?

Of course, there are neighborhood groups that are right now trying to push down-zoning or some kind of overlay zone in Dupont East that would effectively further limit the possibility that small independent business might in fact even survive. That’s going the opposite direction from where the writer sits.

But what about tackling the underlying economic reality that drives small business out of gentrifying neighborhoods? It has much to do with the property tax scheme that the city’s political leadership refuses to address. We have written about this on numerous occasions, but who are we but a small voice in the wilderness? Instead of blaming our neighborhood business groups, for example, for not pushing for positive relief along the suggested or other lines (and we are not so sure that groups like DC-MAP have not tried), where has the influential Washington Business Journal been? We haven’t seen any evidence that they have jumped into the fray here.

Here’s what happens and why so many of our treasured shops and small service businesses can’t survive -- three words: Taxes and rents, and the two are more often than not one in the same. Whenever these properties get reassessed by the city, thanks to its questionable methodology, some small entrepreneur who is just getting by suddenly sees his or her real property tax bill explode because down the block some out-of-state developer came in and paid an outrageous price for a “hot” location and was willing to pay whatever had to be paid so that the property could then be locked up for the developer’s bigger purposes. So the little guy up the street is doomed.

It is thanks in large measure to this ripple effect that the little guys are getting driven out, and yet there is no push from those with real influence to demand a change and make the case that the way things are now is totally contrary to sound public policy for encouraging the health of dynamic and livable neighborhoods.

Also, it must be kept in mind that when people say that commercial property taxes -- or other taxes imposed under the guise as “fees” (read, baseball stadium scam) -- are imposed on owners of commercial property, those taxes are not paid by the property owners but for the most part are direct pass-throughs to their business tenants in accordance with the standard triple-net leases which are the norm. So, it’s not the XYZ Real Estate Investment Trust owner of the property that gets stuck, it’s their little shoe repair tenant -- and, ultimately those of us who live here and depend on the shoe repair guy, or the neighborhood hardware store (so that we don’t have to have a car to drive to the suburbs to shop at a Lowes or a Wal-Mart).

Until our influential business leaders and, especially our elected politicians fully understand all this, the small merchants and service businesses will be put out of business. We need better leadership in this matter from our so-called leaders. Hope springs eternal!