NW Businesses Fear Skyrocketing Taxes Will Push Them Out

"I'm looking at the end of my business," she said. "Either something changes, or we have to leave."

Skyrocketing land values may be turning many business owners into paper millionaires. But few can tap their riches without selling out.

"They end up in a commercial variety of what it's like to be house poor: The building itself is valuable, but you can't afford to do business there," said council member Jim Graham (D-Ward 1), who represents U Street and other commercial corridors in Adams Morgan, Columbia Heights and Mount Pleasant.

Some business owners say that they have stuck it out during the lean times and that they deserve to feast during the fat ones.

"All those people who were there when there was the homeless outside, pimps and prostitutes and drugs," said Jeremy Kittrell, an owner of the New Vegas Lounge. "But now it's like, what do you get for going through that? Where is the allegiance?"

There are few places where the discomfort is greater -- and the symbolism stronger -- than on U Street, the historical center of Washington's black community. Recent years have brought new residents, new businesses and a new prosperity.

"It's good for the city, but it's not good for the business folk," said Rick Lee of Lee's Flower and Card Shop. "The city's going to choke us out."

Lee, along with Ali and other business owners, met with council members last month to lobby for relief. Graham said he is working on legislation with council Chairman Linda W. Cropp (D).

Lee and other business owners say that new housing and affluent neighbors are boosting sales somewhat but that the additional money does not come close to making up for tax increases.

Jorge Pea, of George's Shoe Repair at 13th and U, said he has attracted customers from a new condominium building down the block. He says he can tell the newcomers because they don't ask how much a repair will cost.

But Adeletha Green, owner of the Islander Caribbean Restaurant on U Street, said that although some of her new neighbors pop in once in a while for a plate of calypso chicken, gone are the regulars who would come several times a week and hang out around her bar, watch TV and trade gossip.

Meanwhile, her assessment is due to double next year to more than $1 million.

"We came here before the boom, but what are we to do? Pack up and leave?" Green asked.

City tax officials say the assessments reflect the reality of the market. And if anything, the assessments undervalue properties because they are based on sales data from previous years, said Thomas Branham, the city's chief assessor. Tax bills that go out next year will be based on the new assessments.

Tax assessment is based on numerous factors, including zoning, comparable sales prices, revenue, costs and the potential value of the land if it were developed to its "highest and best use," officials say.

To Ali, the rising values and taxes are forcing small-business owners to "sell, get to the highest and best use or get the hell out."

Rosemary Reed got out. After 30 years in Dupont Circle, her dress store, Toast and Strawberries, closed Oct. 9. Reed was worried about what her rent would be after her landlord finished his planned renovation. She recently reopened her shop -- on the Internet.

She said she saw upper Dupont Circle turn from a place with independent and unique shops to a strip of high rents and chain stores. She said she fears that is what is happening now in other areas of the city such as U Street.

"There should be some balancing, but I don't know how to do that," Reed said. "How can you evaluate who is quirky, who is old?"