Steven Franco owns Discount Mart in Seat Pleasant, Md., one of three businesses suing the city because of a massive tax hike that he says threatens to shut them down. (Bonnie Jo Mount/The Washington Post)

Several business owners are suing the small town of Seat Pleasant, Md., for an approximately eightfold property tax increase they allege is unlawful and designed to shut down their businesses.

The owners of a discount market, a Chinese takeout restaurant and a liquor store say officials violated the city’s charter and state and federal laws when they created an ordinance that sent the property taxes of certain businesses soaring.

Steven Franco, who owns the discount market, said the “special revitalization” tax is a part of an attempt by Seat Pleasant’s leaders to lower the value of the properties so the city can buy the buildings for its own use.

“You can’t attract business like this,” said Franco, whose city property taxes last year jumped from $5,991 to $55,019, dwarfing the $18,269 property tax he pays to Prince George’s County. “It’s backward economic thinking.”

Mayor Eugene W. Grant, a fierce and at times controversial politician who made headlines two years ago for governing from a pop-up tent after he was ousted from City Hall, declined to comment through a spokeswoman, citing the pending litigation.

His 2018 budget says the special revitalization tax on five business owners will “benefit the entire city” by generating more than $250,000 in new revenue a year.

“All of these dollars are necessary for us to provide efficient and effective services for the residents of Seat Pleasant,” Grant said in an October interview with NBC4 Washington.

But according to the city’s charter, special assessments can be levied on properties only if the funds will specifically benefit those properties — for purposes such as building curbs or paving sidewalks — and if property owners are given advance notice and the right to appeal.

“They’re violating their own law,” Franco said.

A pretrial hearing is scheduled for April 2.


Discount Mart owner Steven Franco. (Bonnie Jo Mount/The Washington Post)

In court filings, Seat Pleasant officials maintain that they followed proper procedure in enacting the ordinance and did not violate the city’s charter. City attorney Jason DeLoach said Thursday that Seat Pleasant is drafting a proposed settlement agreement, but he added: “We think we’re on solid legal footing here.”

The Seat Pleasant council introduced the tax ordinance on May 8 and adopted it a week later, after a public hearing that Franco says he and other property owners didn’t know about. None of the council’s seven members responded to interview requests.

The buildings involved in the lawsuit are clustered near the intersection of Martin Luther King Jr. Highway and Eastern Avenue, which straddles the District line in an area that has long struggled with crime and poverty.

Franco — whose crowded store sells a wide variety of things including clothes, snacks and computers — said prostitutes and drug users often stand in his parking lot. A store manager wears a gun on his hip and a badge showing he is a special police officer.

“I’m all for improvement. . . . Based on its geography, this area could be a powerhouse,” said Franco, whose family has been in the discount-store business for decades and had a store in the Skyland area of Southeast Washington that closed to make way for new development. “But this is not how you do it.”


Franco speaks with customers at Discount Mart. (Bonnie Jo Mount/The Washington Post)

Owner Jerry Chen prepares food at Jerry's Carryout in Seat Pleasant. (Bonnie Jo Mount/The Washington Post)

Franco is white and Jewish. Si Qiang and Chang Lin Chen, who own Jerry’s Carryout and the liquor store, are Chinese. Their lawsuit raises the question of whether the leaders of Seat Pleasant, which is 86 percent black, are discriminating against them on the basis of religion and race. An African-American-owned barbershop in the cluster of buildings on MLK Highway was not asked to pay the special tax, Franco said in an interview.

DeLoach called allegations of discrimination “ridiculous.”

“We take offense to that — it is not what the city is doing,” he said.

The Chens’ city property tax increased from $1,705 to $14,033 at one property and from $2,137 to $17,147 at the other. Their daughter, Kathy Chen, said the tax could “destroy everything my family has built over more than 30 years.”

Her 64-year-old father is so worried that he is having trouble sleeping, she said. “We love this community, and that’s why we’ve never left,” she said. “Why did they pick on us? Why?”

The lawsuit filed by Franco and the Chens — and another filed later by MLK LLC, which owns a vacant building across the street — alleges the city has violated state and federal laws by depriving the property owners of their right to due process and equal protection under the law.

The properties will be sold in a county auction in May if the business owners do not pay the tax. Franco said he so far has declined to pay because he did not want the city to have the additional funds, but he is prepared to fork over his money if needed to avoid his business being sold.

“The last thing I would do now is consider the city to buy this,” said Franco, whose family also owns a Discount Mart in Langley Park. “They should have sat down and talked to me, and we could have worked something out.”