Policy

Rent Relief for Small Businesses

DC’s brick and mortar small businesses are in crisis, due to the emergency closures necessitated by the COVID-19 virus. Their suspended or curtailed operations have prevented businesses from being able to meet their rental payments, causing upstream problems for commerciaål property landlords and their mortgage holders. Although the DC moratorium has prevented evictions, a recent court decision has found this moratorium unconstitutional and the DC Council has conducted a hearing to review. Although a temporary stay has kept the moratorium in place, the possibility of widespread evictions may be imminent. A fragmented response to this fragile balance will further imperil recovery efforts and threaten the future of many small businesses that are key drivers of economic growth, job retention, and creation. Preserving these existing small businesses supports the health and vitality of neighborhood commercial districts.

Department of Consumer Regulatory Affairs Reform

Department of Consumer & Regulatory Affairs (DCRA) is responsible for processing all DC business licensing and permitting applications as well as inspections and compliance responsibilities. Small businesses across the District have been adversely impacted by delays, inconsistent information, unclear processes, and expensive fees. These administrative burdens result in delayed openings, long-term vacancies, and barriers to expansions. These results have much broader impacts measured in reduced tax revenues, lost employment opportunities, in some cases business closures. Failing to address these concerns creates a business environment that competes unfavorably with nearby Maryland and Virginia jurisdictions. The long-term effects will see a marked reduction in business attraction and retention in DC.

Sidewalk Cafe Permit and Public Space Rental Fee: Reimbursements Waivers

In an effort to support DC restaurants, the DC Department of Transportation (DDOT) eased public space use requirements to create streateries, parklets, and expansion onto sidewalks. DDOT waived public space and permit fees to property owners and businesses. However, DDOT has continued to charge and collect public space fees associated with restaurants’ Sidewalk Cafe permits. This oversight is concerning for several reasons:

• Businesses that have no existing permit are currently allowed to access public space with no fee. Therefore, there should be no renewal fees required for those with existing permits as a matter of equity.
• Existing Fees are based on an assumption of a now invalid occupancy load. Government requirements for social distancing to meet public health concerns have reduced by at least 50% the number of guests allowed to access patios. This has periodically dropped to total closure under Stay At Home orders. Permit holders should not be required to pay for a service that the government is not delivering (i.e., access to public space for described use and occupancy load).
• Property Owners are billed for the Sidewalk Cafe rental fee but typically pass this cost onto their restaurant tenants, either as a lump sum or as a part of the monthly lease obligation. Therefore, this expense (typically thousands of dollars, depending upon square footage) is a direct cost to local businesses.

Preserving Small Businesses: Real Property Tax Reform

Concerns about rapid gentrification in DC that leads to involuntary displacement impacts not only DC residents but also small businesses. Facing challenges from e-commerce and changing consumer preferences, small businesses are especially vulnerable. The increase in real estate speculation drives escalations in assessed property valuations, not just for residential but also for commercial sites. In DC we are seeing that commercial property owners are passing down increases in tax burdens to their tenants through triple net lease obligations. Although DC requires property owners to submit Income and Expense Forms, it does not appear that OTR is considering demonstrated drops in profitability as assessments continued to rise this year. If assessments are based on the potential of a property to generate revenue and not on the realities of what the current tenants and owners are realistically able to earn, DC will continue to see the loss of treasured small businesses across the District. If assessments are based on air-rights and potential market-rate development, it will erase the stores that make up our current landscape, and do nothing to protect us from the current vacancies we see along ground floor retail space. If we determine assessed value based on what the international real estate market can afford, we lose our locally owned and operated businesses that stuck with us during the hard times but now feel as if they are disposable.