Coalition of small Capitol Hill property owners wants to halt chamber’s ‘Business Improvement Area’ expansion

Center of the opposition: This isn’t the first time Groberman has stood up against a BIA. In creating the existing Broadway BIA, planners “gerrymandered” his Harvard Market shopping center out of the assessment zone

Seattle’s “tax revolt” spring of 2018 includes a skirmish along Broadway, Pike, and Pine. Instead of a battle over “No Tax on Jobs,”  this fight pits the Capitol Hill Chamber of Commerce vs. a coalition of the neighborhood’s few remaining smaller and family commercial property owners and its relatively few co-op and condominium property residents. Together, the group could prove a major barrier for the chamber.

“We have huge traction to fight the proposed Business Improvement Area,” prolific Capitol Hill real estate investor Morris Groberman tells CHS.

Groberman, who owns or is partner in a collection of Capitol Hill properties including the Harvard Market shopping center at Broadway and Pike, is at the head of an effort to organize opposition to the chamber’s proposed expansion of a Business Improvement Area across most of Capitol Hill.

 

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The chamber has a few more weeks left in what amounts to an annual cycle to collect signups from owners of the majority of Capitol Hill property covered in the proposed boundaries, and get the petition before the Seattle City Council in time for it to be acted legislatively by this fall.

Groberman and CATCH — the Coalition for an Affordable and Thriving Capitol Hill — are hoping to derail the process.

“The city cannot be trusted with this money,” Groberman says. “No accountability, no sunset — if the BIA goes away, the City of Seattle gets the cash.”

Jeff Pelletier of 15th Ave’s Board and Vellum and director of the Capitol Hill Chamber of Commerce board says the concern should be about bringing together funding for local solutions to form the expanded BIA — a Capitol Hill Alliance.

“Right now there is no organized way that businesses, property owners, nonprofits and residents across Capitol Hill can come together to address local issues with local funding,” he tells CHS. “A new BIA would allow us to provide important services across the entire hill that don’t just benefit business and property owners, but individual condo owners as well.”

Pelletier says many small family property owners and HOAs pay for their own building and sidewalk cleaning, graffiti removal, trash removal, and other services. “I think they’d be surprised that in the long run, creating a Capitol Hill Alliance would provide them with more services for less money than they are paying for individual services now,” he says.

To move the expansion forward, the chamber must convince property owners impacted by BIA assessments that could run between $2,000 and $5,000 per year for most of the 850 or so properties involved to approve expansion of the city’s Office of Economic Development program. Already part of the Broadway business community for years, the expanded BIA would be similar in structure to ones in Pioneer Square, SODO, University District, Ballard, West Seattle, and downtown, and would power clean streets, public safety, and business growth services across Capitol Hill. This summer, the existing Broadway-focused BIA will put funding towards homeless outreach services to help merchants along the artery cope with the area’s unsheltered population.

But Groberman and property owners like him say growing a Capitol Hill BIA into a $1.6 million or more per year operation shouldn’t lean on assessments and would bloat the effort into work and services taxes paid to City Hall should already be covering. There is also concern about adding more costs in an already expensive place to do business and Groberman and others CHS has heard from say they are concerned that once the expanded BIA is in place, that it will be nearly impossible to dismantle.

To show CATCH’s neighborhood roots run deeper than an URL — catch.talkspot.com — supporters of the opposition effort have been contacting CHS over the past few weeks. We’ve heard from about a dozen, most either are owners of a single, longtime-owned commercial property in the neighborhood or are residents in condo buildings on the Hill. Many like Matt Basta, owner of the 1915-era 11th Ave building home to Queer/Bar, say the assessment could be a final straw pushing them to find larger, less neighborhood friendly tenants or to finally bite the bullet and sell the property for development.

“I have several small local tenants in my building and I have been invested in Capitol Hill for 30 years and have seen many changes,” Basta said. “How much more will my tenants pay before they leave and I am forced to sell out to a developer?”

Hugh Saffel, who runs a creative agency and owns a Pike/Pine commercial condominium, shares similar concerns:

I’ve lived on Capitol Hill for almost 40 years. I’ve owned a commercial condo retail space for the last 18 years. I’m opposed to the BIA for several reasons. I believe that it is the City’s responsibility to provide many of the basic services that this BIA is supposed to address. We pay significant taxes, that I believe should cover these needs. And yes, my property has gone up in value—and my taxes are directly linked to this increase. I can raise my rent to accommodate this, but that continues to escalate rents to price out many of the stores that make our neighborhood unique. I purposely rent my space to a retail store, in spite of the fact I could have charged much more to have it be another bar. I didn’t do that because I want to encourage all hours of activity in our community.

The chamber’s campaign, meanwhile, also has strong independent property owner support including Hunters Capital and developer Liz Dunn. The campaign has posted a roster of supporters here. Critics CHS spoke with say the support is bolstered by large, national developers. “Essex, Alliance, — they’re not from here. “If they make a 1% return, they’re happy with that,” Capitol Hill property owner Ron Amundson says.

“The larger property owners generally are only invested in their properties for the minimum amount to get financing,” Basta said. “It is in their interest to see the neighborhood gentrify so that their property value goes up and they can leverage more money to further speculate on other real estate.”

Similar complaints come from Capitol Hill condo owners whose buildings fall within the proposed expansion boundaries. “I own a condo on 15th, and I’m against it for the same reason that tying school funding to local income is bad,” writes one owner, “tiny locally-bound taxes are a way to let rich places spend their money on themselves instead of pooling it to provide services for the whole city.”

“I do contribute to nonprofits, I believe in government, I believe in taxes,” another of the dozen of so condo owners CHS heard from said. “Instead of collecting revenue and nickel and diming us, we need a citywide effort.”

Other condo boards are supportive of the BIA expansion campaign but are lobbying for their buildings to be classified in areas of the plan with lower assessment requirements like the 15th Ave “sub area” — Rob Curran, board president for the Courtyard on Capitol Hill condos at 15th and Pine, tells CHS his ownership group can’t support the expansion until their building is reclassified.

Despite the criticism of increased costs and concerns about the lack of a “sunset clause,” the playing field just might be tilted severely in favor of the chamber’s campaign. To expand the BIA, the chamber needs signoff from “those responsible for 60% of assessments” — not 60% of property owners or owners of 60% of the area’s parcels, even. In effect, larger landowners will have a larger say about whether a BIA should be implemented.

It’s a rigged game, Groberman and others complain. Pelletier says he understands the concern, but that “just isn’t the reality of Capitol Hill or reflective of the values that we established when we started working on this with a large coalition of stakeholders more than four years ago.”

“There is no grouping of large property owners on Capitol Hill that together get us even a quarter of the way towards our goal,” Pelletier says. “Instead, this campaign has relied on connecting with individual, small property owners across Capitol Hill, getting their feedback and talking with them about how a Capitol Hill Alliance would make our community a better place to live, work and do business.”

If Amundson is any indicator, the chamber, already a year behind schedule on its so-called “Capitol Hill 2020” plan and facing the prospect of missing its 2018 legislative window, has its work cut out. Like Groberman, Amundson owns a collection of Capitol Hill properties. While the national real estate investors and institutions like Seattle Central own the biggest chunks of property on the Hill, Amundson’s patchwork portfolio of Capitol Hill properties are home to many of the key corners of Capitol Hill day to day — from the Broadway Alley building to the lot Rancho Bravo calls home.

“I’m opposed to it because I’m very concerned about my tenants,” Amundson said. “My tenants are getting priced out of the market as it is. Their proposal won’t make any changes there. It’s just a bunch of platitudes.”

Amundson, who has decades of experience managing Capitol Hill properties, says he believes most of the money would be frittered away on graffiti clean-up and, worse, running the program. “Most is for cleaning and graffiti and administration,” Amundson said. “It’s a huge assessment for things we already do. As we know, government doesn’t really work very well anyway.”

In the meantime, as the chamber campaign is entering its final push for 2018, Groberman said his plan is to continue collecting counter-signers to the expansion petition. It’s a list he’s not ready to share — yet.

“I know we have 30% of owners lined up against this,” Groberman says. Groberman said he also thinks some of the initial supporters will back out when it comes time to sign the chamber’s petition. We’ll know soon whether he and CATCH can piece together the independently owned parcels and condo buildings needed to halt the expansion.

Amundson says he expects lots of talk about homelessness and the challenges of living unsheltered. He’s sympathetic to many of the campers he asks to move along from his building’s doorways and alleys. But he also expects a do or die push for the expansion. “I think this is to rescue the Capitol Hill Chamber of Commerce,” Amundson said.

You can learn more about the coalition opposing the BIA expansion at catch.talkspot.com. You can learn more about the Capitol Hill Alliance campaign at capitolhill2020.org.

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18 thoughts on “Coalition of small Capitol Hill property owners wants to halt chamber’s ‘Business Improvement Area’ expansion

  1. Ron Amundson wouldn’t know how to address a tenant concern if it hit him in the face. He is a slum lord, period. As a resident of one of his buildings for years, and suffering from the conditions both in the apartment I rented, as well as dealing with him, nothing he says about tenant concern, tenant rights, or doing anything for the greater good can be trusted. His motivation is pure, pure profit for the least investment. I am thankful that I could finally afford to move away from him as a landlord. The worst I have ever experienced.

    • The same can be said for Morris and Basta. Their properties are the worst in the neighborhood, getting them to clean up anything is like pulling teeth. The BIA would force these slum lords to clean up after themselves.

  2. As a property owner in the University District affected by a BIA I can say it’s a joke. We pay in for no extra service, actually we’ve seen higher crime and more break ins and destruction of property. It was forced down our throat by the university but I wonder if there is any measurable that shows improvement or less homelessness or graffiti. I’m unaffected by this Capitol Hill BIA yet but I’m sure to be swept up in the next wave as they need more money for administration of the program. If I had a vote it would be NO!

  3. This is a tough one. I’ve lived in the neighborhood a long time, and I want to see it get better. At the same time, the way this BIA is defined – as a high assessment on square footage, with no differentiation for different uses – it really favors big businesses that have maximized the development potential of their lot, which will just accelerate the departure of the kinds of organizations that have helped make the neighborhood what it is.

    The building I live in — a 12-unit live-work coop for working artists and designers established just off pike st in 1992 would be hit pretty hard. Assuming my math is right, the BIA as defined would cost each individual resident between $300 and $1000 extra, per year. This on top of property taxes that have already doubled in the last four years.

    That’s a tough pill to swallow.

    Other BIAs have been defined in ways that foster a diversity of uses in the neighborhood. For instance, the Pioneer Sq BIA exempts residences completely, and assigns a much lower rate to warehouse and industrial uses. I bet pioneer square wouldn’t have great arts buildings like Tashiro Kaplan lofts if they hadn’t been careful with their BIA.

    So – what kind of neighborhood do we want? Do we want a diverse neighborhood that still supports the arts, and that can still be home to entities that haven’t maximized the economic value of their lot?

    Is it so important that some businesses can attract more customers with neighborhood promotion and cleaner streets that we’re willing to squeeze others out?

    Does a less diverse neighborhood contribute to its long-term health as a hub of creative activity in seattle?

    If it’s a “business improvement area,” shouldn’t the businesses who really benefit from it and are driving it pay for it?

  4. There’s a density penalty ingrained in this as well. Per Washington State law, single family homes and most townhouses are excluded from BIA assessments, but would still benefit from the proposed services.

    So, the new townhouses at 15th and Olive would pay nothing, while the older apartment buildings on the same block and surrounding blocks, would be stuck paying. Same for the multi-million dollar condos (which are actually subdivided townhouses) in the old Christian Science church next to Seven Hills Park. Wealthy people benefit, and those who have less pay for it: regressive taxation at work.

  5. In our case, our Condo Association spends about $2500 per year at worst for the same cleaning services that the BIA wants to bill us $10k for. And we do it daily, not a few times per month. And the BIA would not reduce our costs more than a few hundred per year as the BIA doesn’t maintain areas off the public right of way.

  6. Also, why is the per-square foot assessment on large property owners and developments capped at 50,000 square feet?

    Why are are small multi-unit residences subsidizing businesses owners of large properties?

  7. I I own two small properties on Pike St. I have had them for years. They only have a one-story building on them
    My rents are below market value, Yet my property taxes are very high. I oppose the BIA, It would substantially raise my taxes with no real benefits to me. I would be forced to raise
    my rents.
    Also, the yearly cost is based on only the square footage of the property. I have only a one-story building, most of the properties
    on Pike St. have several stories. and their actual cost would
    be much cheaper then me. This is truly an unfair way to tax
    property owners based solely on property size. Furthermore
    I clean the sidewalks, remove trash, etc. I ask property owners to reject this BIA I have.
    FrankB

  8. I I own two small properties on Pike St. I have had them for years. They only have a one-story building on them
    My rents are below market value, Yet my property taxes are very high. I oppose the BIA, It would substantially raise my taxes with no real benefits to me. I would be forced to raise
    my rents.
    Also, the yearly cost is based on only the square footage of the property. I have only a one-story building, most of the properties
    on Pike St. have several stories. and their actual cost would
    be much cheaper than me. This is truly an unfair way to tax
    property owners based solely on property size. Furthermore
    I clean the sidewalks, remove trash, etc. I ask property owners to reject this BIA I have.
    FrankB

  9. I’m opposed for a simple reason: I – or representatives of the group I’m a part of – wasn’t ever asked whether I wanted/needed additional services – and if so, what they’d be and how I’d want the impact measured.

    This feels like the existing BIA realizing that assessments on businesses were high, and arbitrarily deciding to try to spread the pain to residents. It doesn’t consider whether residents meaningfully benefit from the services.

    There are also problems with the current assessment calculation, as other comments have pointed out. Even if those were fixed, the right way to approach this would be to start with a blank slate and ask all constituents what problems they’d like to see solved, how they’d like to see those problems addressed, and then try to test or prototype that and measure the impact. But as proposed, this is a business improvement district trying to expand its revenue base to those who didn’t ask for it.

  10. Our condo building will be hit with an assessment of $24,000. As treasurer of our condo association board, I know that we will need to pass this on to our owners. This does nothing to keep Capitol Hill more affordable. It makes no sense to tax multi-family residential units in order to promote businesses. We can support our local businesses far easier by just using them!

    The services that we will receive are already performed by our onsite manger at minimal cost. Our cost savings will be minimal.

    There was no consultation before this proposal was dumped on us, and we had no input into the proposal. Worse, there is no sunset clause to evaluate the BIA’s effectiveness down the road, and no way to terminate this new tax. This lack of inclusion does not bode well for the control and management of the proposed BIA.

    If a majority of local businesses support the BIA – great! They can assess themselves and pay for it. But why tax residents, especially those struggling to pay their rents or mortgages?

    • We feel the same way. The city’s recommended BIA process says:

      “The City recommends that all ratepayers receive notification of the BIA proposal from the BIA proponents either through email, mailing, individual meetings, or group meetings.”

      “When individual commercial or residential condominium owners are part of an Owner’s Association that is the ratepayer of record, additional outreach materials should be made available to inform the individual owners about the proposed BIA. For example, postcards with the public forum information and website information could be delivered to each Owner’s Association for distribution to its members, proponents could present at an Owner’s Association meeting, notifications could be posted in common areas of the owners’ building, etc.”

      None of that seems to have happened, at least systematically, with residential buildings within this zone.

      Personally, I’m not opposed to paying a little more for a nicer neighborhood. But in this case, the definition is inequitable, tilted in favor of large businesses and property developers who have already maximized their lot square footage and are extracting premium rent for it.

      Again, other BIAs are defined more equitably, either based on total assessed value, or in a way that distinguishes between economically high and lower-value uses.

  11. I recall when the BIA representative pitched this expansion to me. She specifically mentioned that the beauty of it was the tax increase could be passed along to my retail tenants through triple net charges-meaning the whole thing would cost me the property owner nothing as the tenants bore the cost.

    Of course this is a ridiculous assertion which assumes my retail tenants can pay the BIA assessment, as well as other increased costs (hey, I might want to raise their rent sometime to pay myself for a change), and suffer no loss of profitability. If their costs go up they have less for themselves and less for me. They also have to compete against other retail tenants who do not have to pay the BIA assessment.

    I am opposed to this expansion because it raises costs while providing way to little. That is especially true in the 19th Ave East node, which shouldn’t even be included in the expanded BIA. Rather than pay them $2700 per year to remove graffiti and sweep the sidewalks, I will continue to have my teenage sons handle the infrequent tag, patrol the grounds for trash, etc.

  12. Groberman says: ““The city cannot be trusted with this money,” Groberman says. “No accountability, no sunset — if the BIA goes away, the City of Seattle gets the cash.”

    That is a red herring argument. The BIA has been around for a long time. It’s not going anywhere.

    The opponents often argue that the City “should” be doing the things that the expanded BIA will do, such as graffiti cleanup, removing the vast numbers of illegal and old posters, removing litter from the streets and sidewalks, etc. Yes, theoretically, but you can wait until the cows come home for the City to do these things….not gonna happen.

    I do agree that condo owners should be exempt from the assessment. If single family homeowners are exempt, they should be too.

    • There is no reason to single out business owners or property owners for this tax. If we think the city has problems that need addressing, in this case the things you just listed Bob, we should all be taxed to address them. Don’t we all have an interest in clean sidewalks, graffiti free living, etc. Then why not pay for it together?
      I am tired of people who are so eager to tax someone else so they can get closer to the city they want. If you aren’t willing to tax yourself then don’t be so cavalier about foisting that burden on someone else.

      • Well, I agree with you, and I am willing to be taxed for this. But taxing all residents and businesses is not even on the table. If it was, the proposal would have to include a vote of the people to approve or disapprove the idea.

  13. They should rename the BIA the “Seattle City Government Incompetence Tax.” It’s pathetic our government is such a joke we have to resort to fees like this for basic standards of living.

    That said, I’d rather trust the BIA with my money than let Kshama and her friends blow it on LIHI or helping people shoot up heroin.

    • That said, I’d rather trust the BIA with my money than let Kshama and her friends blow it on LIHI or helping people shoot up heroin.

      Tell us how you REALLY feel, Adam. Don’t be afraid to really unleash your clear inability to grasp reality.