Displacement of retail businesses through increasing property tax assessments

On the pro-urb list, there is a thread, still, about the gentrification article that ran in USA Today, based on the work of Columbia University Professor Lance Freeman. It reminded me of something that came up in the testimony about DC Main Street.

Here's what I wrote:

With regard to your point about displacement of small businesses from the commercial side, this came up in a hearing a couple days ago at the DC City Council. Councilmember Kwame Brown made the point that long time property owners that run retail businesses are being displaced, because of increasing valuations, which lead to increased property taxes, which end up taking a larger portion of the retail business revenue stream.

Extemporaneously, I made the point that the rule of thumb from the Main Street world is that businesses can afford 4-10% of their revenue stream to be paid for in rent (I know that restaurants pay more, etc.).

So I said that the city needs to take this into account when setting property tax assessment models for commercial properties, particularly in neighborhood commercial districts.

If assessments are greater than what the average business can afford to pay in rent, then such businesses and uses will be pushed out, perhaps unintentionally (or maybe not?, see Urban Fortunes), and chains will win out over locally owned and operated businesses.

Of course, the councilmember that asked the question didn't understand my response at all, which I found quite disappointing and disconcerting.