April 26, 2007
Warehouse Slammed by Taxes, May Close
Earlier this week we heard some terrible news for one of our favorite venues in the city. Warehouse Arts Complex, located on the developing 7th Street corridor near the Convention Center, was greeted with a property tax bill over 500% what they paid last year. The concert venue, art gallery, theater, screening room, and cafe/bar serves the arts community in more ways than any location outside the Kennedy Center, but this kind of work isn't a goldmine, and Warehouse continues to lose money every year despite successful show after successful show due to factors like skyrocketing property taxes in their neighborhood seen year after year. With this last huge blow, owners Molly and Paul Ruppert are now seriously considering closing up shop or at the very least, moving the venue to a new, cheaper location.
The Washington City Paper blog summarizes Warehouse's great history, noting that the Ruppert family has owned the property for over 130 years and transformed it from a hardware store to a restaurant before it slowly evolved into a place for creative talent of all kinds.
Everyone knows that DCist has a special place in its heart for Warehouse. When we needed a venue that would take a chance on an art show featuring an unwieldy number of unknown photographers, organized by a bunch of Internet writers with no experience but plenty of passion, Warehouse was the first name out of all our mouths. Our experience with the venue and with the Rupperts was more than just business, they went out of their way to answer our many questions, give us access to their resources, and spend the time necessary to make sure our nascent show was hugely successful. (In fact, most of the Exposed photographers were so smitten with the place they spent half their time shooting the character-riddled gallery walls, and we know a few who've expressed interest in using the space for their own photoshoots.)
Image by DCist Exposed photographer Kyle Walton.
The concerns of DCist over the future of the Warehouse are fully shared by the community, and Molly Ruppert expressed to us that, "We are overwhelmed that you and the Exposed photographers and so many others have so many supportive and encouraging things to say about Warehouse." Lenny Campello wrote about his experiences with Warehouse here, and if these aren't enough evidence that shuttering the doors would be a huge loss to the community, take a look at what happened just this week.
Artist and blogger J.T. Kirkland has been working continuously over the past few months to put together Supple, what initially looked to be one seriously great gallery show, with huge D.C. names like Colby Caldwell, Robin Rose, Laurel Lukaszewski, and a handful of talented up-and-comers. Suddenly, last week, their chosen venue ripped the carpet out from underneath them, and the show was homeless. Cancellation press releases went out and barely 24 hours later, Warehouse offered up their facilities -- even though the venue has already booked another art show. The Rupperts negotiated with Kirkland and the curators of the other show to make sure no one was left on the streets, and if that isn't community building, we don't know what is.
Campello, in his post, rightly calls out organizations like Washington Commission on the Arts and Humanities and the Cultural Alliance of Greater DC to step-up and support this venue that embraces arts and culture like few others. We give all our support to Warehouse and know many of our readers do, too. If you've never been over to 7th Street, we'll have plenty of information for you in today's Arts Agenda about Supple and No Representation, so this weekend is a perfect time to check out the space, which is located just a block from the 7th Street/Convention Center Metro, and just across from artDC, the international art fair that starts today.
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Wow, that sucks. But I would suggest finding a solution other than moving. Because of the way DC property taxes are calculated, they're just putting off the inevitable every time they move. As neighborhoods develop and grow, their value increases. It's a good thing, but in DC it has an unfortunate dark side. One property gets developed on a street, and the whole neighborhood jumps in value.
Better to find a source of funding support that can anchor them rather than try to build community and run a business in a nomadic manner. Otherwise they'll just end up in Virginia.
I'm a commercial property owner in town, though i've never been to the Warehouse i appreciate why it's with us and what it provides (having volunteered several times at such places as DCAC). I feel that this might be and hope is a glitch in The System and that it can be corrected easily. My business recieved notification of the Stadium tax which applies to DC corporations and i couldn't believe what i saw until i read it a third time and was able to calm down. My biggest gripe with DC property tax assessments is not that rates go up without regard for fair assessments - that special zonings and non-profits do not pay property tax. A big loophole easily taken advantage of .. i think.
erahk
"that special zonings and non-profits do not pay property tax. A big loophole easily taken advantage of .. i think"
speaking of which, would it make sense if the Wharehouse became a non-profit itself? Does that really get rid of property taxes?
I guess it would mean that the Rupperts would have to give up title to the property, which is obviously worth a whole lot of money.
As a for-profit business, I would imagine it would be hard to get outside funding and still try to eke out a profit. What about going for 501(c)3 non-profit status like that place on 14th Street, HR-57. If there is any bar that should qualify for this kind of thing it seems like Warehouse is it. Their support for the arts has to count for something.
This is pretty much standard operating procedure. Theaters and small venues move into warehouse space in sketchy neighborhoods because it's cheap. The neighborhood gets all gentrified, the city jacks the taxes, the theaters move out. Happened in Gallery Place with DC Space, the old 9:30, Insect Club, and it's happening throughout Shaw. I imagine given another 10 years, it'll happen on H Street NE. Given the District's impending defecits, and the collapse of the real estate market, that 500% increase in taxes is only the tip of the iceberg. When have property taxes ever gone down?
Art is so important to a city's vitality. It would be in the District's best interest to do what it can to support and keep the Warehouse alive, rather than sticking them with such a huge tax bill.
move to H street
I'm the only one on my block who isn't a lawyer, but perhaps the Rupperts can have a trust retain title while a nonprofit operates the arts facility, or something along those lines. At the very least, that might keep the tax men scratching their heads for a few more years.
I can't understand why the city couldn't give an arts complex like the Warehouse some sort of protected status. Do we need another friggin' Starbucks or other franchise? Cities too often forget what makes them unique and interesting. The Convention Center is a big cash-generating dead zone for residents, so maybe the city could throw a few crumbs to the "small a" arts.
I love it. Liberals complaining of taxes they are directly responsible for creating. Taxes are great if you don't have to pay for them. Once that happens let the b-tching begin.
@Barry S:
The city is too busy sliding millions in subterranean capital funds to the rich and connected for pet cultural projects.
MS, you are an idiot.
Ah... The Insect Club. I remember eating chocolate covered bugs. Such memories.
Interesting article about property taxes in the District
http://www.dcfpi.org/?p=171
Name calling. Great way to win a debate.
I hope it doesn't end up having to move. It's a great venue, and the only good neighbor the convention center has. Arggghhh.
I second the move to H Street. Property tax will definitely be less...for now.
Okay, how much money are we talking here? Is it the sort of number that could be raised by a couple of benefits -- or maybe DCist setting up/publicizing a PayPal account that we can contribute to? I'd be happy to put my wallet where my mouth is to support local independents...
I really really hope Warehouse moves out so that we can have another bank branch in the city! Or maybe another chain restaurant! Or, better yet, they could put a bank branch, a convenience store AND a chain restaurant in this pesky, unique venue. I mean, I sure have trouble finding cheap, homogenous and unhealthy burritos, subs and convenience-store products so it would be great if they would help us out over there.
I love this town, but it's really sad that there is so little sense of community here. Everytime a unique place is "found" by the general public it winds up getting replaced by a suburban-strip-mall in disguise. I'm fully a capitalist but there must be a better way to balance the economic interests of the city and its developers and the unique nature of our neighborhoods. Doesn't anyone with any money or power value these cultural icons enough to help them survive?
paypal is a great idea. We'd be up for playing a benefit.
As others have pointed out, the obvious answer is to become a non-profit. Pay yourself a salary, but the business itself is nonprofit. It's the oldest tax scam around. Not hard to do. Why do you think half the businesses in DC are nonprofits? Some are legit and real, but quite a few pay their folks quite handsome salaries and expect the DC taxpayers to pick up the tab by avoiding things like property tax, etc.
And I second the move to H Street. You can still buy a place on H for probably a lot less than where they are now.
As others have pointed out, the obvious answer is to become a non-profit. Pay yourself a salary, but the business itself is nonprofit. It's the oldest tax scam around. Not hard to do. Why do you think half the businesses in DC are nonprofits? Some are legit and real, but quite a few pay their folks quite handsome salaries and expect the DC taxpayers to pick up the tab by avoiding things like property tax, etc.
And I second the move to H Street. You can still buy a place on H for probably a lot less than where they are now.
"I'm fully a capitalist but there must be a better way to balance the economic interests of the city and its developers and the unique nature of our neighborhoods. Doesn't anyone with any money or power value these cultural icons enough to help them survive?"
Sorry, but the very nature of capitalism eventually weeds out anything that doesn't lead to more capital, such as consistent money losers like the Warehouse.
It'd be a damn shame to lose the Warehouse. Lots of great memories of that place. DC would be much worse off without it.
Actually, property on H Street NE isn't cheap. The propery owners have all overpriced their buildings to the point that it's starting to interfere with development.
I really hope they seriously look into the non-profit option. I mean, a venue and presenter that consistently loses money on what it brings in on sales alone is pretty much the template for a performing arts non-profit. They could essentially continue to operate as they do now, just add a development staff of a couple of people to raise money to make up the difference between income and expenses, and recruit a board of directors, and they're set. That's an oversimplification, but not that much of one.
how does that whole "tax assessment" racket work anyway? Somebody just says..oh well your real estate taxes are going up and that's it?
You would think Warehouse were owed some sort of equity..in a fair world the new developer would work Warehouse into the new space. If the city had any "balls" they would demand it. Give them that tired DC City Museum building.
maybe they should actually bring in money by having shows/productions that people might want to go to. they've stopped having many shows, they're not open late for hanging out, or open early as a coffee shop. it's like it's just open for people to have shows that only their friends attend.
Warehouse is owed some sort of right to exist? That's not really how it works. If the city can dictate to developers that the must maintain a business that loses money even though the property is zoned for other uses then who in their right mind would ever buy property in DC? As for the city having 'balls'.... maybe it's more that the city realizes that such a demand is illegal and therefore not worth pursuing.
A non profit bar, are you people joking? Come on... If Warehouse accepted charge cardsand had some decent food when I went there I would spend money at the place. A sandwich smashed in a home sandwich maker is not food. They are always out of the beer you want. It is just run poorly. Sell to someone who wants to be creative, serve the customer and make money.. It gets done in DC all the time.
A non profit bar, are you people joking?
Um, been to the Smithsonian cafeterias lately? Or any other (private) museum in town? They have cocktail hours and jazz brunches and tons of other money-making activities involving, among other things, alcohol and food for sale. But like the Warehouse, that's just a sideline. I don't think it's so farfetched.
"A non profit bar"?
Actually, my understanding is that the primary function of the Warehouse is to present art, music and theatre. They use the bar to make that possible. Not the other way around. It's really a fucking shame that alcohol sales are such a vital part of pretty much any arts organization's bottom line, but that's the reality, whether you're at Warehouse, or a larger, more established theatre.
If their bar has shortcomings, obviously they should address them (personally, I've never had any complaints), but the idea that being a bar is their primary function is ludicrous.
"A non profit bar"?
Actually, my understanding is that the primary function of the Warehouse is to present art, music and theatre. They use the bar to make that possible. Not the other way around. It's really a fucking shame that alcohol sales are such a vital part of pretty much any arts organization's bottom line, but that's the reality, whether you're at Warehouse, or a larger, more traditional theatre.
If their bar has shortcomings, obviously they should address them (personally, I've never had any complaints), but the idea that being a bar is their primary function is ludicrous.
I think if we all want to HELP WAREHOUSE, we should go there for DRINKS and check out the SHOWS! It seems like a logical first step, no? See you at the bar!
grizzle wrote: "Sorry, but the very nature of capitalism eventually weeds out anything that doesn't lead to more capital, such as consistent money losers like the Warehouse."
True, except that for better or worse, there are many ways that our society (through government) has intervened in the market--tax cuts, credits, subsidies, mandates, etc.
Ever heard of Amtrak? And what about churches? We (collectively) have decided that churches are good for our society so they pay no taxes.
There is no such thing as pure capitalism (thankfully) so the arguments will never end about where we should intervene. The financial levers that the government controls should, in a perfect world, be used to reflect society's values (very tough to agree on).
My own position: I'm all for giving a tax break to businesses that support the arts. They provide at least as much richness to life as any church I know.
"but the idea that being a bar is their primary function is ludicrous."
No one had that idea. Alcohol = high markup = profits = pay taxes...
Why have your customers
1. Have to bring cash
2. Have to go elsewhere for dinner because a grilled sandwich is not on their food plan..
They probably don't take cards because credit card companies take a chunk of the profits. It wouldn't be worth it for them to take cards unless they were selling a lot more beer than they do.
The Warehouse is not trying to be an upscale restaurant - they're an art, music, and theater venue with a bar. I'm thrilled that I can get healthy vegetarian food that's not fried, which is more than I can say for a lot of bars.
We are talking about a 500% increase in taxes. From what I've heard, it amounts to $250,000. That's a hell of a tax increase and certainly not something you could easily make up by having better sandwhiches.
I can't imagine most small businesses surviving a hit like that, let alone an arts venue. The city clearly needs to reassess how it is determining property taxes. That's the larger issue at hand here. If that doesn't change then what's left of DC will soon become a giant CVS or Starbucks.
It is quite interesting to see the outcry and coverage for the closure of this venue "Warehouse"...folks, it is called gentrification (you know, your favourite subliminally racist code word)...but when "people" are forced to move i.e. low income and/or minority families that have been living in the same area for decades (if not longer), it is for the betterment of the community right? So, we can be oblivious to their plight...ASSHOLES
We welcome the Warehouse to North Capitol Street!
The whole problem is much broader than just Warehouse. Blues Alley, H Street Playhouse, and others are facing gargantuan increases in their property assessments. A few notes:
1. Nonprofits collect and pay sales tax on goods. Just wanted to clarify that for those above.
2. Many nonprofits rent their spaces and rent increases (even the huge ones) are passed on. Same for many small businesses that rent.
2. Many of the District assessments that have come down in the past several years are so huge that few small businesses or arts presenters would be able to pay them for the long haul. 90% increases and higher. Can you plan for such increases in your budget?
3. These increases are proving incredibly challenging, not just for nonprofits but also for quite a few small businesses in the District that are part of why we like our neighborhoods.
4. There is an increasing disincentive for business owners and neighborhoods to improve business corridors. H Street folks don't want to experience what some folks on Barracks Row and U Street are seeing. This is more than "improvements mean more taxes." People know that. It's more along the lines of doing business in a city that does not invest in the health of neighborhood businesses.
5. Many of these businesses have just taken on a stadium tax and pay into Business Improvement Districts (somewhat paying taxes for a special group to handle clean and safe work many cities offer as part of the regular tax structure).
6. Comparing these huge tax upswings to most others is apples to oranges. There is a residential property tax cap in the District (much needed I say) and having one for small businesses seems like a very good idea.
7. The larger question for the city is if we only want those businesses who can afford maximum tax revenues to be in the city. I think most of us like visiting various neighborhoods and patronizing smaller folks for our goods, gifts, music and theater, etc.