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Bakery faces obstacles
Storefront renovation taxes shop owner
(Published October 17, 2005)

By LAURA PETERSEN
Staff Writer

A law designed to encourage a vibrant small business community appears to have backfired on a Petworth bakery owner.

Ken Rubotzky has worked to open Torta Bakery at 225 Upshur St. NW for the last three years. He and his business partner have purchased ovens, freezers and a top-of-the-line ice cream maker, but they have yet to test their specialty cake and gelato recipes.

Since June, Rubotzky has been focused on figuring out why their property was retroactively designated as vacant, requiring them to pay an additional $2,000 in real estate taxes.

"If I'm trying to open a bakery in a depressed neighborhood, it would seem to me they [the city] should be trying to help me not penalize me," Rubotzky said.

A tax rate for vacant commercial and residential properties in the District was created in 2002 that is almost three times as high as the regular commercial tax rate, according to the D.C. Office of Tax and Revenue's Webs ite.

"It's a good law," said Maryann Young, spokeswoman for the chief financial officer who oversees the Office of Tax and Revenue. "It's trying to discourage vacant properties, because they often fall into disrepair and become sites for criminal activity."

Rubotzky agrees that his presence has discouraged drug dealing that used to occur outside the storefront. As a local business owner, he said he will hire local residents to work for him, further benefiting the community.

Councilman Adrian Fenty, D-Ward 4, in whose ward Rubotzky is trying to open the business, said that the vacant property tax law, while valuable in theory, does not have much practical effect.

"Legitimate nuisances have gone untaxed and ones being redeveloped have been taxed," Fenty said.

Originally a data programmer, Rubtozky has been trained to make gelato, an Italian ice cream, and has been honing his baking skills since he was a young boy. He said he hopes that Torta Bakery will be a cozy place where people can meet for a cup of coffee and a treat, and provide unique birthday cakes.

"I don't want to make people fat," he said. "But I think there's room here for a bakery in Petworth."

Yet, Rubotzky said "the obstacles are almost insurmountable" to open a small business in the District.

Soon after receiving notice that his property had been retroactively designated as vacant at the end of May, Rubotzky filed for an exemption. He provided copies of utility bills, proof of business insurance and a copy of a $1,600 check he wrote to have the property's natural gas line fixed documents that he felt would adequately prove he was actively renovating the building. He said he did not receive a denial letter until September. Rubotzky said he was told that his utility bills were not high enough to indicate occupancy.

"Renovated properties should not be considered a vacant property, because that is exactly what the vacant property tax was created to do," Fenty told The Common Denominator.

During the intervening three months, Rubotzky said he doggedly tried to find answers about why his property's classification had been changed and what needed to be done, but said that no one returned calls until Fenty and staff at At-Large Councilman Kwane Brown's office made calls on his behalf.

"If that's the case, it shouldn't have happened," said Linda Argo, director of communications for the Department of Consumer and Regulatory Affairs, the agency that oversees property classification. "People should be able to come in and do business with us and receive callbacks."

What he apparently needed, and didn't yet have, was a certificate of occupancy, which is required for all buildings. To obtain one, a building must pass fire, electrical, plumbing and structural inspections. But he said he wasn't told this until mid-August, leaving him little more than a month to secure the certificate before having to pay the taxes by Oct. 1. Processing the certificate application was slow, according to Rubotzky, who said he visited the processing office six times to push his application through. He was unable to have all the inspections completed before the deadline.

"I wouldn't say we bent over backwards, but we went out of our way to help him in this process," Argo said.

DCRA stopped all potential penalties, such as assessing fines or liens, on his property for 60 days to give him time to get a certificate of occupancy so his property would be reclassified as commercial and not eligible for such actions, according to Rubotzky.

Still, he says, information on how to start a small business is not easy to find, and with both the Office of Tax and Revenue and the DCRA involved, it makes the process very hard to navigate.

"We could do a better job coordinating between and among our agencies," Argo acknowledged.

DCRA plans to hire 11 new program specialists in fiscal 2006 to assist citizens like Rubotzky trying to open small businesses. Argo also said the department plans to revamp its Web site as part of an effort to make information more readily accessible.

It is unclear if all small business owners must pay taxes at a higher vacant-property rate if they are actively renovating their property or if the classification is assigned on a case-by-case basis.

Some city officials who spoke on the condition of anonymity blamed Rubotzky as responsible for some of the obstacles preventing the bakery's opening. They said they were concerned that Rubotzky was not going to open a retail bakery but a wholesale bakery, which would not comply with zoning laws for the area.

Rubotzky confirmed that he had planned on a retail and wholesale bakery, but changed his plans to retail only once he learned that wholesale was not an option. To prove his intentions, officials have asked him to provide a notarized letter promising a retail bakery.

Rubotzky said he is almost done securing his certificate of occupancy, but still has no idea when the bakery will open. He plans to appeal to seek a refund for the higher taxes collected something that the Office of Tax and Revenue said that any property owner is eligible to do.

Copyright 2005 The Common Denominator