GRANOLAPARK: S&A Beads leaving Takoma Park

S&A Beads storefront in Old Takoma, June, 2016, Photo by Bill Brown.

GRANOLAPARK • BY GILBERT

Dear Readers,

S&A Beads is moving out of Takoma Park, owner Larry Silverman announced to the Takoma Park city council Feb. 9. The reasons he cited were high rent, the city’s inventory tax, and parking in Old Takoma.  The rent, said Silverman, went from $2,550 in 2015 to $3,500 this year. He also said the store has outgrown the space, but there are no other suitable, affordable storefronts available in Takoma Park. He is looking for a new location in Takoma, D.C., and Silver Spring, he said.

Silverman has appeared before the council several times to bring the inventory tax issue to their attention. He says it is an arbitrary tax that falls hard on stores such as his that maintain a large inventory. In an op-ed for the Takoma Voice, he said Takoma Park is the only Montgomery County municipality that doesn’t discount or cut business inventory tax.

S&A Beads sells beads to children, hobbists and professionals. December, 2013. Photo by Bill Brown

Silverman’s comments to the council sparked community discussion. Last May former councilmember Seth Grimes gave another view of the inventory, or personal property tax, in his One Takoma column in the Takoma Voice. He said that waiving the personal property tax would mean higher taxes on homeowners to make up the difference. Homeowners already pay the city high real estate property taxes.

Responding the Grimes in his op-ed Silverman countered that business properties are also taxed, and that tax is passed on to the businesses that rent the property. So, in effect, the city is asking businesses to pay extra taxes.

S&A Beads, established in 1989, is at 6929 Laurel Avenue in the Old Takoma business district. A 2013 article about the annual Pajamarama sale included a description of S&A Beads.

More inventory

Inventory tax came up again later in the meeting. A small jewelry business in the Crossroads shopping area relocated across the street in 2012. In crossing the street the store changed counties from Prince Georges to Montgomery. However the State Department of Assessment and Taxation continued to identify it as located in Prince George’s County,

Priti’s Fashion and Jewelry recently realized the mistake and tried to correct the matter. The back taxes on inventory would be particularly steep because the inventory is expensive jewelry. That’s not counting the interest the county is charging.

During the council discussion of the matter, the owner appealed to the city to waive the taxes. The council seemed open to waiving the interest and at last some of the taxes, but the owner advocated waiving it forever, and not just for his business, but for all city businesses. As Silverman did early in the meeting, he cited all the other county jurisdictions who waive or reduce it.

Mayor Kate Stewart noted at the end of the discussion period that the council was of mixed opinion. Some were in favor of getting rid of or reducing the tax for all business, others were not. All were in favor of giving Priti’s Fashion and Jewelry some kind of break.

Councilmember Tim Male wondered if the city has the authority to waive the tax. Based on an previous experience, he thought only the state has the authority.

The council will take up the issue again later.

Gilbert suggests

Your Gilbert suggests that the city waive inventory taxes for those businesses which voluntarily make a donation to the city. The donation would be a certain percentage of their net profits. The city has Payment In Lieu Of Taxes deals with big property developers all the time. In those deals there is no payment—it is a waiver not to pay any property tax for a set number of years. In such a deal with business owners, there would actually be a payment.

Donations, of course, would be tax deductible.

News you can use

There is an ongoing series of meetings about Piney Branch Elementary School and how to balance the need for new classrooms with the continuity (or not) of the Piney Branch Pool. There’s a city blog about it. Suzanne Ludlow, city manager, warns citizens that the conversation is “moving pretty fast.”

Have coffee with the mayor and Ward 6 councilmember Fred Schultz, Friday, Feb. 10, 8:00 – 9:30 a.m. This is one of a continuing series of Community Coffees. It will be at the New Hampshire Recreation Center, 7315 New Hampshire Avenue. That’s in Ward 6.

Councilmember Schultz said Ward 6 constituents will be there if they know what’s good for them. Possible physical consequences were offered to those who don’t attend.

Mayor Stewart announced that the city has requested a feasibility study for a freestanding emergency health care facility to replace the emergency room at Washington Adventist Hospital (WAH) when the hospital moves a few years from now. WAH, she said, has hired a firm to do a feasibility study also.

They WHAT?

Councilmember Jarrett Smith reported on state legislation of interest to the city. The Maryland Municipal League, of which the city is a member, opposes a bill that would allow the State Highway Administration to sell street naming rights. Everyone in the room made a “they WHAT??’ face.

There were two other discussion items. The Nuclear-Free Takoma Park Committee recommend in a December 2016 report Don’t Bank on the Bomb, that the city switch its financial accounts from Sun Trust Bank to one with no nuclear weapon industry investments.

The council liked the idea, though it would take a long time to go through a request for proposal process.

The last discussion item was a review of the council priorites worked out at the councils two retreat session in January.

Two voting items zoomed by with little yakity-yak: a budget amendment and a vote to hire a contractor to develop a housing and economic development strategic plan.

– Gilbert

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About the Author

Gilbert
Gilbert is the pseudonym of a hard-bitten, hard-drinking, long-time Takoma Park resident who maintains the granolapark blog. Gilbert and William L. Brown — Granola Park's mild-mannered chief of staff, researcher, and drink pourer — have never been seen in the same place at the same time.

6 Comments on "GRANOLAPARK: S&A Beads leaving Takoma Park"

  1. Gilbert, it’s my December 2016 “ONE TAKOMA: Time to make Takoma Park business taxes fairer” that you should link to. I offer one approach that eliminates the inventory tax and a second, a homestead-type exemption for locally owned businesses, that would address the burden faced by S&A Beads and Priti’s: http://takomavoice.com/2016/12/01/one-takoma-time-to-make-takoma-park-business-taxes-fairer/

    Regarding S&A Beads: a $950 per month rent increase is steep! But noting that S&A Beads pays about $2,000/year in inventory tax, about 1/20 the amount the business pays in rent, I’d have to conclude that it’s the rent cost that’s the real pain point here.

  2. As an avid beadworker and a property tax payer I can tell you, I’m not sure if it’s the overhead, high rent or a combination, but S & A beads is expensive and while they do have lovely stuff, there’s nothing there that isn’t available online or at bigger venues cheaper. And no, there’s nowhere to park. I cringe when I think of another business leaving TP and taking tax dollars with it. But perhaps if there was another business that was higher volume, a business in that space could better support itself and provide something that more folks could benefit from. Beads are a very specific item that I’m willing to bet don’t move as fast as other products. And it’s a very small space. I so hope that space isn’t filled by some other kitchy, over-priced junk vendor. That’s the problem with our downtown. Nowhere to park, nothing to buy, and if you find anything, you know you can get it for a fraction of the priced elsewhere.

  3. If the Takoma Park Council were to exempt inventory from taxation, they could achieve revenue neutrality by increasing the tax rate on nonresidential real property by 6.5%. They could also choose to support House Bill 859 which would exempt all inventory in Maryland from municipal taxation and reform the state’s traders license fee system which is also a form of inventory taxation. http://mgaleg.maryland.gov/webmga/frmMain.aspx?id=hb0859&stab=01&pid=billpage&tab=subject3&ys=2017RS

  4. “I so hope that space isn’t filled by some other kitchy, over-priced junk vendor. That’s the problem with our downtown. Nowhere to park, nothing to buy, and if you find anything, you know you can get it for a fraction of the priced elsewhere.”

    Tru dat. Hopefully, this is a sign that all of the boutique framing shops and “antique” stores will eventually be replaced by restaurants or other businesses with higher volume and revenue.

  5. Al Carr’s right. As has been noted, the inventory tax is pretty selective if not arbitrary in the businesses that it most affects. If the city can’t impose a sales tax increase, then a business property tax increase seems like the way to go.

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