Are Successful Property Owners The Victims Of Gentrification?

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"Are Successful Property Owners The Victims Of Gentrification?"

I agree with Adam Serwer’s point that it’s difficult to understand racial tensions in Washington, DC without exploring the sharply divergent economic fates of black and white Washington over the past few years. The Fenty administration corresponded with a time of relative prosperity for white Washington amidst a national economic collapse, while black DC suffered mightily from the construction bust and large-scale foreclosures.

That said, I found plenty to like in Savrina Tavernise’s coverage of gentrificaton in the H Street NE corridor and thought this was interesting:

On H Street, Pamela Johnson, an African-American who owns a small storefront building, said her property tax bill had more than tripled in the three and a half years since the city began building a streetcar system that she said she never wanted. She said that she could not afford to pay and that she was one of several dozen owners in danger of losing their properties in a tax sale.

“This process was imposed on us, and now it’s driving us out of here,” said Ms. Johnson, sitting in a Jamaican restaurant on H Street, which now has new sidewalks, stylized street lamps and shiny streetcar tracks. “We see this as the city’s way of gentrifying these corridors.”

“Gentrifying” is a loaded word, but clearly, yes, what the city is trying to do here is to improve the infrastructure and make it a more desirable place to live. And the strategy appears to be working. The public expenditures on improved conditions are leading to higher land values, which is leading to higher property tax assessments. The investment, in other words, pays off. But Johnson is upset. The question is why, exactly, is she upset? According to the article she’s upset because her property tax bill has tripled, which is putting her at risk of losing the building she owns in a tax sale. But doesn’t this mean her building has tripled in value? Ceteris paribus, I’d rather pay less property tax than more. But having your investment in a building appreciate is better than having it decline in value and then you get a tax break. At the same time, it seems like we should take Johnson at her word that some feature of this situation is making her worse off. But I wonder what it is, exactly. If you buy low and then wind up needing to sell high because you can’t cover the property tax out of your income, it seems to me that you’re still coming out ahead. At a minimum, it’s hard to see how she could have been better off had the city not invested in improved infrastructure adjacent to property she owns.

Normally you think of the gentrification problem as applying to renters. Objective conditions improve in a poor neighborhood, which is good. But the improved conditions lead to higher rents, so the poor people wind up not benefitting since they have to move out. It’s difficult for me to see how this kind of problem could afflict property owners, who regardless of race or class considerations ought to benefit from asset appreciation.

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