Rochester’s High Property Taxes Threaten Small Businesses

You know it’s bad when a former New Yorker says the property taxes on his restaurant in Rochester, Minnesota make his tax bill from the empire state look good. But Pasquale Presa told the Rochester Post Bulletin he’d have looked for another place to start his pizzeria had he realized how much of a bite of his sales would go to the government.

Presa, who owns and operates Pasquale’s Neighborhood Pizzeria on Fifth Street Southwest, a block off Broadway, has been advocating for himself — and looking for a little help from the city, county and state — when it comes to property taxes, and what those taxes are doing to his small business.

“The first three years for a business are the most important to establish your reputation, your labor force, your social media,” Presa said. “If I’d have known it was this high, I might have shopped around (locations) a little.”

Presa pays about $50,000 annually in property taxes, though he expects that number to climb once again. That amount is on a 5,000-square-foot space he leases on the southern fringe of downtown.

The Rochester Chamber of Commerce feels Pasquale’s pain but there’s not a lot it can do to help when it comes to his bottom line.

“It is very challenging to open a small business and operate a small business,” said Kathleen Harrington, president of the Rochester Area Chamber of Commerce. “One thing the Chamber is looking at is the total cost of running a small business in downtown Rochester, and property tax is a big, big piece of that.”

Presa points out that even New York found a way to reduce property taxes as an incentive for attracting new small businesses following 9/11. But Presa hasn’t had much luck so far in pressing Minnesota lawmakers to give small businesses a break.

Harrington said changing property tax laws at the state level can be daunting, but, “We want to say to our leaders, let’s look at the need and reduce the cost of doing business.”

She pointed to the fact that one-in-three jobs in Olmsted County comes from a small business, so without successful small businesses, the economy in Olmsted County — not to mention most of Minnesota — would face hard times.

“How much do we want small businesses? How much do we want to support them?” Harrington asked. “That’s a community value that needs to be discussed.”

Rochester isn’t the only Minnesota city to take small business for granted. Small employers face a business climate with expensive regulations like paid safe and sick time off, minimum wage hikes and steeper property and other taxes. Yet few believe their concerns or notice until they’re gone–like O’Gara’s Bar and Grill in St. Paul.