Housing Complex

Tenant Race

Take Me to Your Leaser: Candice Harris (top left), Alicia Anchorena, Jose Sueiro, and Maria Salazar oppose the changes at 1841 Columbia Road NW.

Take Me to Your Leaser: Candice Harris (top left), Alicia Anchorena, Jose Sueiro, and Maria Salazar oppose the changes at 1841 Columbia Road NW.

Life is about to get pretty plush at 1841 Columbia Road NW.

The 114-unit, 83-year-old apartment building formerly known as the Alcazar is currently in the process of a $7 million makeover. It’ll soon have a rooftop terrace and a separate green roof. The antiquated heating system will be replaced, and the apartments will have central air conditioning. There’ll be a new apartment doors, new showerheads, new toilets, a new laundry room, a key fob system, and a remodeled lobby.

And one group of tenants isn’t very happy about it.

They’ve challenged the agreement responsible for the upgrades, and the case is now before the District’s Office of Administrative Hearings, which held five days of hearings on the matter last month. It has inspired bitter name-calling among the various parties involved. And both sides say important principles are at stake in the verdict.

The crux of the dispute is this: Early last year, Urban Investment Partners was seeking to buy the Adams Morgan building and dangled a couple of enticements before the tenants. First, they could take $20,000 if they moved out of the building. And second, if they agreed to allow UIP to jack up the rents on the vacant units in the building beyond the normally allowable increases, their own rents would be protected and the building would get a substantial upgrade. Most of the tenants said yes to both—they took the $20,000, packed their bags, and gave UIP permission to increase the rent for their successors. UIP completed the $26 million purchase last April.

The challenging tenants have a host of complaints about how the so-called voluntary agreement was assembled: that it occurred before UIP owned the building, in violation of the law governing these agreements; that the tenants were coerced into signing it; and that it erodes the city’s supply of affordable housing, in direct contrast to the goals of the 1985 Rental Housing Act that laid out the guidelines for voluntary agreements. UIP and the tenants who signed the voluntary agreement disagree, arguing that everything they did is in line with standard practice, and that besides, everybody wins, so what’s not to like?

On the surface, it does seem like a win-win-win. UIP reaps a healthy profit from the much-higher rents in the formerly rent-controlled apartments. The departing tenants get a big payday. And the remaining tenants keep their low rents while enjoying the upgrades to the building.

But there’s at least one loser: the District. Each voluntary agreement is essentially a vote in the selfish interest of the parties involved, at the expense of future renters in the building and across the city. With each low- and moderate-income rent-controlled building that converts to mostly market-rate, the city loses affordable units at a time when it needs them more than ever.

***

Jose Sueiro has lived in his one-bedroom apartment at 1841 Columbia Road for 30 years. He pays less than $800 a month in a neighborhood where one-bedrooms often go for more than $2,000. His apartment isn’t luxurious, but it’s cozy and affordable—though not, Sueiro says, as cozy as it was before UIP started making changes, like the utility wall that blocks what used to be the secondary kitchen entrance to his unit.

Not that that’s his biggest complaint about UIP’s handling of the building and the voluntary. “It has destroyed 112 units of affordable workplace housing in Adams Morgan!” Sueiro says. “Gone! Up in smoke!” (UIP lists the building as having 114 units, but as with many things at 1841 Columbia Road, this is matter of some disagreement.)

Sueiro is not a subtle man; in 1997, he was the subject of a Washington City Paper cover story largely about his hot temper as publisher of a “bomb-throwing” Latino weekly. Now he’s leading an effort along with two other tenants and a group of co-signers to throw bombs at the voluntary agreement in his building for its alleged violation of the rules and adverse effect on affordable housing.

Other tenants take issue with Sueiro’s stance for two reasons. First, some feel that he’s objecting to the agreement not on behalf of himself and the other tenants, but as a matter of principle.

“Some of the tenants who are opposing this are using their personal interest in affordable housing to make an example out of this building, to make their case,” says Jamie Curtis, who’s lived in the building since 2005 and has sat on the tenant association board since 2010. “It’s difficult when you’re trying to live in the example that everyone is trying to make out of a building.”

UIP Senior Vice President Peter Bonnell declines a phone interview but expresses a similar sentiment in an email. “Although there are those that do not like our business model, we’ve found that these individuals have their own agenda, which is often inconsistent with the interests of the current tenants for whom they purport to advocate,” he writes.

Second, the building was never really affordable housing, in the usual sense of the term. Leonard Ference, who served as tenant association president from 2010 until he took a buyout from UIP, says that when he moved into the building in 2009, the rent for an apartment with one bedroom and a den was $1,800—not cheap, though still below market rent for Adams Morgan.

But middle-income housing is important, too. According to Joel Cohn, legislative director for the Office of the Tenant Advocate, there’s a misperception among some people that rent-controlled units are all occupied by poor people, and a misperception among others that they’re full of millionaires sitting pretty with their far-below-market rents. In reality, he says, the vast majority of rent control tenants are low- to moderate-income earners.

Here’s where geography comes into play. Many rent-controlled buildings are in wealthy parts of town where it’s hard to build new affordable housing. Preserving the existing affordable units is essential to maintaining income diversity throughout the city—rather than concentrating poverty in the poorer, eastern parts of the city where so much affordable housing already exists and where many residents are eager for more jobs and retail, not more low-income housing.

***

For something with so innocuous a name, voluntary agreements have been politically charged for years. In a 2008 case involving the once-elegant Kennedy-Warren building just west of Rock Creek Park, the rent administrator rejected an agreement signed by 87 percent of the tenants, deeming it “coercive” because rational renters essentially had no choice but to sign it, and ruling that it undermined the central goal of the Rental Housing Act, to preserve low- and middle-income housing. Several months later, the rent administrator was fired (for reasons that were never fully explained), and her successor approved the voluntary agreement.

Since then, jurisdiction over voluntary agreements has shifted to the Office of Administrative Hearings. The tenants challenging the 1841 Columbia Road agreement say the OAH judge in their case has never heard a challenge to a voluntary agreement before, and their case is likely the first of its kind before OAH. Cohn says that’s not quite accurate, though earlier OAH cases haven’t really set a precedent.

“This whole process is relatively new,” he says. “Previous decisions have been few and far between, and they’ve been unique to those circumstances.” Cohn says that while OAH rulings don’t establish an official legal precedent, this case could be quite influential: If the challenging tenants win, other judges will consider the ruling; if they lose, future tenants could be discouraged from contesting voluntary agreements.

“The crux of that voluntary agreement is really the crux of the voluntary agreement issue in general,” Cohn says. “The voluntary agreement was never intended as a bargaining chip to get tenants to protect their rent levels in exchange for every other rent in the building to go up to market rate.” Traditionally, voluntary agreements were a way for existing tenants to agree to pay more in exchange for improvements; now, they’re often a way for tenants to protect their current rents at the expense of future tenants.

A chief cause of this shift is the same factor that’s driven changes all over the city: gentrification. Parts of the city that had universally low rents just five or 10 years ago have experienced an influx of young professionals, and as a result, apartment building owners are more eager than ever to convert cheap old units to luxury draws at several times the rent.

“In 2008, I didn’t really view VAs as a substantial threat to affordable housing, because every VA was really west of 16th Street, and it wasn’t really affordable housing anyway,” says Eric Rome, the prolific tenant lawyer who’s representing the tenant association at the Columbia Road building and has been criticized by the tenants challenging the voluntary agreement. “Now we have a gentrification process going up the U Street and Georgia Avenue corridors, and who knows how far it’s going to go? It’s different.”

Rome says voluntary agreements are great for his clients, who can collect a big buyout check or see their buildings improve without paying higher rent, but maybe not so great for the city as a whole.

“You have this tension between economic empowerment and good housing policy,” Rome says. “As an attorney, I can’t judge policy when I’m advocating for my clients. I can only take the tools that I’m given and use them for the best interests of my clients. And the best interests of my clients is not necessarily good housing policy.”

That’s why the solution might not lie in adjudication, but rather in a policy change. When I describe the Columbia Road voluntary agreement to Jonathan Tycko, a D.C. lawyer with experience in tenants’ rights cases, he says it doesn’t seem to violate the law, which “contemplates that tenants could be offered incentives in order to agree.” (Jim McGrath, chairman of the D.C. Tenants Advocacy Coalition, isn’t quite so sure; he says these agreements are often “rife with fraud.”)

“There’s two parts to this,” Tycko says. “One is the legal part: What was the law intended to do? At that level, what you’re describing as having happened at this particular building seems to be consistent with the law. Now whether it makes sense as a policy matter, that’s a whole different issue.”

And it’s an issue that may need to be taken up by the D.C. Council, if it wants to check the steady erosion of affordable housing in parts of the city where it’s rapidly disappearing.

Photo by Darrow Montgomery

Comments

  1. #1

    Which entitlement to pick, right or might, the eternal question.

    An interesting dilemma, how to protect the rights of those not present.

    Perhaps a dynastic succession plan for rent controlled apartments is in order.

  2. #2

    which policy goal to pick - an income diverse neighborhood, or an income diverse building? and how to judge when the latter also involves reinvestment in the building, and more supply of market rate units?

  3. #3

    The presence of rent control greatly distorts housing pricing in the first place. The often large share of rent controlled units in a market mean any new units (or units with a rent control "reset" at current market rates)are scarce, and rent for higher than they would if no covenants or restrictions were in place in the market.

    Look at it this way, assume a neighborhood's apartment stock is all identical, and all it's apartments up for rent at once with no individual having any rights to continue living there, and no prices fixed. Before this condition occurred, assume there were some rent controlled units going for $800, and some "market" rate units going for $2000. The new market rate price for renters to occupy 100% of the apartments won't be $2000, it will be something like $1400 - $1600.

    While this is a hypothetical example, the difference between the current market rate and a "no rent control" market rate is real (in this example $600 - $400), and represents a gray market where all kinds of interesting malfeasance is possible and likely.

    My superintendent in L.A. used this economic reality to illegally sub-let an apartment in Hollywood that he'd moved out of years prior, but maintained the rent controlled lease. I believe he was locked into $600 a month, and the market rate was more like $1200. He charged his illegal sub-let tenant $900, and pocketed a cool $3,600 per year for his arbitrage efforts. The loser in this was both the landlord, and the city which collected fewer tax dollars, while my superintendent and the illegal tenant split $7,200 in real and nominal value without paying taxes on it.

    The best justification for rent control seems to be insulating a population from unplanned displacement and disruption of their lives caused by changes to their housing costs. This is a significant benefit, and it pays political dividends to incumbents as well, but we shouldn't be blind to the negative effects, which are deadweight loss to the economy, and preference to existing tenants at the expense of those who might like to move to a given area.

  4. #4

    God I long for the days when most people were too frightened to come into DC let alone live here--even more to the point, most of the 20-somethings who've moved to DC have no idea what most cities were like pre-2000, they were young children. Cities were rough, but much less densely populated and much more diverse. It meant you could easily get an affordable apt and your neighbors weren't all monied assholes.
    I'll take less restaurants, less services, and more crime if it'd mean a decent apt close to downtown could be had for $1000. Not likely. The most desirable central cores of cities are now the playgrounds of the rich that have very little soul. From Mexico City to Istanbul to DC, if you're poor you have no place downtown unless it's cleaning up after rich people.

  5. #5

    @Mario -- well put.
    Part of this process of diversity planning centers on the Office of Planning. The director, Harriet Tregoning has eschewed planning for an "inclusive" city and is pro-corporate development at any costs, including the cost of homogenization.

  6. #6

    there are still plenty of center cities with high crime, few restaurants, and cheap housing. You might try Detroit, or even Cleveland, or a sunbelt city.

    many of those are less populated now than they were in 2000.

    But if high crime is a good tradeoff for cheap rents, you can probably still find someplace EOTR. Though it wont be an easy walk downtown.

    Im not sure how DC has become less diverse. Its become less african american, to be sure. Is a 50% black city less diverse than an 70% black city?

  7. #7

    DC Council needs to get rid of Voluntary Agreements and Hardship Petitions - off the books. Rent control with "exceptions for developers" is not RENT CONTROL.

    Gentrifiers aren't bringing any money to the city, they don't register their cars in DC (mommy's house in Nebraska), pay DC wage taxes (permanent address is mommy's house in Nebraska), work entry level office jobs, they ride bikes and don't get parking tickets, pay property tax, etc.

    Council needs to stop lining developers' pockets using transient grown-up children who pay $2000 for a rental closet and think they are cool. Gentrifiers, you are the suckers!

    Most gentrifiers will be gone soon--we have to deal with long term issues for DC and "real" DC residents.

  8. #8

    Mario, I long for those days to return too...but it might take a few years to return our city to it's beautiful state prior to gentrification.

  9. #9

    "they don't register their cars in DC"

    Next time I walk throug Logan or Capitol Hill, I will examine all the Subaru Forresters and check the license plates. My strong impression is that most are registered in DC. They can't get parking permits otherwise, right?

  10. #10

    "Gentrifiers aren't bringing any money to the city"

    yet DC tax revenues are going up, as real washingtonians depart.

    "they ride bikes and don't get parking tickets, "

    Yeah, also they never speed through red lights, and get caught by speed cams, damn them.

  11. #11

    These damned transplants are from somewhere else. They aren't native washingtonians like me. I was born in PG county, and I hate how all these blond people have taken over my home turf of DeeCee.

  12. #12

    lol @ NativeLikeMe

  13. #13

    @Billie, DC's only tax reciprocity agreements are the Congressionally-mandated ones with Virginia and Maryland. If you earn income in DC and aren't a resident of Virginia or Maryland, you pay DC taxes on that income, no matter where you officially live.

    As Anon2 points out, the gentrifiers have been a boon to the city government's bottom line. It's not so much the tax revenues per se (like you said, many work entry-level or non-profit jobs), it's how little they consume in government services. For example, they have few children and fewer still in public schools (youth services, especially schools, is the most expensive item in the DC budget) and they usually have their own health insurance (the second biggest item in the DC budget). Compared to the huge savings on education and health, additional expenditures on bike lanes and dog parks are a drop in the bucket. So even if gentrifiers don't pay any more taxes than a long-time resident, they still represent a bigger net payment to the city, which is why the city government has been so enthusiastic about encouraging them to live here.

  14. Transient Who is Stuck
    #14

    Sorry Mario and Billie, but us "transients" aren't going away anytime soon. From the day it was founded, Washington grew because of newcomers. The only reason folks started fleeing was because they fell prey to the false promise of suburban utopia. Turns out we don't like sitting in traffic all day, getting fat from fast food, so we can spend all weekend mowing our lawns. We've locked ourselves into low interest rate loans on housing that is a short Metro ride, bike ride, or walk to work and we love it.

    If you hate the city so much now, there's nothing keeping you here. In fact, I'd love to put an offer on your house if you're in Brookland or Eckington...

  15. #15

    Love the rent control morons arguments. Nice that the socialist utopia of DC has thought since 1985 that it was OK to impose communist ideals regarding rental housing on DC property owners.

    And making distinctions on what the right "mix" tenants based on income levels is WAY outside government authority. Just because DC has been allowed to get away with this idiocy for so long doesn't mean it was ever legal or correct.

  16. #16

    Meanwhile we're pricing federal employees with families out of being able to afford living in the District. I used to love this town. Now I can't wait to leave.

  17. #17

    @Transient Who is Stuck...
    I never said anything about transients. They have been and always will be a part of DC.
    But your contention that "the only reason folks started fleeing was because they fell prey to the false promise of suburban utopia" couldn't be more wrong. It was a perceived "quality-of-life" issue, i.e., crime and demographics that caused the flight of residents. Oh sure, a few left for the burbs because back then a 'burb was Silver Spring or Alexandria, hardly a punishing commute. Now the 'burbs are places like Laurel and Ashburn. VERY far from the actual city and thus your super-long commutes. Now that the city is “safe” is why people have moved back into town. I guarantee you if we still had nearly 300 homicides a year and high robbery rates, folks would be a lot more amenable to sitting in traffic.
    I really don't care who live where or for how long. What matters is that the DC gov't has done an AWFUL job in keeping areas close to downtown affordable. You could easily argue that it's not their role to do so, but they need to put up or shut up once and for all. I'm so tired of seeing new developments that boast "mixed-income" living opportunities that end up being mixed all right: you have to be either upper-middle class or wealthy to get in. Just ask the residents of Sursum Corda or other such communities that were razed near downtown. Why are they still waiting for housing while new developments nearby have not only been built, but they’re occupied as well? That’s hardly equitable, but preying on the less fortunate is a full-time job for developers and their cronies in city gov’t.

  18. #18

    What is the common denominator between Whitey Bulger's (Mobster killer) conviction and the Rent Control Policy (Landlord Killer)conviction...none for a Landlord like me.

  19. #19

    Meant to say both/all are killers and strangle folk.

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