Housing Complex

Catania Legislation Aims to Address Exorbitant Demands on Section 8 Tenants

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In my column in yesterday's paper, I reported that residents of the Museum Square Apartments had recently received an ultimatum. If they didn't come up with $250 million to purchase the building, the low-income, mostly Chinese tenants were informed, it would be demolished, and they'd have to move. Not only would 302 units of affordable housing be lost to the city, but Chinatown would lose around half its remaining Chinese population.

When selling or demolishing a building, the owner is required by D.C. law to give the tenants an opportunity to purchase it, and the $250 million request was the attempt by the owner, the Bush Companies of Williamsburg, Va., to comply. But Bush seemed to have pulled the $250 million figure out of thin air. The property, at 401 K St. NW, was assessed by the city this year at just $36 million. The price required by Bush amounts to $828,000 per unit—far more than the Section 8-subsidized tenants can afford, and likely more than any developer would pay.

Acting very quickly after the story was published, At-Large Councilmember David Catania drafted emergency legislation to address this type of situation and regulate the price that developers can charge tenants for a building slated for demolition under the Tenant Opportunity to Purchase Act. Last night, Catania informed D.C. Council Chairman Phil Mendelson of his intent to introduce the legislation, and this morning he circulated the text.

"According to a Washington City Paper article by Aaron Weiner [sic—but I'm used to it], residents were recently informed that the building’s ownership would be canceling its Section 8 contract on October 1, 2014," Catania wrote in a memo to Mendelson. "Additionally, building ownership stated that they possessed a 'bona fide' offer to purchase the building at the price of $250 million. That figure is more than seven (7) times the current assessed value of $36 million. The emergency legislation would require that the offer for sale made to residents of a Section 8 building pursuant to the Tenant Opportunity to Purchase Act be based on the assessed value of the property. This will give the tenants of Museum Square a more realistic opportunity to pursue a purchase of the building."

The legislation would affect buildings where more than 90 percent of the tenants are subsidized by the federal government under Section 8 of the U.S. Housing Act of 1937. All 302 households at Museum Square receive Section 8 subsidies, which require them to contribute 30 percent of their income and then cover the remainder of the rent.

Catania missed the deadline, noon on Wednesday, to circulate the legislation to the Council for consideration at Monday's legislative meeting. But in his memo to Mendelson, he cited a Council rule allowing a bill to be considered even if it missed the circulation deadline when "the nature of the emergency precludes the notice" of the measure. Catania didn't learn of the issue until he read the story yesterday, he wrote. He urged Mendelson to allow the legislation to be introduced on Monday because it will be the Council's last meeting before its summer recess. "It is imperative," he wrote, "that the Council take definitive action now to ensure the protection of affordable housing for the hundreds of low-income residents at Museum Square." It is at Mendelson's discretion whether to allow the legislation to be considered. A spokesperson for Mendelson said he has not yet had a chance to review the legislation.

"For the right of tenants to purchase their homes under the Tenant Opportunity to Purchase Act to be more than a charade," states the resolution drafted by Catania, "for it to be a bona fide offer as the law intended, an owner’s offered sale price must be fair and genuine."

Catania's submission consists of two bills in addition to the resolution: an emergency bill that would remain in effect no longer than 90 days following the mayor's signature or the Council's override of his veto, and a temporary bill that would expire 225 days after taking effect. If Mendelson allows the bills to be considered, the Council would vote on them at its session beginning at 10 a.m. on Monday.

Update: As currently written, the legislation would not appear to apply retroactively to Museum Square. However, Catania chief of staff Brendan Williams-Kief says Catania is likely to amend it between now and when it's introduced Monday—provided Mendelson allows it to be introduced—and it will be sure to cover Museum Square. "Our intent is to capture Museum Square," says Williams-Kief. "That’s the purpose of the legislation."

Photo by Darrow Montgomery

  • jt

    Nice!

  • kneejerk

    More bad legislation to fix a problem created by bad legislation.

    There is little to no relationship between a property's "assess value" and it's value on the open market. $36M for a downtown property is as big of a joke as $250M.

    TOPA is already bad enough in that it gives someone controlling rights over someone else's property. If you want to make it fair, make the owner present a bonafide offer from another buyer and give the tenants 30 days to match it.

  • Kes

    I'm wary of legislation so rushed it has to be re-written to apply the issue it is intending to address, but good on Catania for doing his job and looking out for the disenfranchised in his city (even if he did it at the last possible moment.) Also good on you, Aaron for bringing light to what looked like a shadey operating practice at best, and an attempt to take advantage of poor tenants who don't understand housing law at worst.

  • JC

    "The legislation would affect buildings where more than 90 percent of the tenants are subsidized by the federal government under Section 8 of the U.S. Housing Act of 1937"

    Why should only Section 8 tenants be afforded this protection? Why not all tenants who are given the right of first refusal to purchase?

    Won't this just encourage building managers not to participate in Section 8?

  • benton

    The entire rent control, TOPA and subsidized housing policy need to be reviewed.

  • http://www.tenacdc,org Jim McGrath

    It's a wonderful proposal, to help out Museum Square. But if Catania were really for affordable housing (He has been saying Bowser has done nothing as chair of that committee - - and the only thing she really has done is bottle up pro-tenant bills in her committee for two years, but now that Catania is making hay of it, she held some token hearing...)IF he were, he would support repealing the EXTRA two percent extra rent increase allowed each year. REPEAL THE TWO PERCENT! Support Graham's bill to do just that! http://www.tenacdc@yahoo.com Twitter: @tenacdc @MetroDiversity @CynthiaPols

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