City Inquiries Shed Light on Museum Square Owner’s Reversal
Residents of the Museum Square Apartments at 401 K St. NW received a welcome bit of news earlier this week, when they learned that the building's owner had reversed course and withdrawn its stated intention not to renew its Section 8 contract—the arrangement that provides federal subsidies to the building's all-low-income tenants.
Earlier, the owner, the Bush Companies of Williamsburg, Va., had informed tenants that it would demolish the building unless they could come up with $250 million to buy it. The tenants, most of whom are Chinese, found that price arbitrary and excessive, as did At-Large Councilmember David Catania, who drafted legislation to cap the amount developers can charge residents under the Tenant Opportunity to Purchase Act when demolishing a property.
So what pushed Bush to allow the Section 8 tenants to remain, at least for the time being? According to the Department of Housing and Community Development, it was a combination of those efforts and pressure from DHCD itself.
"We believe that the owner’s inability to sufficiently respond to the government’s requests, housing preservation advocates' concerns, and lack of tenant involvement has informed their decision to rescind the notification to opt out of the Section 8 contract," says DHCD spokesman Marcus Williams in an email.
On July 15, six days after the online publication of a Washington City Paper story on Museum Square and five days after Catania announced his intention to address the situation through legislation, DHCD sent a letter to to Bush's attorney, Richard Luchs, raising two principal concerns over Bush's handling of Museum Square. First, Rental Conversion and Sale Administrator Lauren Pair wrote to Luchs, the $250 million offer of sale "does not appear to be bona fide," as required by D.C. law. Second, Bush did not inform the city government of its intention to opt out of federal housing assistance.
Luchs comes to the Museum Square fight as a decorated veteran of such battles. A 2006 Washington City Paper profile titled "The Painmaker" called him "the most feared landlord's attorney in the District." His frequent—and frequently successful—efforts to help landlords sidestep tenant protections led the Department of Consumer and Regulatory Affairs to launch a 2005 probe into whether he evaded TOPA, the D.C. Council Committee on Consumer and Regulatory Affairs to subpoena him, and Adams Morgan activist and perennial Council candidate Bryan Weaver to refer to him as "a bloodsucking scumbag." Luchs could not be reached for comment.
The definition of "bona fide" is left vague in the TOPA law, and Luchs argued to DHCD that a 2003 court case involving the Phillips Collection—generally regarded as the only D.C. court ruling with bearing on the question of bona fide TOPA offers—allowed property owners leeway to charge a sale price based not on the property's appraised value but on its potential value for future development. But Pair responded on July 25 that the cases are far from identical, that the $250 million price vastly exceeds the property's $36 million assessed value or any likely fair market value, and that Bush had failed to provide an adequate justification for the price it was asking.
Luchs also asserted that DHCD lacked the authority to take action on the case and qualifications to weigh in on the property's bona fide value. Pair disputed both of these contentions in her July 25 later. A week later, Bush informed the U.S. Department of Housing and Urban Development of its decision not to opt out its Section 8 contract renewal.
"We are very pleased with this outcome," writes Williams. "We believe that the owner rescinding its notification to opt out of the Section 8 contract is a satisfactory outcome of a collaborative effort of various District of Columbia government agencies, housing preservation advocates, and most importantly, the tenants."
Photo by Darrow Montgomery