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Washington City Paper

Jan. 13–19, 2006

The Painmaker

by Ryan Grim

The D.C. Council closed Richard Luchs’ favorite loophole. So the real-estate attorney found another.

In 1985, a then-14-year-old Carlos Baruca emigrated from El Salvador and rented an apartment at 2351 Champlain St. NW, in Adams Morgan, with his brother. He supported himself during high school by washing dishes and waiting tables at a neighborhood restaurant, Mr. Henry’s. After getting his diploma from Cardozo Senior High School in 1988, he waited for the next eight years at Galileo restaurant downtown. He saved his money, and by 1996, he and three of his brothers had rented space for a restaurant on 14th Street NW.

The restaurant, El Paraiso, thrived; he and his brothers used their profits to open a market nearby and were able to buy the building that houses the restaurant. Carlos got married and started a family at the Champlain Street apartment. All the while, they and other tenants, says Carlos, saved for the day when they could finally buy the apartments they were living in.

Thanks to a tenant-friendly provision in D.C. law, that day appeared to have come in early 2001, when one of their building’s owners, Lucy O’Brien, sold her 50 percent share to an investor named Dennis Lee. The tenants learned about the sale two weeks later, when Lee offered to sell his share to the tenants for nearly five times what he had just paid. The tenants thought that the transaction between O’Brien and Lee should have triggered their right to buy, a right guaranteed by the District’s Tenant Opportunity to Purchase Act (TOPA).

But it didn’t. Somehow, the transaction didn’t qualify as a “sale” under the terms of TOPA. The tenants hired an attorney to challenge the move, arguing that they hadn’t been given a legal opportunity to purchase. After a two-year legal battle, the tenants lost. “Our lawyer said, ‘That’s that. We lost the case. We have to move,’ ” says Carlos Baruca. Carlos; his wife, Carmen Baruca; and their three children were bumped from their two-bedroom apartment, eventually accepting $2,500 for their troubles, says Carlos. The Barucas were able to find an apartment in the neighborhood; other tenants, says Carmen, moved to Prince George’s County. “I miss the building,” she says, “I miss the people.”

The tenants at 2351 Champlain had been outfoxed by a savvy owner and buyer—and an even savvier lawyer. To consummate the sale, O’Brien had hired Richard W. Luchs of the D.C. firm Greenstein DeLorme & Luchs. With Luchs handling the paperwork, the arrangement sailed through the offices of the Department of Consumer and Regulatory Affairs (DCRA), the agency entrusted with enforcing TOPA. As long as the transaction didn’t convey 100 percent of the property, according to the agency, the tenants were out in the cold.

Luchs, 54, was a wise choice. Real estate is in the man’s blood. Both his father and grandfather were District real-estate attorneys. And for more than two decades, he has found ways to keep tenants from buying a building or to clear them out of it—often both at once. Dozens of times since 1987, Luchs has assisted landlords in minimizing their obligations under TOPA, usually through a loophole that has come to be known as the “95/5” sale, in which a seller transfers around 95 percent of a property and retains the remainder. For years, the city interpreted such transactions to be something other than a “sale,” thus depriving tenants of their right to buy. In many cases, the “sale” was to a developer who could then pay off the required number of tenants to facilitate a lucrative condo conversion.

Luchs’ productivity in this arcane yet highly profitable segment of real-estate law has fundamentally altered the course of one of the grand social experiments of the District’s home-rule era—that is, the ideal that tenants should have the opportunity to buy their building when it comes up for sale.

The Champlain Street case is one of the first-known instances of a group of tenants challenging a sale involving Luchs. Thanks to the attention it garnered among D.C. tenant activists, though, it wouldn’t be the last.

Recent transactions involving Luchs’ clients have caught the attention of officialdom. The most feared landlord’s attorney in the District has come under scrutiny in at least three investigations focusing on various efforts to empty buildings or push through sales without first offering buildings to tenants.

In August 2005, the DCRA launched a recently concluded probe into whether Luchs and his clients had evaded TOPA in connection with a massive deal to wring greater revenues out of 11 District buildings. And in December, Luchs was subpoenaed to testify before the Committee on Consumer and Regulatory Affairs in connection with another investigation, headed by Ward 1 Councilmember Jim Graham. The DCRA is separately investigating the same deal that led to the council probe.

Regardless of what the investigations turn up, Luchs’ line of work has left him with some determined detractors. In 2001, Luchs was asked to help the Adams Morgan advisory neighborhood commission wage a liquor-license battle against an area business; the attorney even did some of the work on a pro bono basis. “Somewhere out there, there’s a letter with my name on it thanking Luchs for his service” in the liquor fight, says Bryan Weaver, a member of the commission. “That was before I learned he was a bloodsucking scumbag.”

For years, Luchs conducted his business in what can only be characterized as a favorable regulatory climate. A DCRA bureaucrat named Linda Harried—whose official title was housing regulation specialist—endorsed the 95/5 approach, allowing Luchs and other lawyers to draw up worry-free transactions for their clients. Harried’s approvals came swiftly, yielding the stable regulatory environment that business groups dream about.

Nor was the D.C. Council inclined to shake up the industry. From 1999 through 2004, DCRA oversight fell to Ward 6 Councilmember Sharon Ambrose, a cheerleader for gentrification and a friend to landlords. “[Ambrose] adopted an attitude that landlords can do no wrong in this city. They were almost a protected class,” says Jim McGrath, chairman of a local tenants’-rights organization called the Tenants’ Advocacy Coalition (TENAC).

The landscape changed in early January 2005. That’s when Graham, an old-school liberal, took over Ambrose’s spot atop the committee. The same month, Patrick Canavan, a fierce DCRA critic with a reformer’s reputation, took over as the agency’s director. An ideology heavy on tenants’ rights was on the rise.

Investigating the ways landlords were getting around TOPA was among Graham’s top priorities in his new council slot. “As soon as I got [the committee chairmanship], everywhere I looked, I saw Luchs’ name,” says Graham, who held hearings in February 2005 to look into the 95/5 sales. The hearings spawned some press coverage and an amendment later passed by the council clarifying that a sale is, in fact, a sale. Ambrose abstained—the only member not to vote in favor of closing the loophole.

The council’s action ended the decadelong heyday of the 95/5 transaction. Luchs says that the first such sale—which he was involved in—occurred in 1987 but that the practice didn’t really take off until 1994. Whatever its starting date, the loophole was a favorite of Luchs’. There are, says Graham, “possibly hundreds of buildings where he was involved in extinguishing tenant rights.”

Graham isn’t far off the mark. Between the summer of 1999 and the summer of 2004, the DCRA’s Harried issued at least 85 letters exempting a sale of a property from the tenant-purchase requirement. (There may be more, but DCRA files aren’t in the best shape.) Of those 85, 22 went to Luchs and 20 went to his law partner Vincent Policy.

The exemption letters add up to big money. A compilation and analysis of the approvals, done by tenant advocate and economist Kevin Fitzgerald, assess the value of all the properties at more than $340 million. The value of the buildings owned by clients of Luchs and Policy comes to nearly three-quarters of the total; Luchs’ portion alone clocks in at more than $170 million.

Most of the exemption letters procured by Luchs related to decrepit buildings that housed immigrants and other folks with little political clout—just like the situation at 2351 Champlain. As long as Luchs stuck to those kinds of deals, he faced little public backlash. As the recently concluded real-estate boom wore on, however, prices rose and so did the profiles of the buildings that Luchs was after.

In 2004, Luchs took on the ultimate gentrification project: a complex sale and potential condo conversion that involved 11 properties clustered mainly around Adams Morgan and Mount Pleasant. The deal was worth more than $80 million and involved such iconic D.C. buildings as the Park Plaza Apartments on Columbia Road NW and the Sarbin Towers on 16th Street NW.

To make the transfers, Luchs stretched the 95/5 loophole to its breaking point. He wrote to Harried that owners would be transferring 99.99 percent of each property, retaining 00.01 percent. In a DCRA land-speed record, Harried determined in three days that tenant protections didn’t apply to the sales. Just in case, the sale was explained to tenants as a “change in management.”

Tenants protested Harried’s hurried ruling, and in August 2005, the city jumped in on their side, launching an investigation into the legality of the sales. Luchs sued to nullify the city’s action, but a D.C. Superior Court judge tossed out his complaint.

The DCRA concluded its investigation of the $80 million deal and issued a ruling on Dec. 16. It found that the 99.99/00.01 sale was “consistent with a longstanding practice…” Graham says he is “quite unhappy” with the finding and has told Canavan as much.

Luchs wasn’t so fortunate when he took on the 76-unit Embassy Apartments in Mt. Pleasant. His client, Harvard Limited Partnership, wanted to evict the tenants and convert the buildings to condos, relying on incomplete conversion paperwork filed in the early ’80s. In November 2004, residents were given 120-day notices to vacate. Tenants went to Graham and the DCRA, and the city issued a cease-and-desist order in April. When Luchs challenged the order in D.C. Superior Court, the attorney general defended the agency and Luchs’ challenge was defeated. The condo conversion has since been ruled invalid.

Graham is pleased that the bureaucracy has found a spine. “We determined we really had to make a forthright stand. The attorney general backed the tenants. This was a radical difference,” he says. “I think we have the makings of a new era.”

Housing has always been the trenches of the District’s ongoing class war—two sides pitted against each other, a political no-man’s land in between. In the late ’70s and early ’80s, tenants’ rights were in vogue, fueled by a growing black-power movement. In 1980, the council passed TOPA, one of the more far-reaching tenant-protection acts in the nation. Luchs has spent the bulk of his professional life battling that law.

And for good reason, as far as his clients are concerned. TOPA can place significant hurdles in front of someone who wants to buy or sell an occupied building. While it may seem that building owners wouldn’t care whether their money came from PN Hoffman or from a group of tenants, the reality is quite different. The law grants tenants time to form an association, vote on proposals, and seek financing—a process that can take up to 660 days, according to Raenelle Zapata, a former rent administrator at the DCRA.

As tenants go about weighing their options, various calamities can ruin the building’s marketability, including a simple cooling of the real-estate market. And at the end of the period, tenants can still turn around and sell their right-to-buy to a completely separate buyer. And for a variety of reasons, it’s a rare bunch of tenants that actually ends up buying the building. “Tenants, in reality, don’t buy buildings,” says Luchs. Instead, he says, they use their opportunity to purchase as a way to “extort” landlords into offering cash payments in exchange for their right.

For Luchs, it’s the district’s idealistic but poorly conceived laws that are the real cause of tenant misery. Where thought has been given to housing policy, says Luchs, it has been for the benefit of tenants only. “Everything I’ve seen over the last 30 years is: Put the burden on the housing provider [for] what is in essence a social policy…It’s a real Hobson’s choice,” he says.

The city itself, says Luchs, is now learning what it’s like to deal with hot property. “In Southeast,” where the baseball stadium is proposed to be built, “poor people will be bought out or forced out.” He suggests that, instead of promoting tenant buyouts, the city should “provide some mechanism whereby landlords could recover costs [of repairs and renovations].…The reality is developers are in business to make money. If they can’t, we’ll go back to the ’70s and ’80s, when rent control first came in” and a stream of rental units came off the market as landlords, restricted on the rent they could charge, sought to profit by selling the units.

Graham is unsympathetic to Luchs’ attempt to blame the laws for the unfortunate consequences that befall tenants in his path. Anyhow, says Graham, the council has closed Luchs’ favorite loophole, so there are now fewer laws to blame. “I’m glad we could relieve him of that moral burden,” says the councilmember.

A flaw in the blame-the-law defense is that Luchs and his partners have helped shape D.C. housing policy. Luchs is a registered and active lobbyist with the influential Apartment and Office Building Association of Metropolitan Washington (AOBA). Policy is also a powerful lobbyist. “These are the guys who wrote the laws,” says Graham.

Luchs’ firm has provided a lucrative pasture for retired government regulators. For instance, the bio of Abraham Greenstein says that the firm’s co-founder was “in charge of all of the City’s housing code enforcement, housing rehabilitation, and condominium and cooperative regulation programs.” Miriam Hellen Jones, an associate attorney, ran the District office in charge of condo and co-op conversions and sales from 1979 until 1983, and she also held high posts in the DCRA from 1991 to 1997.

Then there’s Byron Hallstead, the regulator who Luchs says approved the first 95/5 sale and now consults for his firm. Partner Richard Wise was a trial attorney with the D.C. Office of Corporation Counsel from 1972 until 1980. Policy was a member of the committee that advised the District of Columbia Rent Control Study in the ’80s. Lyle Blanchard, an associate attorney, worked as a staff member for two councilmembers, a role that his bio says included frequent involvement in tenant and housing-regulation issues.

“He has a very cozy relationship with the regulators,” says Graham of Luchs.

Luchs readily admits that the DCRA can be a difficult agency to work with and that he benefits from his relationships. “If you don’t know the people, and you haven’t worked with them before, you’re in real trouble,” he says.

Graham is doing his best to keep the landlord lobby from getting around the intent of D.C. tenant protections. The first step, says the councilmember, was stopping the 95/5 sales. Then came changes on the personnel front. In April 2005, Harried, as Graham puts it, “was allowed to retire.” (She was unable to be located for this article.) Zapata, a high-level functionary who OK’d the DCRA’s 95/5 policies, was next to go, fired in late November. “There’s no more Raenelle Zapata, no more Linda Harried, no more 95/5,” says Graham, who seems to have made it his personal mission to bring down Luchs, a man he describes as a “key element in the effort to manipulate TOPA and rob tenants.”

The allegations bounce off of Luchs. “Graham can say whatever he wants about me. I’m a fourth-generation Washingtonian. I’m not going to criticize these people on the council who came from other places and have their own opinions.” The out-of-towner comment is a swipe at the transplanted Graham, who, Luchs says, is on a political crusade to become council chair.

Though Luchs makes no apologies for his legal adventures, he does concede that they can inconvenience tenants. “Nobody likes to evict somebody. You have to put their stuff on the streets, and other people might take it,” he says, adding that there are lockers that evicted people can use to store their belongings.

In the end, Luchs’ public-relations problems, he says, are mostly a matter of media bias. “The Washington Post is on the tenant-advocacy side,” he says. “It’s more interesting to color someone as a villain.”

Luchs has emerged as tenants’ Class Enemy No. 1 largely because of the clients he represents—but also because of the ruthless way he represents them. “I have gotten exercised. I’ll readily admit that,” he says.

In March 2005, Kim Fahrenholz, then a third-year law student at the University of the District of Columbia, saw the litigator exercised. She had previously heard of him through his role as the attorney for owners attempting to sell her building without giving tenants the right of first refusal. It was all part of Luchs’ $80 million deal. On June 30, 2004, 99.99 percent of her Mount Pleasant building was transferred from Park Plaza Apartments LLC to Park Plaza Apartments II LLC.

In early 2005, while Fahrenholz and fellow tenants fought the sale of the building, she decided to challenge her rent as well. She had discovered that the DCRA did not have on file the proper paperwork for her past rent increases. She filed a tenant petition demanding a rebate for every month she had overpaid, plus triple damages because her landlord had acted in “bad faith,” she says.

At least for the rebate, Fahrenholz thought she had an open-and-shut case. She didn’t think her landlord, embroiled in a legal battle over the sale of the building, would bother to put up much of a fight. “I was like, They wouldn’t pay Richard Luchs, a $500-an-hour attorney, to fight against me,” she says. But Luchs, who says he charges $340 per hour, doesn’t fight just the big battles. “I got [to the hearing], and there he was,” she says. “I was like, Damn, it’s Mr. 95/5 himself.”

It didn’t take long for the administrative hearing to heat up. Luchs pulled several documents out of his briefcase and entered them into evidence as the proper paperwork needed for the rent increases. Fahrenholz objected, saying that the documents were not in the DCRA’s records. She explicitly questioned their authenticity and, by implication, Luchs’ integrity. She says that stamped DCRA documents not in the agency’s files conveniently materializing at the hearing raised questions for her. Hearing Officer Gerald Roper also expressed skepticism. “This registration form, or amended registration form, does not give the rent charged,” he said. “I don’t know why. It looks like it was altered.”

Luchs countered that the registration form did not technically need the missing information, but Roper didn’t seem convinced. “I’ve been doing this long enough to know that an amended registration always has the rent ceiling and the rent charged on them. This does not have them on it,” he said to Luchs.

Roper called a recess so that the DCRA’s hard-copy files could be searched for the documents Luchs was presenting. When they didn’t turn up and Fahrenholz continued to question the authenticity of the documents, Luchs issued a direct threat. “I’ll deal with her law school on this,” he said.

And Luchs did. After the hearing, he called Fahrenholz’s adviser, Ed Allen, furious that his integrity had been called into question. According to a letter from Allen to Fahrenholz, Luchs threatened to go to the bar’s admissions committee and “yell and scream.” Fahrenholz called the bar herself to find out what damage Luchs could do and was reassured, she says, that Luchs could not block her admission.

Luchs remembers the confrontation and confirms that he reported what he considered to be her “unethical conduct” to Allen. Roper has yet to rule on the case.

In early October 2005, residents of two apartment buildings on Vernon Street NW, in Adams Morgan, found fliers posted on their doors instructing them to set up a meeting with a “representative” of the landlord to discuss “issues related to the condition of the building.” Kendall Golladay, a tenant since 1998, scheduled his meeting. “I was expecting the men in black to show up and give a lawyerly spiel,” he says, not fooled by the fliers’ (technically accurate) promise to discuss building conditions. Instead, the shakedown was disappointingly low-budget. “It was just some guy,” he says.

The guy, who called himself only “Bill,” handed Golladay a copy of a letter written by Raenelle Zapata approving a request to evacuate tenants from the building within 120 days. He then handed him a form labeled across the top: NOTICE TO VACATE. In reality, the form was not a notice but an agreement that he would voluntarily vacate his apartment. If he signed on the spot, he’d be given a check for $500; Bill already had one made out in Golladay’s name. Golladay would receive another $500 when the entire building was cleared. He refused the offer, as did all but five tenants in the four buildings Bill would visit.

“The purpose of that flier was to trick the tenants out of their rights,” says Advisory Neighborhood Commissioner Alan Roth, who lives across from the buildings.

Zapata’s letter was based on a previously obscure provision of D.C. law. Section 501(f) of the housing code allows a landlord to clear out a building for substantial repairs if those repairs can’t be made safely with tenants still in the building. In principle, the idea is a sound one. If major repairs are absolutely necessary and can’t be done with tenants in the building, landlords need a way to temporarily empty the building for everyone’s safety and benefit. Safeguards are written into the law that guarantee tenants an “absolute right” to return to the building once repairs are done and to do so at the same rent if the repairs were made to get a building up to code through no fault of the tenant. In practice, though, the provision is rarely used as intended. It’s not in a landlord’s interest to empty a building of paying renters, pay to make repairs, and then invite the same people back in at the same rent. However, it does make financial sense to empty a building and improve it, then convert it to condos, rent it at a higher rate, or sell the building.

TENAC’s McGrath says more and more tenants have been coming to his group with 120-day 501(f) notices to leave their buildings. “It’s a sham process,” he says. “There’s nothing more permanent than temporary removal.” The misuse of 501(f) is considered to be a particularly egregious abuse of tenants’ rights because it encourages landlords to allow buildings to run down so that they can claim they need substantial work. Not only do tenants get evicted, but they also live in a steadily crumbling building for a long time beforehand.

The DCRA reports four 501(f) cases in 2003 and just three in 2004. That number jumped to 13 in 2005, with Richard Luchs’ name on nine of the applications. Tenant advocates and Graham figured they had found the latest Luchs loophole. “I recognized immediately this was a new variety of mischief,” says Graham, though Luchs says he helped a client with a 501(f) petition as many as four years ago. Graham called hearings again, meeting twice in November, and passed emergency legislation to close the loophole last month.

But Graham wanted more. He subpoenaed Luchs, who had twice ignored nonbinding requests to testify, as well as three other individuals. The parties gathered for a nine-hour hearing on Dec. 21. This time, the session was more than the standard wonkfest on Channel 13; it was part of an official investigation.

The ongoing investigation focuses on four buildings—the two Vernon Street buildings plus one on T Street NW and another on 16th Street NE. The stipulated facts: Jackson Parker transferred 50 percent of each of these buildings to Perseus Realty, a D.C. firm that specializes in upscale development. In exchange for the share, Perseus would be responsible for the management of the buildings and some capital improvements. Attorney Mark Jackson arranged the transaction, then suggested Perseus work with Greenstein DeLorme & Luchs for its next move. Graham asked Jackson at the hearing why he recommended the firm. “I don’t evict tenants,” Jackson said.

When tenants of the buildings in question were given notices to vacate, the “Bill” character who approached them with $1,000 go-away offers was Bill Salmon, who was working for Perseus. Very few of the tenants took the offer—and that’s about all that the parties agree on.

John “Woody” Bolton, a Perseus owner, claimed in the hearing that nothing shady was going on. He testified that Parker transferred the share to Perseus because Parker, who was ill and no longer able to properly manage the buildings, had become embarrassed by their “horrid conditions.” The 501(f) filing was necessary because there are significant structural, lead, and asbestos problems at the buildings, said Bolton, who added that all Perseus wanted to do was help the tenants. Once repairs were finished, Bolton claimed, he’d be happy to allow the tenants to return at the same rent. At the hearing, he lost his temper at one point, loudly scolding Graham for pushing the anti-501(f) legislation, which he said was preventing him from making needed improvements.

Parker, who was not subpoenaed because he is living in Florida with terminal cancer, echoes Bolton’s story and dismisses Graham’s “gentrification nonsense.” Parker says he has no problem allowing tenants to move back into the building after it’s renovated to “Watergate-quality.” He says, though, that most of them will either decide not to move back or can be convinced with cash payments not to. Those who declined the initial $1,000 payments can be bought out for more, he says; those who can’t be bought out at all will be welcomed back at a loss. Parker argues that the units could be sold for $340,000 to $350,000 as condos, or rented at a higher rate if vacant.

Graham has his own hunch about what happened: There was concern, as Jackson testified—and as Parker confirmed in an interview—that the buildings were “underperforming.” In order to get them to perform, Parker brought in Perseus and its development expertise. A window into Perseus’ plans for the buildings emerged from Bill Salmon’s contract with the company, which promises him payment and a stake in the properties if his work “facilitates the redevelopment of the Property.” Before the buildings could be redeveloped, they had to be cleared of low-riding tenants, Graham theorizes. So Perseus went to the master, Richard Luchs, who had an idea: commission reports that show the buildings need repairs for lead, asbestos, structural decay, or whatever, and have Zapata approve the 120-day notices. Take a year or two to redevelop the buildings, and the tenants won’t come back. Checkmate: four new, empty, market-rate buildings.

At the Dec. 21 hearing, Stan Jackson, a Vernon Street resident manager who followed Salmon around the building as he dished out his “Notice to Vacate” contracts, lent credence to Graham’s theory. “Personally, I figured they wouldn’t want the same people back,” he said. “If they got new tenants, they could get more money.”

The undercards finished, Graham moved on to his headline clash with Luchs. The councilmember, a former Georgetown adjunct law professor who once clerked for a retired Supreme Court Chief Justice Earl Warren, was ready with a stack of questions for the real-estate attorney. Graham’s strategy was to interrogate Luchs on the notice to vacate that Salmon had passed around; it was at the very crux of the building-clearing operation that Luchs was assisting. But Graham got nowhere with his inquiry, because Luchs denied writing the notice and liberally asserted attorney-client privilege. A flustered Graham sat with his stack of unasked questions hanging from his hand. He then understood what Luchs’ opponents have long known. “I never thought for a second he would deny drafting it,” Graham would later say.

The fate of the buildings is now in question, with both sides vowing to fight on. T Street’s tenant-association president, Nancy Miranda, has been active for years in attempting to get the management firm, Barac Co., to make repairs, and she took it to court in 2002 when her ceiling caved in on her daughter. “We know they have us in a bind. If we complain about conditions, they’ll clear the building. If we don’t, the building collapses,” she says.

Gene Analuwicz, a vice president at Barac, denies that his company intentionally allowed the building to deteriorate. “We were not apprised of the sale…We only know what we’ve read in the newspapers,” he says. “We couldn’t have let it deteriorate to facilitate a sale, since we didn’t know about the sale.”

Whether or not the Perseus deal comes out clean, Luchs & Co. may not have anticipated the level of scrutiny that’s now being applied to their 501(f) application. For starters, the survey reports that are used to back up the 501(f) claim are labeled as having been conducted on a building in Leesburg, Va. Some of the addresses of the buildings are wrong. At least one of the buildings’ floor plans is clearly wrong. And, according to an expert hired by Housing Counseling Services (HCS) to review the submissions, the lead and asbestos evidence cited in the Vernon and T Street surveys isn’t enough to warrant the evacuation of the building—whether in Leesburg or the District. The expert also found, according to HCS, that there was no need to empty them for purposes of structural repair. A preliminary survey by the DCRA came to the same conclusion.

The particulars of certain other Luchs transactions also wither under prying eyes. Early last year, Luchs assisted in the preparation of a 501(f) application for a Mount Pleasant building. The building’s owner, the Newton Partners, cited evidence that the building needed to be emptied for repairs. The evidence was supplied by an inspection company owned by the same person who owns Newton Partners.

In February 2005, Luchs’ client Horizon Properties submitted a 501(f) application to clear out and renovate the 13th Place Apartments. But on the blueprints submitted along with the application, the property is erroneously—if tellingly—referred to as 13th Place Condominiums.

Tenants insist the slip-up was Freudian. The purpose of the 501(f) application, they say, was to get them out so the buildings could be sold and converted to condos. Horizon’s Web site is also fairly clear about the potential the company sees in the buildings:

Description: Built in 1939, this 64-unit complex was purchased in 2004 as a repositioning target. Despite its deteriorated physical condition, the attractive location gives way to significant yield opportunities through substantial rehabilitation or condominium conversion.

After a long battle of attrition, only 11 units are currently left occupied. Attorney Elizabeth Figueroa, representing the holdouts, says that the existence of two separate buildings neatly allows the owners to make any repairs they want, while moving the tenants between the two. Instead, the owners are allowing dozens of affordable units to sit vacant. She says Horizon has told her that moving tenants from one to the other would not be “economical.” Horizon declined to comment.

Asked about Horizon’s 501(f) application, Canavan and the new rent administrator, Keith Anderson, said they were unfamiliar with it. Canavan said he would look into the filing when told about the Web site and the blueprints labeled “Condominiums.” The questionable application will likely become part of Graham’s ongoing investigation, which shows no signs of slowing.

Luchs isn’t slowing, either. “My grandfather died in the saddle, my father died in the saddle, and I plan to die in the saddle,” he says. CP

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