City Paper is not for tourists
A decades-old flaw in D.C.’s rent control law continues to burden residents.
Tenant association leaders, lawyers, and advocates say that so-called rent concessions scams are alive and well in D.C., despite administrative complaints against the worst corporate offenders and a lawsuit from the city itself challenging the practice.
“We believe thousands of tenants across the District are dealing with the practice of rent concessions every year, facing higher-than-expected rent increases and being pressured to waive their rights,” says Beth Harrison, a housing attorney at the Legal Aid Society.
As the legislative season winds down and the Council eyes summer recess, Harrison and other rent control advocates are looking to a handful of bills sitting in the Council’s Committee on Housing and Neighborhood Revitalization. They’re pushing the committee’s chairwoman, At-Large Councilmember Anita Bonds, to introduce, mark up, or vote on the measures, which they say will close pernicious loopholes in rent control laws.
City Paper has reported extensively on the allegations lodged against Equity Residential and affiliate Smith Company Holdings, a management firm that tenants say has consistently engaged in rent “concessions” in properties like 3003 Van Ness Street NW: It lures prospective residents by advertising market-rate prices for apartments, but when it’s time to renegotiate the lease, quotes them substantially higher prices, often by many hundreds of dollars.
Equity does it by claiming that the lower price was merely a temporary “concession,” while arguing that there’s a “real,” higher rent that the company uses to calculate rent increases (the Consumer Price Index, plus 2 percent). The result is a figure that can be double what tenants already pay.
Attorney General Karl Racine filed a lawsuit against the company last year, characterizing Smith’s rent negotiations as “unlawful trade practices.” Rent concessions fights are considered widespread among the city’s 80,000-plus rent-controlled apartment buildings, and are estimated to have collectively cost residents hundreds of thousands, if not millions, of dollars.
And since January, the Rental Housing Commission has issued two separate decisions in favor of 3003 Van Ness tenant Gabriel Fineman, who challenged the company’s use of concessions.
The commission denounced the practice of calculating rent from a hidden figure, ruling that rent increases should only be based on the amount of rent a tenant actually pays—not an arbitrary, fictitious number. (Smith appealed the decision, and the case now goes to the D.C. Court of Appeals. A spokesperson for the company “denies these allegations.”)
But despite the initial rush of attention to Racine’s case and the Rental Housing Commission’s most recent March decision, advocates say the only way to stop routine abuses is to make changes to the law itself: A legal precedent, they say, isn’t always helpful for tenants who are worried about retribution should they challenge the company in court. And only a bill could close small but mighty loopholes that allow property managers to effectively “save up” their concessions, charging tenants an astronomical increase in rent years down the line.
Ward 3 Councilmember Mary Cheh introduced legislation in 2016 that would narrow the circumstances in which a landlord could offer tenants a discount on their rent, but withdrew it after the measure failed to garner enough support from other Council members.
Since then, Bonds organized a working group to deal with the issue, but while it has met sporadically for two years, it has not yet produced a Council-ready bill to address loopholes that allow property managers to exploit concessions. That’s about to change, per Barry Weise, the housing committee’s legislative director. He says he anticipates that Bonds will introduce the bill before the Council breaks in July.
“I’ve never had a more intractable nut to crack than rent concessions,” Weise says of the time it’s taken for the group to find consensus on a policy to address concessions, noting that members have “gone through many ideas and permutations.”
That stems largely from the working group’s effort to weigh “good” concessions against the bad, per characterizations of the group’s conversations by Weise and Joel Cohn, the legislative director of the Office of the Tenant Advocate. The two say the working group has toyed with finding a way to make sure mutually beneficial concessions—like a property manager temporarily reducing rent for an elderly tenant with high medical bills—aren’t discouraged.
But doing so requires the Council to create a “two-tiered rent system,” 3003 Van Ness tenant association president Harry Gural says. In email correspondence to Bonds, he called the proposal “a radical re-writing” of rent laws that effectively legalizes rent concessions (by calling them “discounted rent”). In February, he resigned from the group, calling Bonds’ bill “a Trojan Horse for large corporate landlords.”
Gural says D.C. officials are “trying to broker what they think is a compromise between tenants and landlords, but I think they’re wrong.” (“I completely disagree with that assessment,” Weise says of Gural’s position. He declined to comment on the minutiae of Bonds’ bill, but said that it will protect tenants entering into rent concessions for “the lifetime of the tenancy,” and will also protect housing providers who want to temporarily lower rent out of goodwill.)
Advocates say that other proposed rent control bills, such as B22-025, which would cap how much property managers can increase rental prices after a vacancy, and B22-100, which would restrict the unwieldy use of voluntary agreements, have also languished in the housing committee. Harrison says that Legal Aid has “heard that both of these bills have broad support from members of the housing committee and the rest of the Council,” and is “hopeful that [Bonds] will follow through on her promise to mark these bills up and move them forward.” Weise says Bonds’ committee is “confident” the voluntary agreement bill will move forward in its current form before summer recess.
Equity, meanwhile, is “do[ing] business as usual,” according to Gastón de los Reyes, the tenant association president at Cleveland House, another Equity property. “It’s incredible how brazen the company practices are,” he says. Jason Robinson, a tenant activist and former 3003 Van Ness resident, says he receives “countless” reports from tenants about concessions fights at Equity properties, but that the Fineman decision and a growing whisper network of tenants who have faced tough lease renegotiations have made tenants more bold in challenging the company.
One resident of 3003 Van Ness, who requested anonymity out of fear of retribution from the company, says that Smith continues to engage in the concessions practice.
The advertised price of a studio in the resident’s building was just over $1,600 per month when the resident moved in last summer. But as it came time to renegotiate the lease, the resident says it took weeks of haranguing property managers before they’d provide a new rental price. When the company did, it came back with a price of over $3,000, email communications between the parties show.
Smith appears to have backed down only after the resident cited the Rental Housing Commission’s decision in the Fineman case, copying city agencies on the email. “The fact that people are aware it’s not just them [facing this] has made the decision to go public or go to court much more obvious,” Robinson says.
Gural says he’ll continue to press city leaders to categorically denounce rent concessions, arguing that the Fineman decision is a powerful enough deterrent without introducing a bill that housing providers could exploit. “It’s clearly, clearly illegal in a massive way,” he says, and then pivots to city leaders: “They are not doing anything, and they know it.”