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On March 30, the lobby that represents landlords and developers in the District was fresh off a big win. It had stuffed an attempt by Ward 1 Councilmember Jim Graham to tighten rent control. To boot, it had rammed its own legislation through Graham’s committee, over his objections. And so the landlords organized a victory-lap press briefing to explain the merits of the legislation and discuss why it should be passed into law by the entire council.
Graham showed up. Vincent Policy, an attorney with the landlord-favorite firm Greenstein DeLorme & Luchs and a lobbyist with the D.C. Apartment and Office Building Association (AOBA), wasn’t having it. “You weren’t invited,” said Policy, widely known as the brains behind the landlord lobby.
“You’re asking me to leave?” Graham replied.
“Politely,” said Policy. “This is not a public event.”
“Let me have someone from AOBA ask me to leave. You’re from a law firm.”
“OK,” said Policy.
As the lobbyist searched for someone to carry out the eviction, Graham was asked if he’d ever been kicked out of an event before. “Never. This will be a first,” he said. “I didn’t even get a cookie.”
Policy returned and told Graham, “The consensus is you can stay if you don’t talk.”
“I wouldn’t dream of saying a wooooord,” cooed Graham, who then offered to leave and sit in his car, which, he volunteered, was legally parked.
“You want some change for the meter?” Policy asked.
Graham ended up staying and staying quiet—perhaps the real first that occurred that day. Indeed, there has been little peace between the councilmember and the landed class since he took control of the committee that watches the Department of Consumer and Regulatory Affairs (DCRA) in January 2005.
When Graham took over, he didn’t find your standard busted motor vehicles administration, but instead a sprawling and complex agency broken by years of understaffing and a relentless assault by the industry it is intended to regulate. “I know how to detect when an agency has been captured and this one had been fully captured—it was bound and gagged,” he says. “The lawyers for the regulated industry were simply submitting anything they wanted to and the agency was signing off.”
Shortly after the councilmember took over, Director David Clark, known as business-friendly, was replaced. “Had someone else become chairman of that committee, rest assured he would still be there,” says Graham. A reformist director, Patrick Canavan, was confirmed to lead the agency. Simply fixing the systems and processes that had fallen into disrepair over the past few decades would be enough of a challenge for any administration. Doing so while wresting power from an entrenched landed class would be Herculean.
Recapturing the DCRA may take as long as did its unraveling. Graham and Canavan will have to roll back a campaign by business that stretches back to the early years of Mayor Marion Barry Jr.’s rule. As the story has played out over the years, the agency’s shortcomings have almost invariably been couched in the language of ho-hum municipal dysfunction.
The truth behind all the apparent anarchy is that it has served the purposes of people who own and build big buildings in town. In other words, the rent-control program doesn’t work because of understaffing; millions of dollars in fees aren’t collected because developers’ paperwork isn’t read; agency decisions are consistently gentry-friendly because overworked bureaucrats rely on landlord attorneys to break down the law for them. When Graham took over the committee chair, there was a report on city administrator Robert Bobb’s desk suggesting “consumer” be dropped from the agency’s title “on the theory that it wasn’t relevant to the agency’s business responsibilities. That was the extreme to which this had gone,” says Graham. “[The city] just suspended all consumer protection for 10 years.”
Whether for pride, for politics, or for principle, Graham set out to deliver the agency back to the people it is supposed to protect—that is, tenants, consumers, and regular folks. Bureaucratic heads have rolled, loopholes have been closed, and laws have been tightened and enforced, but it’s way too soon for anyone to plant the people’s flag atop the DCRA’s glass-and-steel-draped building on North Capitol Street.
Legislation by Loophole
Graham’s assault on the DCRA may be one business cycle too late. That’s because the real-estate boom that transformed just about every lot and square of the District only recently concluded. From 1999 until this past winter, escalating home and condo prices emptied entire buildings of low-income tenants—immigrants, students, service-sector employees—and replaced them with gentry.
Funny thing: The boom’s start and end dates coincide nearly seamlessly with the dominion of Ward 6 Councilmember Sharon Ambrose, who chaired the council’s DCRA oversight committee from 1999 until the end of 2004.
In Ambrose, the landed had a political and philosophical ally. “Here’s my view on the role of regulatory agencies: Their role is to regulate the business so that both business can operate and consumers are protected,” she says. “Now, not everybody has the philosophy that you protect the business interests as well as consumers.” While Graham and the city’s tenant advocates—or “not everybody”—may quibble over her commitment to consumers, both sides agree that she faithfully protected business interests. The same is true of her predecessors over the previous two decades, Councilmembers Harold Brazil and John Ray.
No controversy greater illuminated Ambrose’s oversight than what has come to be known simply as “95/5.”
Tenants bounced from large apartment buildings learned only gradually that they’d been screwed by the DCRA and the city’s fat cats. Here’s how it would happen: They’d hear through the grapevine that they’d have the right to buy their own building in case it ever got offered up for sale. Something about the Tenant Opportunity to Purchase Act.
When the sale would actually happen, they wouldn’t be told about it. They’d put two and two together and realize there was a new owner. Then came the blindside: They’d learn one day that a 95 percent interest in their building had been sold, 5 percent remaining with the owner. By structuring the deal that way, the owner had essentially cut the tenants out of the deal, laying the groundwork for a massive condo conversion.
The ruling class had no qualms about a technicality that reliably screwed tenants out of rights they viewed as guaranteed. “People call it a loophole. Others say it is necessary to allow property to change hands,” says Ambrose.
Sure, landlords have long complained about the impact of the Tenant Opportunity to Purchase Act (TOPA), which can tie up a sale for years. “Tenants have held landlords hostage by the use of this law,” says ex-DCRA official Linda Harried. “The length of time is too long; [tenants] stretch it out to the last degree.”
Harried, while running the DCRA’s condo-conversion office, signed off on the scheme in scores of form letters that became known as the “Harried letters.” But the roots of the loophole go much deeper than one bureaucrat. Ninety-five/five was not a D.C. Council slip-up discovered by a microscope-wielding landlord. It was deliberately drilled into the law.
In 1983, Barry and the council were reauthorizing TOPA. A proposed amendment would close a potential loophole by broadening the definition of “sale” and “sell” to include “majority transfers” of companies whose sole purpose is to hold a piece of property. Without the change, an owner could sell a company that owned a property and claim he hadn’t actually sold the property.
But the People’s Mayor objected to the amendment. A 1983 letter from Barry to the amendment’s sponsor argues that it would be “administratively unenforceable.” Besides, it says, the loophole is seldom if ever used. At a council hearing on the amendment, a DCRA official, Mimi Jones, who most likely authored the Barry letter, made the same two points. The amendment was rejected, and properties began to trickle through the loophole. It finally passed in 1994 but with one crucial alteration. The phrase “majority transfer” was replaced with “100 percent transfer.” Ambrose was the chief of staff to the councilmember, John Ray, who worked in the loophole; she says she supported it at the time.
The DCRA interpreted the council action to imply that a transfer of property that was less than 100 percent was exempt from the TOPA requirement—leaving tenants without the opportunity to purchase. It took several years for the housing market to heat up to the point where anybody actually wanted to buy a building. But over the next decade, an army of tenants was driven through the loophole, rapidly accelerating the city’s gentrification. Between the summer of 1999 and early 2005, Harried issued at least 105 letters, all essentially identical save for addresses and names, facilitating the sale of more than 300 buildings and 6,500 apartments, according to an analysis of the letters done by tenant advocate Kevin Fitzgerald.
The loophole wasn’t closed until 2005, when Graham took control of the committee from Ambrose, who had held 95/5 hearings that led nowhere. Graham’s action rocked a longstanding MO of landlords, their attorneys, and the agency. One lawyer, Richard Luchs, had executed around one-quarter of the 95/5 sales (“The Painmaker,” 1/13/06), with his partner, Policy, accounting for another quarter. Mimi Jones would later join them at their firm.
In spring 2005, Graham publicly blamed Harried for the 95/5 debacle. Her boss, Raenelle Zapata, says Harried was scapegoated. “When you’re charged with doing what the law says, you don’t have a choice. That’s it. That’s all we have to hang our hat on,” says Zapata. “It’s the council’s responsibility to change the laws….It’s much easier to point to a person than point to a law. It’s much more satisfying for people to say, ‘That’s a bad person’ than to change the law.” Zapata was fired in November 2005 in the wake of another DCRA scandal and is now running for the Ward 5 council seat.
Harried, too, says she was following the council’s mandate. “That law says 100 percent must be sold,” says Harried. “We had been doing 95/5 for ages before.”
There’s some disagreement about Harried’s exit from the DCRA just after the controversy. Graham has said Harried was “allowed to retire.” Harried says her paperwork for retirement was in long before Graham began his public harangue, an assertion Zapata backs up. Says Harried: “I truly believe Mr. Graham owes me a written and verbal apology. As far as I’m concerned, he ruined my name.”
The tenant associations victimized by 95/5 challenged the sales in court. Though the biggest case is still being appealed—led by tenant attorney Jon Tycko, who vigorously rejects the notion that the DCRA acted within the law—the nonsale sales have so far held up in court. The failure to overturn Harried’s decisions indicates that she might be on safe ground with her just-following-orders defense. Surely she could have interpreted the law differently, but it was the mayor and councilmembers who let it happen.
Talking the Tenant Talk
The Rental Accommodation and Conversion Division (RACD) at the DCRA is on the seventh floor of the agency’s building. Go in through the glass door and you’ll find a contact representative at the front desk. Back behind the desk are another six employees, who oversee pretty much anything in the city that has to do with rental housing.
They field requests for inspections, file rent increases, and are charged with enforcing rent-control regulations in a city with thousands of units under a complex regime of control. How many thousands? Don’t ask the DCRA. There’s no list of apartments in the District that fall under rent control—a pretty fundamental handicap when it comes to regulating those apartments. (Spokesperson Karyn-Siobhan Robinson says they’ll have a list by October.)
One contact representative says the workload would require at least a dozen employees to be done efficiently. More than 35 large boxes of rent increase filings sit unfiled in one storage room. Another 15 sit in the other. They’ll be filed, says the rep, “when we get some help.”
The same understaffing dynamic applies in Harried’s former office, charged with overseeing condo-conversions and sales. “Staffing cuts had left me nearly alone in an office once staffed by eight or nine people in the mid-’80s, yet more work was coming in than ever thanks to the booming housing market,” says Harried. “Frankly, sometimes it seems like they are using the department as a welfare-to-work program, and very few are ever hired.”
Zapata cites the nonenforcement of rent control as an example of the mayor and the council’s tendency to pass tenant-friendly legislation with no intention of it actually benefiting tenants. “If you’re serious about rent control, you put the money behind it and properly fund RACD. If you’re not serious about rent control, then you pass laws and don’t fund them,” she says. “I kept saying from the beginning that I can’t do this job alone, but they wouldn’t give me help,” says Harried, who adds that if incompetence is anywhere, it’s in the John A. Wilson building. “My position is that some councilmembers pass laws and know nothing about the laws or how the changes will alter the process or how the changes can be implemented.”
On the crucial mandate of busting faulty housing providers and other scofflaws, resources all but dictate the agency’s vigor. Between fiscal years ’94 and ’98, significant budget cuts were accompanied by a one-third drop in housing inspections, from 44,340 to 28,337, according to data compiled by Graham’s office. In ’96, in response to the budget pressure, the council eliminated 84 positions and suspended the DCRA’s enforcement of the Consumer Protection Procedures Act and the city’s lemon law. The suspensions were supposed to last for three years but weren’t lifted until July ’05.
DCRA spokesperson Linda Argo refers to “a history of disinvestment in the staff and systems needed to support the operations here.” Canavan makes the case that the historic understaffing of the agency is not directly related to underfunding and rejects the idea that the council purposely designed a dysfunctional agency.
Rather, he says, an unwieldy and understaffed human-resources (HR) department left open more than 120 positions that were budgeted for but were unfilled when he took over. He says he will soon have that number below 90. HR has been so bad for so long, he says, that directors just found it easier to bypass it. “It was an arduous task to get through the HR system,” he says. “The contract staff have numbered in the hundreds at times.”
He adds, however, that the understaffed HR department was a result of underfunding. “I think a captured agency is in the eyes of the beholder,” he says. “I don’t see DCRA as captured. I think if it’s captured, it’s captured by not having the IT resources that helps people make smart decisions on a regular basis. It’s been captured by having too few staff here over time and perhaps by a lack of training.”
That’s how capture works. If you’re overworked and understaffed and Richard Luchs offers to write a form letter for you, hell, why not take him up on it? Harried and Zapata both say they trusted attorneys like Luchs to give them good advice because they were swamped and in need of the help. “You have to rely on people’s integrity,” says Zapata.
The New Class Front
Where once the city’s class struggles were easily identifiable—rich vs. poor, landlord vs. tenant—gentrification has opened a new front on the battlefield: suckers who bought overpriced condos vs. speculators who sold them.
There is a District law tilted toward the suckers in this case. Condo-conversion regulations require developers to give the DCRA a “warranty bond”—set at 10 percent of the cost of the work that went into the condo—that condo owners can draw on to make repairs. If no repairs are needed within two years, the developers get the money back.
That’s how it’s supposed to work, anyway. The DCRA has no process to cross-check whether a developer actually puts the bond down.
One group of new owners found that it didn’t matter whether the DCRA collected the money—because the agency wouldn’t give it up anyway. Michele Bouquet bought a renovated condo in a 14-unit building in Columbia Heights in May 2004. It wasn’t long before she and the other owners realized they’d bought a shithole with a coat of paint and bronze trim on the front façade. The basement, which had recently been dug out, wasn’t underpinned properly or waterproofed. It’s now black with mold. The roof, windows, and doors leak badly. The foundation is corrupted.
Fortunately for the condo association, the developer, Rami Badaway, had put down a $100,000 warranty bond with the DCRA. Bouquet’s situation was exactly the type that inspired the law. Her condo association went to the agency in August 2005 to request that the bond be released. Feet dragged for months, until Graham intervened. The DCRA’s Keith Anderson, Zapata’s acting replacement, took over the matter personally and, says Bouquet, was responsive to the building’s concerns. In February, he ordered that the bond be released to the new owners.
Instead, the settlement attorney released it to the DCRA, where it has sat for the last four months. The agency acted as if it were more interested in bending over for the developer than solving the problem. For weeks, officials insisted that Badaway be given the chance to inspect the property himself. Several weeks ago, the owners vigorously objected and Graham intervened again, making sure the agency was clear that Badaway had no right to inspect the building. The agency appeared to acquiesce.
Yet last week, Bouquet got a call from a DCRA official attempting to schedule an inspection by a Badaway contractor. Bouquet objected and says she was told: “Oh, so you’re refusing to cooperate.” On Saturday, June 24, DCRA officials came to the house again—and, according to Bouquet and another resident, brought a contractor representing Badaway who entered the house while Bouquet was on the roof.
According to Robinson, a check will be cut for the roof within the next few days. “There is ongoing dialog concerning other claims against the bond,” she writes in an e-mail.
Though the struggle over the $100,000 bond has been a “sad, maddening history,” says Graham, it’s a victory. “This is probably the first time DCRA has been prodded into taking the performance bond for consumers,” he says. “They’ve done good stuff here. They didn’t do it willingly, but they did it.”
The DCRA’s Hot Properties
While nonresponsiveness has been the DCRA’s historic means of oppression, the agency has occasionally gotten dressed and left the house to stomp around the neighborhood. In late 1999 and early 2000, the DCRA sent its housing inspectors on what seemed a noble mission: Find the worst slums in the city so that the agency can force the owners to improve conditions in the buildings. The inspectors compiled a list for then-director Lloyd Jordan of 75 properties spread across the city.
Jordan took the list and knocked two-thirds of the buildings off of it. He then added a few to it. The resulting list of 27 properties was dominated by buildings in Columbia Heights and Mount Pleasant with low-income, Hispanic residents. Nearby, a brand-new Metro station and planned commercial center were sending rents and property values skyrocketing. Jordan called the compilation the “Hot Properties List.” He released it in March 2000.
The DCRA then set about closing the buildings down, a step toward conversion to high-end condos that accelerated the neighborhoods’ gentrification. A resulting lawsuit brought the DCRA’s effort to empty the buildings into the light. Jordan’s inspections branch chief for the eastern sector of the District testified that the idea of creating the hot properties list came from Jordan and that he intended to close the buildings down after the list was created. He also testified that the DCRA expected the tenants to leave and that there was no plan in place for relocating them.
The lawsuit charged that the policy illegally discriminated against Hispanic residents. In its defense, the city fell back on incompetence, claiming that it didn’t know that Mount Pleasant and Columbia Heights were mostly Hispanic neighborhoods. Twelve residents were awarded $181,500 in an initial judgment; the case was remanded in April for a new trial.
Because the properties were on the hot list, Harried says, they could not legally be converted to condos. But Jordan never showed Harried the list, and the first building closed, at 1512 Park Road, was converted to market-rate condos. “One error that was made was that I wasn’t in the mix, so if a landlord came in and wanted to convert their building, they shouldn’t have been able to convert. But I didn’t know they were on the list, so I allowed them to convert,” she says. Harried doesn’t think there was anything untoward in the failure to communicate between divisions. It was just simple incompetence, she says.
Several housing inspectors don’t think it was so benign. In fact, they say, gentrification by intense housing-code enforcement still goes on. The inspectors who make the charge admit that they have no concrete proof that decisions are made to benefit developers, but they say that the end result is undeniable. The root of their charge is that decisions about what properties to inspect on a buildingwide basis—and how often to do so—are made by council offices as opposed to DCRA management.
That’s not the same thing as encouraging gentrification, says Canavan. “The council has no less right than anybody else to be able to tell us: This is a problem property. If [a councilmember or staffer] wants to use that [right] for their own agenda to further the economic development agenda of other people, so be it. My job is to be the guy who says: For whatever reason I am here, there are code violations here or not,” he says.
“There was a time when what we did wasn’t so political,” says Shirley Buie, who has served as a DCRA housing inspector for 28 years.
Whether for the benefit of developers or not, some inspectors say that the focus on vacant properties and buildingwide inspections leaves less time for tenant complaints. “Emergency inspections”—intended to take care of immediate problems like heating or electricity quickly—“used to be a priority. They’re no longer a priority. Depending on where you live, you might not see us for two or three weeks,” says one inspector with more than 20 years’ experience.
The Glass-and-Steel Bastille
Storming the DCRA has not been a one-night affair. The council debate over rent-control reform offers an insight into the power of the landlord lobby and the garrison that reformers are up against.
For months, Graham had been researching and writing a bill to strengthen rent control. He’d brought in AOBA, the DCRA, the mayor’s office, Ambrose, and tenant advocates and came up with five bills for his March 16 committee hearing. The first four cruised right through.
And then AOBA—through Ambrose—sprang.
As a substitute for Graham’s fifth bill, a four-pager that would tighten rent-control laws, she introduced an 18-page counterproposal that had come from the DCRA’s offices but was originally drafted by AOBA, according to a source in Graham’s office. (At the briefing where Policy explained the law to the press, he denied that AOBA wrote it. Ambrose also denies it was drafted by AOBA. But there is no dispute that it came through the DCRA.)
The bill would have all but eliminated rent control. Graham moved for a recess to read over the substitute, but Ward 4 Councilmember Adrian Fenty, who portrays himself as a friend to tenants, said he would object to the recess and so the chair plowed on.
In an attempt to cull out some of the more obvious landlord gifts in the 18-page surprise, Graham introduced three amendments that would have softened the blow for tenants. Each was defeated, with Fenty and At-Large Councilmember Kwame Brown, another avowed buddy to tenants, casting the crucial no votes.
The bill contradicted many of the provisions in the four bills passed previously, but the committee passed it anyway, with only Graham in opposition.
After the vote, when Graham’s office had time to go over the DCRA/AOBA bill, it discovered some surprising provisions. Most significant was a section that would prohibit tenants from challenging their rent based on the fact that what they are being charged is illegally high. Whatever the lease says—whether it’s legal or not—goes. Allowing a lease to trump the law is a radical revision of District housing policy.
The landlord lobby was thrilled and could have been forgiven for thinking that the good regulatory times were rolling again. Within days, fliers began appearing in apartment buildings across the city urging tenants to support the legislation at the next committee hearing. The fliers, though printed on different management companies’ letterheads, were identical in text. “For over 30 years, confusing rent ceilings have done little to control rents,” read the flier.
It’s a cynical argument indeed, since AOBA knows that the reason the ceilings are so confusing is the association’s own never-ending search for new ways to circumvent the law. In other words: We’ve planted so many loopholes in this law for over more than 30 years, we might as well just get rid of it.
Tenants in the city fought back. Graham used his power as chairman to hold up the bill while tenant groups lobbied other councilmembers and attempted to shame Fenty for his pro-landlord stand. (It seems not to have worked so far.) The AOBA bill was defeated by the council and replaced by a Graham bill that tightens rent control and reduces the amount that rents can be raised—similar to the one Graham originally introduced. “Essentially, what they did was to cave in,” says Graham. It doesn’t go into effect until later this summer or early in the fall. So, of course, landlords right now are busy instituting rent increases. (See “Take a Hike,” p. 11.)
The struggle for control of the agency goes on, with Graham’s crusader rhetoric complemented by Canavan’s subtle style. “I have certainly provided some emphasis that might be different than has occurred here in the past—certainly my work with the tenants-rights issue and my work with consumer protection,” says Canavan. “This sort of change is not something that happens quickly. It is every day, fighting the good fight.” CP
Art accompanying story in the printed newspaper is not available in this archive: Greg Houston.