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Through a pair of lawsuits recently launched by D.C.’s chief lawyer, tenants who endured vermin, broken heat and air conditioning, fire hazards, and criminal activity for years under neglectful landlord Sanford Capital could recoup rents they paid. The lawsuits represent the third and fourth times D.C. has sued the company since January 2016.
Earlier this month, District Attorney General Karl Racine in Superior Court filed suit against Sanford over abysmal living conditions at two properties in Northeast and Southeast that the company owned and managed for the past several years. The properties—known as Franklin Street Apartments and G Street Apartments—together comprise almost 125 units, although many of them have remained vacant and dilapidated, attracting vagrants and drug use.
In the case of G Street, Sanford in 2014 even committed to repairing the property after the District brought a public nuisance complaint. But the company failed “to maintain the property free from health, safety, and security issues,” D.C. says in court papers. Both lawsuits point out that many of the properties’ tenants are low-income people who “made the difficult decision to continue residing at the Property despite the hazardous and dangerous conditions.”
“It’s just ridiculous,” G Street tenant Timothy Harper told City Paper last year. “The property looks like a third-world country, with drug dealers all over the building, tree branches and things knocked off the roof, discarded furniture.”
The new litigation, first reported by The Washington Post, comes as Sanford Capital seeks to sell its entire portfolio, which at its apex included more than 65 buildings in various states of disrepair across the city. It also comes as the District litigates against the company over a set of properties it owned for several years near the Congress Heights Metro station, but which it quietly transferred to CityPartners—a former business partner—at the end of December.
At G Street Apartments, which Sanford acquired in 2009 for $2.3 million but sold for $4.5 million last year, the D.C. Department of Consumer and Regulatory Affairs found 151 housing code violations around the beginning of 2017, according to the attorney general’s lawsuit. Of 94 serious violations DCRA was able to subsequently reinspect, 57 were not resolved. Then, in June, the D.C. Fire Department found 36 fire code violations at the complex. “None of the violations were abated; rather FEMS found that the cited conditions had worsened” a month later, the suit says.
At Franklin Street Apartments, which Sanford acquired in 2012 for about $2.5 million and is poised to sell for more than $9.3 million through the bankruptcy process, DCRA found 93 housing code violations in March 2017, per the complaint. “At least 86” of these were not resolved by July. In December, when the Fire Department inspected this property, it found 24 fire code violations, including defective fire extinguishers, excessive trash, and broken lights.
Racine is suing Sanford in these two cases under the District’s consumer protection laws, arguing that the landlord misrepresented—”expressly and implicitly”—that it would provide “safe, habitable” housing when it rented out units and said it would fix housing code violations. He is also suing Sanford co-founder and principal Carter Nowell as an individual, asking for civil penalties and damages. (Nowell did not respond to an emailed request for comment.)
Last fall, the District won a settlement in a lawsuit against Sanford Capital over the derelict, 61-unit Terrace Manor complex in Southeast. Per the settlement’s terms, about a dozen tenants there were to receive roughly 75 percent of the rents they had paid over a three-year period. They were promised the right to return to the property with rent control as soon as the new purchaser, WC Smith, redevelops Terrace Manor. Sanford bought the property in 2012 for $3.2 million—committing to conduct repairs—and sold it via the bankruptcy process to WC Smith for $6 million.
This month, WC Smith filed plans for its redevelopment of Terrace Manor into about 128 affordable apartments to the D.C. Board of Zoning Adjustment. The former tenants have been relocated to other WC Smith properties in the interim and the property is currently vacant, according to zoning papers. The new owner is asking for city funding.
In the Congress Heights case, the Superior Court is holding a hearing today on the recent transfer of the buildings, and whether that was a valid action. The judge recently approved limited legal discovery into Sanford and Nowell.