After years of disrepair, low-income renters in Congress Heights who live on some of the most sought-after land in D.C. could purchase their four buildings from notorious landlord Sanford Capital. That possibility is now part of an ongoing civil suit over the site’s conditions.
D.C. Superior Court Judge John M. Mott last week ordered Bethesda-based Sanford and its affiliates to “negotiate exclusively with the tenants, or the tenants’ representatives, regarding the terms of a sale of the Property” during a 60-day period. Currently, about a dozen tenants still reside in the buildings, which sit above the Congress Heights Metro station along Alabama Avenue SE and also face the St. Elizabeths East Campus. The land is valuable because of its access to transit and the huge mixed-use development planned for St. E’s. That development is set to include a Washington Wizards’ practice facility and retail, among other amenities.
With Mott’s order, the tenants could work out a direct sale with Sanford rather than having to go through the prolonged process required by D.C.’s Tenant Opportunity to Purchase Act, which provides tenant associations the right to buy their buildings or assign this right to a third-party developer when landlords put buildings on the market. It’s unclear what purchase price Sanford would ask for—and whether the tenants or a developer partner could meet it. But Will Merrifield, an attorney for the tenants, says he’s “cautiously optimistic.”
“This is an example of what happens when you fight back,” says Merrifield, who works at the Washington Legal Clinic for the Homeless. “We know that if it doesn’t work out, if we can’t negotiate a direct sale to the tenants, we’ll just keep fighting. Nobody’s going anywhere.”
Stephen Hessler, an attorney who represents Sanford, said he was not available to comment. Aubrey Carter Nowell, who co-founded the company more than a decade ago with his then-business partner Patrick B. Strauss, has not responded to a request for comment.
Sanford Capital acquired the buildings individually about seven years ago, adding them to a portfolio that peaked at just under 20 properties across D.C. as of early 2017. Initially, most of the Congress Heights buildings’ 47 units were occupied. But under Sanford, they soon became unsafe and derelict, with squatters conducting illicit activity in unsecured areas, rats and roaches roaming the grounds, and the heat going out.
Tenants left the property in droves. By the time D.C. Attorney General Karl Racine sued Sanford Capital in January 2016 for a pattern of neglect allegedly intended to empty the site for redevelopment, 32 of the units were vacant. Since then, the District, the tenants, and the landlord have fought in court over housing code violations, follow-up inspections of the property, and a joint remediation plan that failed.
In September, after months of urging by the attorney general’s office, Mott appointed a third-party expert known as a receiver to perform needed repairs at the property. The receiver, an experienced housing consultant named David Gilmore, determined that the work could cost $2 million or more, a large share of which would go toward removing mold inside the buildings’ walls. (Gilmore served as a receiver for the troubled D.C. Housing Authority in the 1990s and, later on, for the New Orleans Housing Authority. In 2014, The New Orleans Advocate reported that the U.S. Department of Housing and Urban Development was probing Gilmore’s firm. He said he was unaware.)
Earlier this month, Gilmore submitted a lengthy assessment of the conditions at Sanford’s Congress Heights property to the court. The assessment found “the most readily apparent deficiencies” at the site were related to security, including unoccupied units where plywood had been removed from patio doorframes and then vandalized. Poor lighting, illegal dumping, leaks, and flooding were issues too.
The current residents “are remarkable for their endurance and their high hopes for the future of their community,” the assessment notes.
One of those residents is 73-year-old Ruth Barnwell. She moved to Congress Heights in 1982 and now leads the tenant association at the property. Barnwell recently told City Paper that the tenants want “safe, decent, affordable housing” at the site. “I stay because it’s not right, number one,” she explained. “The other reason I’m staying is for my sisters and brothers. …People [must] stand up for their rights.”
Merrifield says negotiations with Sanford Capital are “imminent,” and the court order specifies that the receiver may make emergency repairs, do standard maintenance like cleaning and trash removal, and patch the roof to stabilize the property while the negotiations unfold.
In a statement, Racine says all D.C. residents have a right to safe and habitable living conditions. “The receiver’s report gives us a fuller picture of what it will take to make the buildings livable, and the receiver has already begun to make the most critical repairs,” he says. “The court order gives tenants the opportunity to negotiate the sale of the property to a responsible buyer they approve.”
But in the battle over the property, there’s another key piece of the puzzle. D.C. owns a vacant fifth building on the corner of Alabama Avenue and 13th Streets SE, after repossessing it at the start of 2017 from developers who had defaulted on a $920,000 government loan. Sanford Capital included the building and the land underneath it in mixed-use redevelopment plans for the area surrounding the Metro stop. D.C. zoning officials approved those plans in 2015.
Sanford, though, never attained control over the fifth building, stymying the company’s stated hopes of building more than 200 mostly market-rate apartments, offices, and retail. The tenants have a different idea for the entire site: nearly 200 units of affordable housing. They are demanding that the city transfer the corner building to them for this purpose, which they’d effectuate with a nonprofit developer. (At present, the tenants’ preferred development partner is the National Housing Trust–Enterprise Preservation Corp.)
D.C.’s Department of Housing and Community Development holds the building and has said it will invite developers to bid on it through a competitive solicitation process once a pending 2014 suit over the rights to the property is resolved. That case is in the pretrial phase.
“We hope the city embraces the tenants association at Congress Heights and ensures the vacant plot is assigned to us,” Merrifield says.
If Sanford sells the four buildings it owns to the tenants, that wouldn’t be the first time litigation led to the company offloading a property. In October 2016, Racine also sued Sanford over conditions at another Southeast property, Terrace Manor. The property ended up in federal bankruptcy court earlier this year. Ultimately, however, Sanford sold it to District real estate company WC Smith, which has promised a brighter future for the complex’s tenants, including a $10.7 million rehabilitation, guaranteed rent control, and other benefits.
Sanford acquired Terrace Manor, which comprises 61 units spread across 11 buildings, for $3.15 million at the end of 2012 and sold it for $6 million this year.