Credit: Darrow Montgomery

D.C. Court of Appeals judges have affirmed a previous civil ruling that favored the tenants of an affordable housing complex in Mount Vernon Triangle occupied primarily by elderly, low-income Chinese and African-American residents.

The three-court panel’s decision Thursday—first picked up by The National Law Journal—finds that Virginia-based developer Bush Companies, acting under its affiliate name Parcel One Phase One Associates, did not offer a bona fide price for the Museum Square Apartments to the building’s tenant association in accordance with D.C.’s Tenant Opportunity to Purchase Act. The company wanted the residents to fork up $250 million, or around $300,000 per unit, or it would advance its redevelopment plans for Museum Square’s 300-plus subsidized apartments. In the past year, the tenants and their surrogates have held protests and rallies against Bush Companies, alleging that the firm has tried to evict them to turn a profit on the site.

Attorneys for Parcel One did not immediately respond to requests for comment Friday. But, per Senior Judge James Belson‘s opinion, it’s probable that Bush Companies will have to remake a lower sale offer if it wants to move ahead with redeveloping Museum Square. A 2003 case established that a “bona fide offer of sale simply requires an objectively good faith, honest offer of sale… based on [a property’s] intended use” and not necessarily its current “market” or “appraised” value, Belson pointed out.

“No reasonable third party purchaser, apprised of Parcel One’s in-house appraisal or the [future projected evaluation] report, would have been willing in 2014 to pay the 2019-2021 value of the property of $250 million,” the judge concluded. “Therefore we hold that, as a matter of law, Parcel One’s offer of sale was not bona fide under TOPA and Phillips [the 2003 case]. The trial court did not err in granting the [tenant] Association summary judgement,” which in effect halted Bush’s development process.

Speaking on background, a lawyer for the tenants says the decision is a clear win for them, but may not be the end of the fight with the developer. Bush could seek to have the full appeals court review the case en banc, though this may be unlikely given that Thursday’s ruling was unanimous and included Chief Judge Eric Washington. In another scenario, the firm would have to reissue TOPA notices to the tenants in good faith. While noting that the court ruled narrowly about Museum Square, the lawyer said the case could benefit future tenants in similar circumstances with respect to legal standing and fair property evaluations.

A spokesman for D.C. Attorney General Karl Racine, who supported the tenants, says his office was pleased by the outcome.