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Life is about to get pretty plush at 1841 Columbia Road NW.
The 114-unit, 83-year-old apartment building formerly known as the Alcazar is currently in the process of a $7 million makeover. It’ll soon have a rooftop terrace and a separate green roof. The antiquated heating system will be replaced, and the apartments will have central air conditioning. There’ll be a new apartment doors, new showerheads, new toilets, a new laundry room, a key fob system, and a remodeled lobby.
And one group of tenants isn’t very happy about it.
They’ve challenged the agreement responsible for the upgrades, and the case is now before the District’s Office of Administrative Hearings, which held five days of hearings on the matter last month. It has inspired bitter name-calling among the various parties involved. And both sides say important principles are at stake in the verdict.
The crux of the dispute is this: Early last year, Urban Investment Partners was seeking to buy the Adams Morgan building and dangled a couple of enticements before the tenants. First, they could take $20,000 if they moved out of the building. And second, if they agreed to allow UIP to jack up the rents on the vacant units in the building beyond the normally allowable increases, their own rents would be protected and the building would get a substantial upgrade. Most of the tenants said yes to both—they took the $20,000, packed their bags, and gave UIP permission to increase the rent for their successors. UIP completed the $26 million purchase last April.
The challenging tenants have a host of complaints about how the so-called voluntary agreement was assembled: that it occurred before UIP owned the building, in violation of the law governing these agreements; that the tenants were coerced into signing it; and that it erodes the city’s supply of affordable housing, in direct contrast to the goals of the 1985 Rental Housing Act that laid out the guidelines for voluntary agreements. UIP and the tenants who signed the voluntary agreement disagree, arguing that everything they did is in line with standard practice, and that besides, everybody wins, so what’s not to like?
On the surface, it does seem like a win-win-win. UIP reaps a healthy profit from the much-higher rents in the formerly rent-controlled apartments. The departing tenants get a big payday. And the remaining tenants keep their low rents while enjoying the upgrades to the building.
But there’s at least one loser: the District. Each voluntary agreement is essentially a vote in the selfish interest of the parties involved, at the expense of future renters in the building and across the city. With each low- and moderate-income rent-controlled building that converts to mostly market-rate, the city loses affordable units at a time when it needs them more than ever.
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Jose Sueiro has lived in his one-bedroom apartment at 1841 Columbia Road for 30 years. He pays less than $800 a month in a neighborhood where one-bedrooms often go for more than $2,000. His apartment isn’t luxurious, but it’s cozy and affordable—though not, Sueiro says, as cozy as it was before UIP started making changes, like the utility wall that blocks what used to be the secondary kitchen entrance to his unit.
Not that that’s his biggest complaint about UIP’s handling of the building and the voluntary. “It has destroyed 112 units of affordable workplace housing in Adams Morgan!” Sueiro says. “Gone! Up in smoke!” (UIP lists the building as having 114 units, but as with many things at 1841 Columbia Road, this is matter of some disagreement.)
Sueiro is not a subtle man; in 1997, he was the subject of a Washington City Paper cover story largely about his hot temper as publisher of a “bomb-throwing” Latino weekly. Now he’s leading an effort along with two other tenants and a group of co-signers to throw bombs at the voluntary agreement in his building for its alleged violation of the rules and adverse effect on affordable housing.
Other tenants take issue with Sueiro’s stance for two reasons. First, some feel that he’s objecting to the agreement not on behalf of himself and the other tenants, but as a matter of principle.
“Some of the tenants who are opposing this are using their personal interest in affordable housing to make an example out of this building, to make their case,” says Jamie Curtis, who’s lived in the building since 2005 and has sat on the tenant association board since 2010. “It’s difficult when you’re trying to live in the example that everyone is trying to make out of a building.”
UIP Senior Vice President Peter Bonnell declines a phone interview but expresses a similar sentiment in an email. “Although there are those that do not like our business model, we’ve found that these individuals have their own agenda, which is often inconsistent with the interests of the current tenants for whom they purport to advocate,” he writes.
Second, the building was never really affordable housing, in the usual sense of the term. Leonard Ference, who served as tenant association president from 2010 until he took a buyout from UIP, says that when he moved into the building in 2009, the rent for an apartment with one bedroom and a den was $1,800—not cheap, though still below market rent for Adams Morgan.
But middle-income housing is important, too. According to Joel Cohn, legislative director for the Office of the Tenant Advocate, there’s a misperception among some people that rent-controlled units are all occupied by poor people, and a misperception among others that they’re full of millionaires sitting pretty with their far-below-market rents. In reality, he says, the vast majority of rent control tenants are low- to moderate-income earners.
Here’s where geography comes into play. Many rent-controlled buildings are in wealthy parts of town where it’s hard to build new affordable housing. Preserving the existing affordable units is essential to maintaining income diversity throughout the city—rather than concentrating poverty in the poorer, eastern parts of the city where so much affordable housing already exists and where many residents are eager for more jobs and retail, not more low-income housing.
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For something with so innocuous a name, voluntary agreements have been politically charged for years. In a 2008 case involving the once-elegant Kennedy-Warren building just west of Rock Creek Park, the rent administrator rejected an agreement signed by 87 percent of the tenants, deeming it “coercive” because rational renters essentially had no choice but to sign it, and ruling that it undermined the central goal of the Rental Housing Act, to preserve low- and middle-income housing. Several months later, the rent administrator was fired (for reasons that were never fully explained), and her successor approved the voluntary agreement.
Since then, jurisdiction over voluntary agreements has shifted to the Office of Administrative Hearings. The tenants challenging the 1841 Columbia Road agreement say the OAH judge in their case has never heard a challenge to a voluntary agreement before, and their case is likely the first of its kind before OAH. Cohn says that’s not quite accurate, though earlier OAH cases haven’t really set a precedent.
“This whole process is relatively new,” he says. “Previous decisions have been few and far between, and they’ve been unique to those circumstances.” Cohn says that while OAH rulings don’t establish an official legal precedent, this case could be quite influential: If the challenging tenants win, other judges will consider the ruling; if they lose, future tenants could be discouraged from contesting voluntary agreements.
“The crux of that voluntary agreement is really the crux of the voluntary agreement issue in general,” Cohn says. “The voluntary agreement was never intended as a bargaining chip to get tenants to protect their rent levels in exchange for every other rent in the building to go up to market rate.” Traditionally, voluntary agreements were a way for existing tenants to agree to pay more in exchange for improvements; now, they’re often a way for tenants to protect their current rents at the expense of future tenants.
A chief cause of this shift is the same factor that’s driven changes all over the city: gentrification. Parts of the city that had universally low rents just five or 10 years ago have experienced an influx of young professionals, and as a result, apartment building owners are more eager than ever to convert cheap old units to luxury draws at several times the rent.
“In 2008, I didn’t really view VAs as a substantial threat to affordable housing, because every VA was really west of 16th Street, and it wasn’t really affordable housing anyway,” says Eric Rome, the prolific tenant lawyer who’s representing the tenant association at the Columbia Road building and has been criticized by the tenants challenging the voluntary agreement. “Now we have a gentrification process going up the U Street and Georgia Avenue corridors, and who knows how far it’s going to go? It’s different.”
Rome says voluntary agreements are great for his clients, who can collect a big buyout check or see their buildings improve without paying higher rent, but maybe not so great for the city as a whole.
“You have this tension between economic empowerment and good housing policy,” Rome says. “As an attorney, I can’t judge policy when I’m advocating for my clients. I can only take the tools that I’m given and use them for the best interests of my clients. And the best interests of my clients is not necessarily good housing policy.”
That’s why the solution might not lie in adjudication, but rather in a policy change. When I describe the Columbia Road voluntary agreement to Jonathan Tycko, a D.C. lawyer with experience in tenants’ rights cases, he says it doesn’t seem to violate the law, which “contemplates that tenants could be offered incentives in order to agree.” (Jim McGrath, chairman of the D.C. Tenants Advocacy Coalition, isn’t quite so sure; he says these agreements are often “rife with fraud.”)
“There’s two parts to this,” Tycko says. “One is the legal part: What was the law intended to do? At that level, what you’re describing as having happened at this particular building seems to be consistent with the law. Now whether it makes sense as a policy matter, that’s a whole different issue.”
And it’s an issue that may need to be taken up by the D.C. Council, if it wants to check the steady erosion of affordable housing in parts of the city where it’s rapidly disappearing.
Photo by Darrow Montgomery