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The Department of Consumer and Regulatory Affairs (DCRA) has made a number of head-slappingly ludicrous decisions in the past—perhaps most famous among them the pronouncement that the sale of 95 percent of a building is not actually a sale. But for sheer Kafka flavor, a recent ruling in a tenant-purchase issue may have set a new bar.
Jeff Nelson and some fellow residents of 1815 19th St. NW thought their plans to purchase their Dupont Circle apartment building and convert it into condos were coasting along. Like scores of tenant groups before them, they formed a limited liability corporation (LLC) as part of the purchase. The next step in the condo-conversion process should have been a formality—an election whereby the tenants vote to proceed with the deal. “We played by all the rules,” Nelson says.
But Carl Bradford, a DCRA housing-regulation specialist, stopped the process cold. He ruled that the tenants could not vote in the election because they were “employees” of the LLC. The tenants initially thought that the ruling was a simple mistake that would be corrected by Bradford’s higher-ups.
At the end of last week, one higher-up declined to do so. In an 11-page decision, Acting Rent Administrator Keith Anderson argues that if he allows the tenants to vote, future landlords might create their own LLCs and have employees move into a building, pay rent, and then vote for conversion, thereby skirting tenants’ rights. Ward 1 Councilmember Jim Graham, who chairs the committee that oversees the DCRA, says he doesn’t understand the legal basis of the ruling. It “effectively jettisons [tenants’] ability to convert to condominiums,” he says, which is protected under District law.
Of course, this ruling is miles from lunacy for some in the D.C. housing market. If tenants can’t purchase a building and then vote to convert to condos—as is the obvious intent of the law—they have only one other choice: sell their right to purchase to a developer.
DCRA spokesperson Karyn-Siobhan Robinson did not comment, other than to say that the decision is “not final.”
Nelson et al.—encouraged by an IRS ruling that says “employees” actually have to be paid—plan to appeal the ruling in court, and Graham says he will formally request that Anderson reconsider his ruling. “It has an Alice in Wonderland quality,” he says. “I thought we were in a little bit of a different era.”