How Some Landlords Skirt D.C.’s Rent Control Law – Washington City Paper

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In October 2016, as Robert Enzel was in the process of buying the rent controlled Adams Morgan apartment building where I live, he emailed real estate broker Marty Zupancic asking for some advice. I had requested to move to a different unit in the same building, and Enzel wanted to know how much he could increase the rent if I left my apartment.

“If we agree to the move what can we advertise her apartment for? The $1360 she pays or the $3000 market rent?” Enzel asked in an email provided to me.

Zupancic appears to advise Enzel that he could essentially ignore D.C.’s rent control law because the Department of Housing and Community Development, which is in charge of administering the law, wouldn’t bother to check.

“You can ‘do whatever you want,’ weighing the risk versus reward, and also depending on if you do work to the unit, etc.” Zupancic replied. “By right/law, you can add 10% immediately to her $1360 … or $1496. In reality, unless your new tenant complains to DHCD (not likely that a tenant at $3,000 will care one way or another), its between you and your tenant. We can talk about strategies that other investors implement all the time.”

Zupancic’s response is half right. The law allows landlords to raise the rent by up to 10 percent in vacated units. But his advice that “you can do whatever you want” provides a window into the role that real estate agents and investors can play in evading D.C.’s rent control law (officially called “rent stabilization”), due in part to a lack of enforcement from the DHCD’s Rental Accommodations Division. (DHCD representatives did not respond to multiple requests for comment.) 

Zupancic says in an interview that he never intended to advise anyone not to comply with the law. He says the rent control law has changed over the years and without enforcement or proactive outreach to landlords from DHCD, he’s watched property owners struggle to comply—most are ignorant, some are bad actors, he says.

“When I’m talking to people, and I say, ‘You can do what you want,’ that’s because people can make their own choices, including hiring an attorney or consultants,” he says. “And it’s shocking, the range of decisions out there that people make. As a broker, I’m not there to tell somebody how they should handle it or interpret it, but my job is to share with them how other owners have handled things or interpreted rent control.”

I ultimately remained in my unit, and my rent didn’t increase, but my new neighbors were not so fortunate. I discovered years later that Enzel and his partners, through their 2523-13 LLC, raised the rents in the other units by about 60 percent over the past five years. 

(In the interest of full disclosure, I’m currently in litigation with my landlord alleging violations of rent control and fair housing laws.)

As an attorney with experience in consumer protection, this revelation had me wondering whether my landlord is an example of a larger trend. After almost two years of research, including discussions with hundreds of tenants in D.C., it appears that my landlord’s behavior is not uncommon.

I discovered my landlord’s violations only by accident. In the summer of 2021, I filed a fair housing discrimination complaint with the D.C. Office of Human Rights. In the process of responding to the investigator’s questions, I began to search for information about my unit (I was providing answers under penalty of perjury, and I wanted to be precise). I learned that DHCD maintains a public database containing rent-control histories for D.C. rental units, called FileNet, and what started as a simple search became a trip down a rent-control rabbit hole.

This is what I found:

• Some D.C. landlords do not register rent-controlled units with DHCD as the law requires, nor do they tell tenants that the units are rent controlled. Without that disclosure, those landlords then go on to charge much higher, illegal rates without tenants’ knowledge.

• Tenants have a three-year window to challenge unlawfully high rents. The clock starts when tenants begin paying the increased rate. If they don’t object via a tenant petition to DHCD within three years, the high rental rate is almost always set in stone for the current tenants and future tenants as well.

• Some landlords seek to remove existing tenants, then add more bedrooms to the vacated units to justify charging more rent. Newly constructed units are exempt from rent control, and the landlord can set the new rate. But some landlords are adding additional bedrooms to existing units and raising the rents on those “reconfigured” units even though the square footage remains the same. And though DHCD must approve a rent increase based on renovations or capital improvements, some landlords have simply reported new, much higher rents without any review by DHCD. 

• Some landlords are exploiting an exemption to the rent-control law for voucher holders. Landlords are allowed to charge voucher holders market rate for rent-controlled units. If that tenant moves out, the unit is supposed to return to its rent-controlled status, but landlords often continue advertising and charging the higher, market rate.

• Some landlords list long-term rental units on sites such as Airbnb and lease them for rates that are higher than the rates registered with DHCD. In some cases, tenants have overpaid by as much as twice the registered rent.

• The task of preserving D.C.’s rent-controlled housing falls to tenants, who must be willing to take their landlords to court and have the resources to do it. That’s because the two government agencies responsible for enforcing housing and business regulations, DHCD and the Department of Licensing and Consumer Protection, have largely failed when it comes to rent controlled housing.

“There is a real concern that if landlords are not properly reporting what they’re doing, it’s really going to muddy and confuse the rent levels for the apartment,” says Mel Zahnd, supervising attorney in the housing law unit with Legal Aid D.C. “And if a tenant down the line tries to go back and look up their filings with [DHCD], which is already a challenging process, they might not be able to appropriately challenge what they’re being charged. Time passes, the statute of limitations runs, and they’re not ever able to correct the rent levels, resulting in the loss of affordable housing down the road.”

***

The Rental Housing Act, D.C.’s rent control statute, says all rental units in the District must be registered with DHCD’s Rental Accommodations Division and designated as either subject to rent control or exempt from rent control. Rent control automatically applies for any unit that is not registered with RAD.

The law requires owners to fill out a form that includes ownership information, the number of units in the building, the number of bedrooms in each unit, the vacancy status, and either the current monthly rent or the rent control exemption for each unit.

According to DHCD’s website, the most common exemptions to the rent-control law are for units receiving government subsidies, such as housing vouchers, units built after 1975, units that were vacant when the law was passed, and units owned by small landlords. (Small landlords are defined as natural people, rather than limited liability company, who own four or fewer rental units in the District.)

There are more than 73,000 rent controlled units in D.C., according to a 2020 report by the DC Policy Center, which only looked at buildings with five or more units. “The universe of small, rent-controlled buildings is one that we don’t know much about,” says DCPC Executive Director Yesim Sayin

The law also requires landlords to disclose the rent-control status and rent histories to new tenants. If tenants discover that they have been charged more than the law allows, the RHA says they can petition for a refund and reduction in rent. But the three-year statute of limitations begins to run as soon as a tenant starts paying the increased rent, regardless of whether the landlord has disclosed a unit’s rental history. That means if a tenant finds out they’ve been overcharged after three years, they are out of luck.

That’s the situation that almost played out in my building after Enzel and his partners bought it through a limited liability company. Fillings with DHCD show that in May 2018, Enzel and his partners, through their 2523-13 LLC, raised rents for the other six units in my building by an average of $760 each per month. None of my neighbors knew their units were rent controlled when I contacted them in January of 2022. The COVID-19 public health emergency temporarily extended the statute of limitations for filing rental petitions with DHCD, so several of my neighbors were able to challenge the rent increases. (Some of the tenants, who no longer live in the building, settled their petitions with the landlord, but petitions for remaining tenants are pending.) 

I also reached out to tenants in other buildings that Enzel owned or owns through various limited liability corporations and discovered the same pattern of incorrect filings, large rent increases, and tenants who were kept in the dark.

1441 Girard St. NW. Credit: Darrow Montgomery Credit: Darrow Montgomery

Laura Treat was a tenant at Enzel’s former building at 1441 Girard St. NW and was shocked when I contacted her last year to ask if she knew her unit was rent controlled. In the four years that she lived in the building, from 2015 to 2019, she says, she had not received a single rent-control disclosure. Rather than raise her rent with the required rent increase forms, which would have alerted her to her unit’s rent-controlled status, she says Enzel raised her rent by asking her to sign new leases, which she shared with me.

Treat only discovered that she had been overcharged in 2022—well beyond the three-year statute of limitations that started running when she first moved in and paid $1495 a month for a one-bedroom apartment. The last registered rent for her unit before she moved in was $907. She now has no recourse, and the inflated rent became the baseline for the next tenant.

Kidist Mekonnen moved into the building at 5740 13th St. NW with her twin toddlers in 2015 (2523-13 sold the building last month.) When she moved in, the rent for her one-bedroom apartment was $1,400, but because she never received a tenant disclosure, she was unaware that the last registered rent, in 2013, was $616. By the time the single mom discovered that the unit was rent-controlled in 2020, it was too late. “It made me feel bad because it’s very unfair,” she says.

5740 13th St. NW. Credit: Darrow Montgomery

“Landlords illegally fail to disclose the rent-increase history, and then argue that when those tenants eventually figure out that their rents are illegal, it’s too late for them to bring a challenge,” says Marc Borbely with the D.C. Tenants Rights Center, a law firm that exclusively represents tenants at affordable rates. (Borbely is representing my neighbors in their petitions.)

Landlords are required to register their rental units, including the rates, with DHCD’s Rental Accommodations Division. Rates for occupied rent controlled units generally can only increase once per year by 2 percent plus the rate of inflation. But DHCD staff don’t verify that the figures landlords list on their filings comply with the law, as Harry Gural, president of the Van Ness Tenants Association, knows all too well. “D.C. has laws on the books that appear to be pro-tenant but the District doesn’t enforce them,” he says.

Starting in 2017, Gural exposed his landlord’s use of rent concessions to charge excessive rents. The landlord, Equity Residential Management, LLC, misled tenants by giving them an undisclosed discount, or “concession” when they signed their leases. But when the company wanted to increase the rents, they calculated the increase based on the higher rate, rather than the discounted rate, resulting in monthly increases of up to $1,500.

After he reviewed the building’s RAD registrations, Gural discovered what he believed were implausibly high rents registered for his building. In February of 2017, he emailed DHCD’s Keith Anderson, asking if the agency verifies that rental rates submitted by landlords comport with the law. Anderson (who is not the Keith Anderson currently serving as deputy mayor for operations and infrastructure of the same name) replied in an email, saying “historically, RAD has/does not perform a review of rent adjustment filings for rent calculation accuracy.”

Gural asked for clarification in a follow-up email, and still Anderson replied: “No. RAD doesn’t check the math. If there’s an obvious mistake that’s detected on the face of the document when filed, such as the wrong [consumer price index] percentage, a typographical error or a simple math miscalculation (2 + 2 = 5), the mistake will be corrected at the counter.” DHCD has not responded to a list of emailed questions about its enforcement of the law and regulations.

Borbely is also familiar with the ways in which landlords maneuver around the seldom enforced rent-control law. 

“Many many landlords in the District are flagrantly violating rent control laws, and they usually get away with it, because not enough people are checking that rents charged are lawful,” Borbely says. Because the law requires tenants to prove that a landlord acted “willfully” (a high legal burden), “it often makes financial sense for a landlord to charge illegal rents,” he adds.

Joel Cohn, legislative director for the D.C. Office of the Tenant Advocate, agrees that the burden of proof to show that a landlord acted willfully—or with specific intent to violate the law—is a high standard for tenants to meet. 

***

Some landlords use “reconfigured” or renovated units to unlawfully raise rents.

In the rent-controlled building at 1635 6th St. NW, for example, rent increased more than 100 percent between April 2022 and April 2023, according to the building’s filings with DHCD.

Rudy Ramos moved out of that nine-unit building when the new owner, 1635 6th Street LLC, purchased it in April of 2022 and offered tenants a buyout to vacate.

1635 6th St. NW. Credit: Darrow Montgomery

The vacate agreements signed by Colin Thomas, managing member of Thomas Development LLC, offered tenants up to $80,000 per unit, with the opportunity to reinvest the buyout money as an equity ownership interest in the building. According to Ramos, all of the tenants moved out, but some tenants reinvested their payments with Thomas.

When 1635 6th Street NW LLC finally filed the rent control registration with DHCD in April of 2023 (nearly a year later than required by law), the rents, which previously ranged from $815 to $1,779 in 2022, had increased to between $3,000 (for a two-bedroom unit) and $4,800 (for a four-bedroom unit). Thomas wrote in the registration form that the landlord is entitled to set the rent on a “reconfigured unit” and cited an obscure 1989 rental housing decision in support of the increased rent. (The decision was not initially published online, and I had to specifically request it from the Rental Housing Commission.)

Rather than file a petition to increase the rents in the building, as the law requires, Thomas raised the rents on his own. Without oversight from DHCD, Thomas was able to report any amount he saw fit. Advertised rents for the building are even higher than the rents registered with DHCD, which range from $4,000 to $5,000 per month. A voucher contract I received from the D.C. Housing Authority lists the rent for one unit in the building as $3,872. 

Cohn says the rent control law’s exemption for “new construction” only applies if new units are added to a building. The exemption doesn’t apply if a unit is divided up into more bedrooms. “Simply converting a one-bedroom unit to a two-bedroom unit does not add new units to the building … Thus, it appears the landlord practice you describe is unlawful under current law,” Cohn says via email.

New York’s Division of Housing and Community Renewal recently amended their Rent Stabilization Code to close a similar loophole for “reconfigured” units by eliminating the right to set the initial rent in a “reconfigured” rent-stabilized unit.

Ramos, for his part, says “the new rents are absurd.” Despite the renovations, Ramos says he has no interest in returning to his old unit, even if it was offered at his original rent. “It’s the same square footage and tinier bedrooms,” he says. 

Neither Valerie Cook, who is listed as the beneficial owner for 1635 6th Street LLC and whose listed address is associated with an Alabama-based law firm, nor Thomas, returned my phone calls. Thomas did, however, testify at a June 29 hearing on the Rent Stabilization Protection Amendment Act of 2023, held by the D.C. Council’s Committee on Housing.

The legislation was introduced by Ward 3 Councilmember Matt Frumin and aims to remove the housing voucher exemption in D.C.’s rent control statute. Frumin proposed the bill following media reports that landlords and developers were targeting rent-controlled buildings and voucher holders, in part, because they knew they could receive above market rate rent from a tenant with a housing voucher. The D.C. Housing Authority, which administers the voucher program, had not been verifying that rental rates requested by landlords were in keeping with similar units nearby. As a result, DCHA overpaid landlords to house voucher recipients, often in horrible conditions, by millions of dollars every year, the Washington Post reported. DCHA began using a new “rent reasonableness” tool to verify market rates on July 1.

Thomas testified that many of the tenants at 1635 6th St. NW reinvested their buyout payments with him. “We came up with a creative structure where the TOPA buyouts were considered as equity,” he said during the hearing, adding that “the tenants would be investors in the building.” He cautioned that “the tenants will lose all their equity” if the bill passed.

Thomas and other landlords who testified at the hearing spoke in opposition to the bill and described its potential consequences in apocalyptic terms, claiming the bill would create zombie buildings and cause catastrophic bankruptcies. Landlord Phil Simon claimed that “if DCHA will not pay market rate, housing providers will not take voucher tenants. This bill which removes the exemption, will lead to redlining. Voucher tenants will not have access to high opportunity neighborhoods.” Barry Madani, CEO of Solid Properties LLC, agreed that “removing the voucher exemption will likely trigger a city-wide movement among landlords to circumvent voucher tenants in favor of market tenants through any means necessary.”

When a landlord leases a rent-controlled unit to a tenant with a housing voucher, the unit is temporarily exempt from rent control, and landlords can charge market rate. But they also must file the exemption with DHCD.

When a voucher tenant leaves, the unit should be promptly returned to rent-control stock, and the new rent should be based on the rate before the voucher holder moved in, according to the RHA. After the exemption ends, Cohn explains, the rent increase is capped at the last rent amount on file before the exemption took effect plus all yearly increases that the landlord would have been entitled to and an additional 10 percent in lieu of missed vacancy increases.

But a comparison of DCHA voucher contracts and DHCD filings shows that landlords are also failing to properly register for government subsidy exemptions and instead report the higher voucher rents as the rent-controlled rate. This theoretically allows the landlord to charge a higher rate after the voucher-holder leaves the unit. And down the road, the voucher rates can become baked into the rent history of the unit.

DHCD could track which landlords need to file for subsidy exemptions using information from the D.C. Housing Authority. But while housing authority shares information about project-specific vouchers with DHCD (that is, vouchers that are attached to the unit, not the tenant), the agency does not share information about tenant-specific vouchers (those that a tenant can use on any unit in the city), according to DCHA’s Chief Operating Officer Rachel Molly Joseph. The lack of communication makes it nearly impossible for DHCD to verify which landlords qualify for subsidy exemptions.

Hammere Gebreyes, DCHA’s interim senior vice president of the Housing Choice Voucher Program, testified at the June 29 hearing that DCHA is not able to verify if a unit is rent controlled.

Gene Santomartino is co-founder of Rent Control Consultants, a company which provides rent control compliance services for over 100 property management companies in D.C. He says that since December 2021, when the Rental Housing Commission amended their regulations, it’s clear that DHCD wants companies to file paperwork when a rent controlled unit “comes on/off a subsidy program.”

***

Some landlords are able to evade rent control restrictions by listing rental units on platforms such as Airbnb and charging higher rates than the law allows. While many consider Airbnb a short-term rental platform, it can also be used to advertise and lease long-term stays. Unless a unit is a long-term, market rate rental, the unit would either fall under the short-term rental law or the rent control law.

The short-term rental law has several requirements, including that the property must be licensed with DLCP, must be owned by an individual, and must serve as a homeowner’s primary residence. The law also restricts all stays to 30 or fewer consecutive nights.

2800 Connecticut Ave. NW. Credit: Darrow Montgomery

When Nathan Thomas rented an Airbnb unit at 2800 Connecticut Ave. NW for about a month starting in October, he didn’t know that the apartment was rent-controlled. At $5,400 a month, “I thought it was a little expensive for how old the building was, but I liked the neighborhood,” he says.

It wasn’t until he researched his unit on the FileNet database after I contacted him that he realized he was paying nearly double the rent for his unit registered in 2022. The building was purchased by 2800 Connecticut Avenue Owner LLC in 2022, but it took some digging for me to find the human owner.

The sole member of 2800 Connecticut Avenue Owner LLC is Connecticut Avenue Investors, LLC. Its managing member is Stanton Park Inc., whose president is Lee Kenna.

Back in July, I emailed Kenna with questions about the drastic increase in the rents he registered with DHCD. For example, the rent in one unit in the Connecticut Avenue building increased from $1,256 in 2022 to $3,977 in 2023. At the time, Kenna replied that “after we received your email, we reviewed our filings and found an error. We have filed to correct it.” 

But the new registration on FileNet doesn’t list any of the rental rates for the building, and Kenna did not respond to my follow up questions asking how much rent he’s charging. As of November, the units were advertised and rented for much higher rates than allowed under the law. One unit in the building was advertised on Airbnb for $7,066 per month.

On hotpads.com, five units in the building are advertised for between $4,650 and $5,600. Stephen Horst, whose number is listed on several of the ads for 2800 Connecticut Ave. NW, said “no comment” when I called and asked about the drastic rent increases. 

Nicole Pace, the COO of Sojourn DC, is also listed as the contact for some of the advertised units at 2800 Connecticut Avenue NW. A representative for the luxury temporary rental service advised that I contact Pace via email. I emailed her questions about the advertised rental rates, but she has not responded.

Thomas says he feels misled. The practice of concealing the rent control status of an apartment “is really crappy and seems like a loophole so they can pocket people’s money,” he tells me.

Like Thomas, Tyler C. rented a unit at 1912 S St. NW for three months through Airbnb, and had no idea the furnished apartment was rent-controlled. Tyler C. says he paid about $2,600 per month in rent—almost $1,000 more than the last registered rent for the unit, according to filings with DHCD.

1912 S St. NW Credit: Darrow Montgomery

The building was purchased by 1912 S LLC in November of 2021, and according to DLCP, Waggaman Corporation is the sole beneficial owner. Catherine Hsu, who is listed as the beneficial owner for Waggaman Corporation, says that she is not the owner, and declined to reveal their identity. The deed of trust for the property is signed by Kenneth Vogel, the sole member of Klein KV LLC, which in turn is a member of 1912 S LLC.

Vogel did not respond to all of my specific emailed questions about the Airbnb rentals at 1912 S St. NW, including whether he believes the building is exempt from rent control. “The properties are operated legally,” he writes in one email, and later adding: “The management endeavors to strictly follow the law. We do not accept any short term tenants.”

A copy of the house rules that Tyler C. received from the owner includes the disclaimer that, “THIS PROPERTY IS NOT SUBJECT TO DC RENT CONTROL.” He says he never received the legally required disclosure about the building’s rent controlled status that would have alerted him to his rights. 

Airbnb says in an email that they have removed the listings at 1912 S St. NW from their platform, in accordance with their policies. “We are deeply committed to responsible hosting and actively collaborate with the Department of Licensing and Consumer Protection (DLCP) to help ensure adherence to local short-term laws,” an Airbnb spokesperson says via email.

One of the long-term tenants at 1912 S St. NW recently succeeded in challenging a rent increase, and discovered along the way that the building was improperly receiving a subsidy exemption.

J.S., who requested to be identified only by their initials, filed a petition with DHCD in April, alleging that their landlord did not properly register the unit with DHCD and illegally increased their rent. (In full disclosure, J.S. and I developed a friendship after I contacted them earlier this year.) While the petition was pending, J.S. contacted DHCD Rent Administrator Lauren Pair in August to check the status of that petition, and they learned that 1912 S LLC had received a government subsidy exemption for the entire building even though only one unit was occupied by a voucher holder.

“You are correct that the registration filed on 08/09/2023 is incorrect—my staff member erroneously granted an exemption for the entire building,” Pair said in an email, adding that she would fix the mistake. But if J.S. had not intervened, the error might have gone unnoticed.

After J.S. filed their petition challenging the increase in their rent, the landlord withdrew the rent increase and refunded their previously paid overcharges. Pair, who was also in contact with Waggaman about the rent increases, wrote to J.S. in an email: “I told them to cancel the rent increase notice altogether—that they are not entitled to send tenants anything unless/until the building is registered.” Pair added that she found the whole situation “a little puzzling given Waggaman’s experience with navigating the rent control system.”

“I know it might be intimidating to go up against your landlord, especially with something as important as where you live,” J.S. says by way of advice for tenants in D.C. “But tenants should know that D.C. law is on their side if they choose to take action.”

***

Failure or delay in registering rental units with DHCD is another common issue. Although Sabrina and Ronald Vaughn purchased the building at 224 21st St. NE in 2003, they have never registered the building with DHCD. It’s unlawful to increase the rent if the building is not registered; that failure also allows tenants to challenge rent increases beyond the three-year statute of limitations.

In a petition filed in March this year, the building’s tenants call the Vaughns sophisticated real estate investors and “rent-control scofflaws” who are charging illegal and excessive rents. On July 13, 2023, an administrative judge with the Office of Administrative Hearings ordered the Vaughns to refund $28,985.47 in illegal rent increases (plus interest) to the tenants. (Tenant petitions can take years to conclude, so this is a preliminary win for the tenants.)

A comparison of DC Office of Tax and Revenue sales records and DHCD registrations shows that the Vaughns are just one of many landlords that fail to register with DHCD or who register years after they purchase rental properties (registration is required within 30 days of ownership).

Although the Department of Licensing and Consumer Protection website claims that an applicant for an apartment business license must register with DHCD before the business license will be issued, landlords like the Vaughns are routinely issued business licenses without registering with DHCD, according to my research. DLCP did not respond to my emailed questions about this discrepancy.

Under the current law, landlords only face penalties for breaking the rent control law if the violations are “knowing or willful,” which is a high legal standard to meet. Given the regularity with which Borbely says landlords violate the law, he believes they should face penalties regardless of their intent.

“The burden should be on the landlords to do this right,” Borbely says via email. “Otherwise, it’s in their best interest NEVER TO FIGURE OUT HOW IT WORKS, so that they can honestly say they didn’t know any better.”

Zahnd, of Legal Aid D.C., says that “protecting rent-controlled units and maintaining affordable housing is a larger systemic interest for the District beyond individual tenants and should be a real priority for the District.”

A spokesperson with the Office of Attorney General advises tenants who believe they may have been subjected to deceptive housing practices to contact the their Office of Consumer Protection at [email protected] or through their online complaint form.

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