Preserving Affordable Housing in the District of Columbia
By Julie Reynolds
Photographs by Patrice Gilbert

Living in the District of Columbia is an expensive proposition, particularly for renters.

According to a report issued by the D.C. Fiscal Policy Institute, the number of affordable houses and apartments declined last year by 11,800 units, while the number of high-cost houses and apartments increased by 15,400 units. Rental buildings in the District are being sold or converted to high-end condominiums at an unprecedented rate. The number of condominium conversions in the first six months of 2005 is four times the number of conversions in all of 2004.

What happens to the low-income tenants who want to stay where they are? Tenants in the District of Columbia are well represented by a host of organizations that offer practical advice and legal assistance. These providers, however, are unable to handle all the requests for assistance.

How best to recruit new attorneys to help tenants understand and exercise their rights to retain their housing? The D.C. Bar Pro Bono Program’s Affordable Housing Preservation Project, a new project begun in the fall of 2005, seeks to fill that gap and develop new ways of offering legal assistance for the preservation of low-income housing in the District.

Gentrification
In recent years the D.C. housing market has undergone dramatic changes. Most notably, gentrification has transformed whole neighborhoods to the point that only the well-to-do can afford to live there. This increased proportion of expensive housing is squeezing out many who cannot afford high rents or mortgage payments.

Much of the low-income housing in those neighborhoods facing gentrification has been snapped up by developers for repurposing as condominiums and expensive apartments. This is sad news for those people who have lived in the District for generations but now find they cannot afford to remain.

The District government’s track record in this area has been inconsistent. Mayor Anthony Williams has encouraged high-end development while also stressing the need for the preservation of affordable housing—evidently seeing no conflict between these goals. However laudable the city’s efforts, they are hardly sufficient to meet the need for affordable housing.

With gentrification slowly spreading throughout the city, even east of the Anacostia River, many landlords are looking to benefit from the shift in market conditions. The trend includes buildings in less desirable neighborhoods (in hopes that they will be next for refurbishment) and buildings in poor shape. Landlords have an incentive to turn their buildings over to developers before the market boom dries up.

Fortunately for D.C. tenants, the District has a strong set of laws protecting their rights. The Tenant Opportunity to Purchase Act requires sellers to give tenants notice of their intent to sell and gives tenants the right of first refusal when a building’s owner decides to put the building up for sale. A majority of the tenants must also approve a condominium conversion before it goes through. Additionally, with few exceptions, tenants in residential buildings constructed before 1975 are protected by rent control provisions limiting the amount of annual rent increase.

The prospect of breathtaking returns on investment has led many landlords and others involved in the real estate business to resort to circuitous means to empty their buildings so they may be sold to the highest bidder. The result, in some cases, has been the use of cunning maneuvers designed to evade the tenant protection laws that would bog down any development deal, certainly prolonging the process and possibly thwarting it altogether.

In fact, the District of Columbia has some of the most progressive tenants’ rights laws in the country. The difficulty is that many tenants have no idea that they possess these rights or are insufficiently sophisticated to fully take advantage of them.

The Perfect Match
The D.C. Bar Pro Bono Program created the Affordable Housing Preservation Project as a means of connecting low-income tenants with attorneys. The Pro Bono Program is ideally positioned to recruit, coordinate, and support tenant organizing groups, legal service providers, small-firm practitioners, and large law firms interested in offering assistance to tenant associations in affordable housing cases.

This ambitious undertaking began almost by accident.

Rebecca Lindhurst, an attorney with Bread for the City, was volunteering at the Pro Bono Program’s regular Wednesday night Law Firm Clinic when she began chatting with the program’s assistant director, Mark Herzog. “Mark and I had a conversation,” she recalls. “I told him that I was spending a lot of time on these building cases. . . . We were getting lots of calls from tenants who were in varying stages of being displaced, whether through a condo conversion, through the sale of the building, through a landlord who wanted to substantially rehabilitate a building, or the tenants felt forced out because of conditions in their building. It’s becoming more and more frequent.”

Herzog thought the work compelling and said he would investigate the Pro Bono Program’s capacity to help.

Affordable housing cases have been a staple of legal service providers’ work for some time. The extensive experience of these organizations in the field, however, has been overshadowed by their lack of resources to meet the growing needs of tenants for legal representation, especially in the wake of the recent housing boom.

Legal service providers may only be able to dedicate a certain number of hours, or one or two attorneys, to tenant and affordable housing cases. Moreover, they lack the financial wherewithal to conduct expensive, time-consuming discovery, hire expert witnesses, and so on. Thus organizations such as Bread for the City and the Washington Legal Clinic for the Homeless can be effectively outgunned by landlords and developers determined to enact their plans on residential buildings.

Filling these unmet needs was a logical fit for the Pro Bono Program, which has an extensive history in affordable housing. For years the program’s Community Economic Development (CED) Project has recruited and trained law firms to handle transactional matters for tenant associations. Its Law Firm Clinic has represented tenants in litigation matters for almost 13 years.

The Affordable Housing Preservation Project combines the resources of the CED Project and the Law Firm Clinic to provide the full range of legal services that tenant associations require to preserve their housing. Coordinating the efforts of legal service providers and private law firm attorneys is just one of the activities of the project.

Lindhurst points out that both legal service providers and law firms taking on this type of pro bono assignment can benefit from the relationship. She hoped to work that into the project from the outset.

“In the past we’d hang around but not actually be part of the litigation,” says Lindhurst. “But in order to get further litigation experience as a legal clinic, we decided that it was a great model to co-counsel . . . that’s been a really successful model for us. So in talking about all this with Mark, I said it would be really great if we could get the Pro Bono Program involved and get some law firms involved through them.

“But at the same time, we don’t want to give up ownership of these cases,” she adds. “We want to continue to work on these cases with the law firms so that we can get experience in complex litigation, something beyond the typical individual landlord–tenant case.”

The Affordable Housing Case
One of the attractions of affordable housing cases is how extraordinarily interesting they can be. The broad spectrum of issues that could be implicated in these cases present opportunities for lawyers of every background. Some matters may be comparatively straightforward and involve only closing the deal. Others may warrant significant litigation. Helping create a tenant association; serving as a go-between in negotiations with developers, landlords, and the tenant association; and representing tenants in landlord–tenant court are just some of the tasks that lawyers in the affordable housing field may be called upon to address.

A landlord might be trying to convert his building to condominiums. The law states that tenants must approve any condominium conversion in a currently occupied building. To avoid this hurdle, the landlord might employ a variety of stratagems to empty the building, such as buying off Spanish-speaking tenants for a pittance, giving them false or misleading information about their rights, threatening them over their immigration status, and suing them in court without foundation. An attorney taking on the case has the opportunity to protect all the residents of the building from being displaced.

A tenant association might need to be formed and formally incorporated. In the case of tenants wishing to buy their building, the association would require legal advice and assistance in securing a developer or some other financial means to make the purchase. The attorney could assist with the purchase, loan, and development documents.

This process calls out for a variety of legal expertise. According to John Nields, a partner at Howrey LLP and chair of the D.C. Bar Pro Bono Committee, “This is what law firms do all the time.” Legal service attorneys may have an understanding of affordable housing issues, but law firms know how to negotiate major deals, and have the depth of experience and accessibility to resources to see these matters through to conclusion in a manner that best serves the tenants’ needs.

A case in point is the one in which Lindhurst participated, involving Kelsey Gardens, an apartment complex across the street from Bread for the City’s northwest office. The owner wanted to end his Section 8 contract, demolish the building, and erect a large high-rise in its place, displacing families. Antonia Fasanelli of the Crowell & Moring Affordable Housing Initiative at the Washington Legal Clinic for the Homeless approached the law firm of Hogan & Hartson L.L.P. about participating in the case. A communal effort to save the building began. Hogan & Hartson, Bread for the City, Washington Legal Clinic for the Homeless, and local attorney Elizabeth Figueroa continued to consult and assist with tenant meetings. Manna CDC also served as a tenant organizer. With a motion pending before the Superior Court, the case has not yet been decided, but the tenants are still in their homes.

Organizations like Bread for the City frequently come across such cases through their ordinary intake systems. “Unfortunately, a lot of tenants don’t know their rights,” says Lindhurst. “Something I hear over and over and over again from tenants is ‘My building was sold, I have to move.’ ” Which, of course, is absolutely untrue, but these are the signals that lead to the opening of an affordable housing case.

Such cases have traditionally been handled by legal service providers, but with their increased frequency and complexity, outside assistance from law firms is often necessary to ensure a successful outcome.

Landlord Strategies
For all those landlords that scrupulously follow the law with regard to their tenants’ rights when selling a building, there are many others willing to go to extra lengths to circumvent those rights. After all, the tenant notice-of-sale-and-opportunity-to-purchase requirement can significantly delay the process of selling and developing a property.

The strategies used by building owners, says Fasanelli, “often depend on what the end goal is for the owner. Is it to convert the building to a condominium, is it to sell it empty, is it to get out of a federally subsidized housing program?”

According to Fasanelli, the techniques some landlords have used include harassment, threatening immigrants with calls to Immigration and Customs Enforcement, making “absurdly small” offers of money for tenants to move out, and filing retaliatory lawsuits in landlord–tenant court.

Until recently, another one of the favored means for selling the building without triggering the tenants’ right of first refusal was the so-called 95/5 transaction, wherein a 95 percent interest in the building would be conveyed to the new purchaser and a 5 percent interest kept by the original owner. At some agreed-upon future date, the remaining 5 percent interest would be conveyed to the new, and now sole, owner of the building. Thus neither conveyance could be called a “sale” under the controlling law, the D.C. Rental Housing Conversion and Sale Act. Housing advocates asserted that the 95/5 transaction constituted an end run around the rights of tenants as enshrined in D.C. law.

That was also the position taken by Ralph Albright and Henry Liu of Morgan, Lewis & Bockius LLP in their representation of the tenants of 907 Euclid Street NW. The 13-unit Columbia Heights apartment building was conveyed to a new owner via a two-part sale in January 2003 and March 2004. The tenants, who were never given notice or the opportunity to purchase the building, wanted the building offered to them at the same price and on equally favorable terms.

Albright and Liu came to the case through their firm’s pro bono department, which had been informed about it by the D.C. Bar Pro Bono Program. The case demonstrates what is at stake for tenants and how many landlords fail to follow the statutory provisions guaranteeing their tenants’ rights. The tenants are serious about exercising their rights, they say, and have been wronged in this situation.

The D.C. Council adopted the tenants’ position in May 2005 with a new law clarifying the act. This amendment, which went into effect in July 2005, classifies 95/5 transactions and any variant thereof as a sale for the purposes of the act. Unfortunately for those cases that predate the new law, the D.C. Court of Appeals decided in March, in Twin Towers Plaza Tenants Association Inc. v. Capitol Park Associates, L.P., that the 95/5 does not constitute a sale under the older version of the act. The holding in Twin Towers is not dispositive for the tenants of 907 Euclid Street, however, and Albright and Liu will continue pursuing their case.

Other Housing Challenges
Certainly not every case involves a landlord antagonistic to the tenants or one who has resorted to dirty tricks to empty the building. Christopher Dove and Caroline Gaudet worked on such a case beginning in 2004, when it was referred to their firm, Steptoe & Johnson LLP, by the D.C. Bar Pro Bono Program.

Most of the tenants in this case had been living in their Mount Pleasant building for a long time, upwards of 20 years, so it was important to them that they be able to remain where they were. Nor could they afford a significant rent increase. When Dove and Gaudet took the case, the deadline for when the tenants had to match the contract to purchase the building was fast approaching.

Notwithstanding the time constraints, Dove and Gaudet were able to meet with the tenants and work with a lender to come up with a contract. “We were down to weeks to arrange everything,” recalls Gaudet. “At the end of the day, we—I think to the owner’s surprise—were able to come up with a matching contract and the deposit.”

Dove took the case with him when he later joined Cadwalader, Wickersham & Taft LLP. He is now working on securing permanent financing and helping the tenants transition into being their own landlords.

The D.C. Bar Pro Bono Program also referred to Arnold & Porter LLP partners Michael Rufkahr and Blake Biles a nonadversarial case in 2004. The tenant association at Faircliff Plaza West, a sprawling apartment complex in Columbia Heights, was negotiating with a developer to purchase and renovate the property while keeping its affordable housing status. The developer wanted to bring the association into the partnership and to reinvest some of the funds it would receive as part of the development back into the complex itself.

The representation initially began with the tenants’ request that the attorneys look over and evaluate the proposed partnership agreement. Rufkahr, a tax lawyer, was drawn by the opportunity to perform pro bono work that didn’t involve litigation.

As the representation progressed, however, Rufkahr and Biles began offering assistance to the tenants in other aspects of the development project. The tenants were less concerned with the money being offered to them than they were with the renovation of the apartment complex, which had fallen into deplorable condition and required extensive repair.

The developer, of course, wanted to renovate the complex in the most cost-effective manner possible. The tenants were more interested in the time line of the renovation and what improvements would be made, such as the installation of secured access to buildings and the replacement of appliances. Getting both sides to recognize each other’s concerns was challenging, calling upon negotiation skills that both attorneys felt prepared to offer.

“There was a process of not so much legal representation—though we were counsel for the tenant association—but working as a representative and being helpful in dealing with the developers,” says Rufkahr. “We were also able to address those issues from a business standpoint.”

Once the renovations were finished, the tenants created a new organization, the Faircliff Plaza West Community Center Association, which oversaw the use of the funds provided by the developer. The project’s centerpiece was the development of a community center on the premises, with laundry and computer facilities and activity rooms, and the hiring of a coordinator.

Security and Stability
For tenants, the ideal outcome of an affordable housing case is to be able to keep one’s home. For Keonie Carter, an active member of the Faircliff Plaza West tenant association, it would be that current housing remain affordable.

Some tenants, depending on the case, also receive the added benefit of actually owning the building in which they live and having a greater voice in how the building operates. That security and stability not only improve the lives of individuals and families, but also help maintain the diversity that has made the District of Columbia an appealing place to live.

As with all pro bono participants, the attorneys who work on these cases are pleased by the opportunity to make a profound difference in the lives of others, in helping them secure something so fundamentally important as a home and saving them from possible eviction. The work of the Affordable Housing Preservation Project, says Albright, “gives us the opportunity to help people of limited means.”

Dove has similar sentiments. “Even now, every time I see [the tenants], they thank me for coming to the meetings and for explaining what’s going on. We had a little party when we closed on the building, and the tenants were just elated because it was a moment in their lives when they felt that they had a little more control over their living situation.”

“Without some help, a lot of times they just don’t stand a chance,” says Rufkahr. “I think it’s satisfying knowing that we’ve been able to give someone an opportunity to get to a better place.”

The various facets of affordable housing cases make them a worthwhile challenge to law firms. Moreover, unlike many other kinds of pro bono cases, they offer the opportunity to engage transaction specialists as well as litigators.

“To do affordable housing legal work effectively,” says Biles, “you need real estate lawyers, corporate lawyers, litigators, and so on.” Tenants wanting to purchase their building can’t come up with the money themselves, and so will have to connect with a developer. “Who knows how to pair up with developers?” he asks. “The real estate lawyers.”

The D.C. Bar Pro Bono Program’s Affordable Housing Preservation Project, as it grows into its role, will be increasingly instrumental in coordinating the resources needed to preserve the District’s cultural and socioeconomic landscape.

“One role the Pro Bono Program tries to play, and does very well, is bringing resources together to tackle a problem, and finding effective ways for marshaling those resources,” says Nields. “In this project the partnerships between law firms and legal service attorneys are a powerful combination. The project will provide whatever support those teams need to make a difference for their clients.”

Building on past success, the project provides the organization, coordination, and recruitment needed to serve tenants and tenant associations in their efforts to retain their housing. Moreover, it is in a perfect position to evaluate and determine future needs and how best to address them.

“There’s a wonderful diversity in D.C., but that diversity exists because of the ability of people of multiple income levels to be able to reside in the same city,” says Fasanelli. “It’s my job and the job of many other legal service attorneys to make sure that that type of diversity exists.”

“The real hope is to prevent the displacement of tenants and maintain the affordability of the units,” says Lindhurst. “As we all know, the amount of affordable housing in D.C. is dwindling ever so rapidly; so much so in the last few years that our clients are being forced out. We want to do what it takes to keep these units affordable.”

For more information about the D.C. Bar Pro Bono Program’s Affordable Housing Preservation Project, contact Mark Herzog at 202-737-4700, extension 206.

Julie Reynolds is a staff writer for the D.C. Bar.