The Profit in Decay

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Wrong Side of Renewal

In recent years, landlords in the District have emptied hundreds of apartment buildings and taken steps to convert them to condominiums. Tenants say they have been pushed out, sometimes by bad building conditions. Landlords say they have tenants offered move-out offers, and that tenants often report frivolous code violations for leverage in negotiations.

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"Tenants have amazing rights," said Natalie LeBeau, an advocate with the nonprofit Housing Counseling Services. "But some landlords are aggressively using building conditions to get rid of tenants. Their water is shut off. Their heat is shut off. And the next thing you know, they're gone."

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In 1980, city leaders created a law that empowered tenants in two fundamental ways: giving them the right to decide whether apartments should convert to condominiums and the right to buy their buildings before they are sold to outside bidders. In recent years, the council has toughened controls on rent and evictions and twice closed loopholes that had helped landlords sidestep tenant rights.

But the flow of vacancy exemptions continued, with 2,500 rent-controlled units lost in the past four years. In some cases, entire sections of city blocks began converting to condominiums with approval from the District's watchdog agency, the Department of Consumer and Regulatory Affairs, or DCRA.

For property owners, vacancy exemptions have paid off: They have sold more than 1,200 condominiums, with a median price of $250,000 and reaching up to $1.1 million. Because the owners were exempted from the conversion fee, they saved an average of $180,000 per building. One owner saved more than $1 million.

Exemptions were originally given only to long-vacant properties, but in 1995 the D.C. Council dropped that requirement, saying in a report that "there do not appear to be the same incentives or ability for owners to illegally vacate their rental housing accommodations in order to establish condominiums."

Since 2004, more than 200 apartment buildings have received exemptions even though city records show that they had been occupied in recent years. Not all of the owners had code violations or disputes with tenants. In some cases, tenants accepted money to move out or struck a deal to buy a condo at below-market prices. Some building owners who received vacancy exemptions said their buildings were empty when they bought them.

Lawyers and housing advocates, however, have been pointing to evidence for years that tenants have been unlawfully forced out, but the government has seldom intervened. One landlord even stated on vacancy exemption applications for two properties that tenants had left because building conditions were so bad.

By law, landlords can ask the city for permission to raise rents to cover the cost of repairs, as well as when their return on investment dips below 12 percent. But only six of the owners with vacancy exemptions did so, city records show.

At Sherita Evans's complex, the owners were cited for more than 75 violations, including leaking sinks, uncollected garbage and damp floors and walls, in the months before they were granted a vacancy exemption.

Evans had moved into the building in 2001, enrolled her son in preschool and took the nearby subway every day to her job as a human resources representative in Arlington County. She decorated her son's bedroom with train posters and became friendly with the elderly neighbors who waved hello from their porches across the street.

She thought she had finally found a home.