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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DCRA quickly granted the vacancy exemption even though the tenants' association at the complex had registered with the agency just weeks before. When Becker pointed out the discrepancy, the agency rescinded the exemption.

In the meantime, another family moved out. In March 2006, Litman sent a letter to tenants, saying, "If you want to stop us from converting . . . what do you gain? Sure, I'll patch and paint your apartment, move in Section 8 tenants and just rerent the complex. If that is the victory you seek, then be careful, you might get it."

Two months later, the owners struck a deal with the remaining tenants, including Evans, paying their moving costs or allowing them to stay as renters in renovated condominiums.

DCRA reissued the vacancy exemption, paving the way for the owners to sell 46 condominiums so far, drawing almost $9 million in sales and saving $450,000 on the conversion fee.

Litman and Madeoy said they did not know why their attorney told DCRA the buildings were vacant while tenants were still living there. "Clearly, it was an error," Litman said.

He said tenants had been treated fairly, with move-out offers that included $1,000 and a month's rent at a new apartment complex. Litman said he had good reason to pay the money: The partners saved hundreds of thousands of dollars on the condominium conversion fee.

"Thirty thousand [on move-out offers] or $400,000 [in fees]? Let's see," Litman said. "I didn't go to business school for that one."

Records show that Madeoy has an interest in companies that own at least eight other apartment buildings in the city, several with a history of building code violations.

At 7436 Georgia Ave. NW., LaTreaviette Prailow and her husband lived for months without heat, huddling under blankets to stay warm. The heating unit caught fire in December 2006. It wasn't fixed until more than nine months later. Still, Prailow wants to stay because she fears that she won't find another affordable apartment close to public transportation, which her husband uses to get to his housekeeping job at George Washington University.

Tenants have resisted taking an offer of three months of free rent if they move to a neighboring building.

"I'm leaving it in God's hands," said Prailow, who is working with housing advocates from the nonprofit Latino Economic Development Corp. "I'm praying He puts me somewhere safe."

At two other properties, Madeoy claimed the buildings would be "completely renovated and then sold as a private home," telling the city he planned to vacate the buildings. At one of the buildings, he is now developing 14 condominiums at $299,000 apiece. He sold the other building once tenants were gone for $1.4 million, about $1 million more than he had paid in 2003. The new owner received a vacancy exemption and told DCRA she plans to sell condominiums.

Madeoy said he had planned to sell that building to a private owner but the deal fell through. At the other building, he said, he ended up giving tenants money to leave or deals to return as renters or buyers.

"We followed the law to the letter," Madeoy said, adding: "I'm trying to provide as much affordable housing as I can."

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Records show that other landlords have delivered a flurry of eviction notices, often to tenants who had never received notices before. Housing advocates and lawyers say the notices can be a baseless form of harassment, but tenants must go to court and defend themselves. Some simply give up and move out.

On Brandywine Street SE, David Tolson's company paid $6.1 million in 2005 for a series of apartment buildings that had been cited for hundreds of code violations. Only about 18 families were left in a complex of more than 100 units.

A manager for Tolson sent a letter to tenants saying the company "wants to vacate apartments" and offering buy-out payments. Once again, tenants resisted, saying the offers were sketchy. They also complained that repairs weren't being made, with rats still running through their apartments. Within months of Tolson's buying the complex, tenants began receiving eviction notices for nonpayment of rent. Records show that in several cases, Tolson settled with tenants, paying them to leave.

By 2006, most tenants had left, with one striking a deal to stay on as a renter. When Tolson applied for vacancy exemptions, he said the property had been vacant when he bought it.

Tolson sold $14.9 million in condominiums, saving nearly $750,000 on the conversion fee.

"I thought, 'That man is sitting back there laughing at us,' " said tenant Yvania Flakes, a data entry specialist, who negotiated a deal to remain as a renter. She has since moved to Virginia. "I was hearing stories every day from tenants about how if they didn't move out, they'd get evicted. [Tolson] managed to get everybody to run."

Tolson, who had received a vacancy exemption on an earlier property as well, countered that the Brandywine project has been a success, with the buildings cleaned up and turned into affordable housing. He acknowledged that telling the government the buildings were vacant when he bought them was "a mistake," but he said that the eviction notices were legitimate and that he made repairs.

"Some of the tenants knew that we were emptying the project and just quit paying the rent," he said. Tolson said he didn't ask tenants to vote on a condominium conversion and opted instead to empty the buildings because "then the conversion tax doesn't apply." He said he gave tenants the chance to stay on as renters, but most took money to leave. "It's a low-income neighborhood, and they were happy to have that money," he said. "It was no big deal to get them vacant."

At 1417 N St. NW, tenants also resisted a condominium conversion. A company hired by the owner had approached them in 2006 about converting, also offering money to move out or the chance to stay as renters in the new condominium complex. Tenants instead called on the owner to make building repairs.

After the elevator in the building broke down last summer, tenants protested in the lobby, where they served lemonade. Shortly after, an attorney for the owner sent a letter to two tenants who had organized the protest, saying that they had breached the terms of their tenancy for "loitering in the common areas," among other things.

"For a minute, your heart stops," said tenant Silvia Salazar, who had worked with the tenants who received the letter. "You think, 'They're coming after me now.' "

Erik Bolog, managing partner with Tenacity Group, the asset manager for the owner, said that the company respects the right of tenants to meet but that the protest in the lobby wasn't properly scheduled and raised safety concerns.

"If by chance there was a fire in that building and people could not get out because a table was in the way, then people would be critical of the ownership for allowing that to be going on," Bolog said. " . . . If lemonade spills on the floor and people slip, it becomes a safety issue."

Bolog said the owner is repairing the elevator, a lengthy process because its age makes it difficult to get replacement parts.

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Across the city, tenants are still locked in battles with landlords pushing to empty buildings. A vacant building not only qualifies for a vacancy exemption but is also often worth more on the market because a new owner can easily convert to condominiums or bring in tenants at higher rents.

At 1352 Longfellow St. NW, owner Pamela Coleman, a Providence Hospital doctor, hired a property manager who in April 2005 warned tenants in a letter that there may not be heat and water the following year: "It is going to become a health hazard and the city will shut [the building] down if that happens."

Two months later, the manager sent another letter to tenants: "We cannot keep the hot water heater going and the heat for next winter will be non-existent." On the same day, she wrote: "Your landlady will pay you $5,000 to vacate if you leave ASAP."

The manager told tenants that Coleman couldn't afford to make the repairs. Records show that Coleman never applied to raise rents to cover the costs.

Tenants said the apartments had no heat or hot water for much of 2004, 2005 and 2006. They directed a steady series of complaints to DCRA, which confirmed the problems. By February 2007, the pipes had deteriorated so badly that the water stopped working altogether.

When that happened, DCRA determined conditions were unsafe and forced the two remaining tenants to move, emptying the building. Coleman, who has not applied for a vacancy exemption, did not respond to calls and letters seeking comment.

"It was terrible, terrible," said tenant Asrat Ferede, who lived in the building for 12 years, including two years without a working refrigerator. In 2006, records show, Ferede received an eviction notice for nonpayment of rent, even though he had copies of his cashed checks showing that the rent had been paid.

"She was the coldest landlady I have ever seen," Ferede said.

He sued for wrongful eviction and this year received a $153,000 settlement, which his attorney said will likely help Ferede buy a place to live.

In Southeast, Angelia Chatman-Moat, a data analyst at Howard University, is one of fewer than 30 tenants left in a 108-unit complex at the Oak Hill Apartments on Wheeler Road SE, where boarded-up windows bear the spray-painted message: "Keep out."

In late 2006, a company owned by developers Aubrey Carter Nowell and Patrick Strauss bought the complex for $6 million. In mid-2007, records show, they started offering money to tenants to move out.

About the same time, they proposed to the city a redevelopment plan for the area, which would include the school property next door. They submitted the proposal with Meridian Hill Advisors LLC, a real estate investment firm whose managing director is Adam Kreisel, who served as assistant to President Bill Clinton's longtime chief of staff, Leon Panetta.

Dozens of tenants left. But Moat, who pays $769 a month in rent, feared she could not afford a more expensive apartment on a $28,000-a-year salary.

In February 2007, DCRA documented several dozen code violations at the complex, but inspectors never returned to inspect the whole complex, even after tenants sent a 25-page report last summer describing the lingering problems. DCRA officials said the property manager and tenants reported that repairs had been made.

Strauss said he and his partner responded to repair requests. He said the plan to redevelop the school site with Meridian Hill has been dropped but the partners are offering buyouts to tenants so the Oak Hill site can be renovated.

"After decades of neglect by previous owners, the Oak Hill Apartments are in need of a major renovation," Strauss said.

Moat said tenants are worried: The complex still needs repairs, and last fall, more than a dozen tenants received eviction notices for nonpayment of rent. Nine cases were dismissed in court after a lawyer with the nonprofit Bread for the City stepped in and the tenants showed that they had paid.

Moat fears that without more help from the city, she might be the last tenant left in an abandoned apartment complex that once bustled with life. Still, she refuses to go.

"I'm holding out because this is where I can afford," she said. "This is my home."

Staff researcher Meg Smith contributed to this report.