When Raymond J. Howar, a prominent local building owner, decided to sell an apartment house at 4200 Cathedral Ave. NW, his tenants were told that the District of Columbia's rent control system was to blame.
"It is unfortunate that the supporters of D.C. rent control, in our opinion, do not understand that rent control destroys the rent housing supply and although it might give short-term relief in lower rents, the ultimate loser is the very person it intends to help, the tenant," Howar said last month in a letter to the building's tenants. The apartment house is expected to be converted to a condominium project.
Howar's gloomy assessment of the city's rent control system - one shared by many real estate specialists - attracted considerable attention, mainly because Howar is not only a building owner. He is also a member of the D.C. Rental Accommodations Commission, the board that oversees the city's rent control program.
Howar's criticism of rent control prompted a quick retort from D.C. City Council member Polly Shackleton (D-three), a rent control advocate who represents the Northwest Washington ward where 4200 Cathedral Ave. is located. In a letter to some of the building's tenants, Shackleton described Howar's explanation of his decision to sell 4200 Cathedral Ave. as quite misleading."
"It's unfair to blame it on rent control," she said in an interview. "I don't think that's the fact."
The debate over 4200 Cathedral Ave. mirrors the controversy that has surrounded the rent control system since its start here 3 1/2 years ago. Real estate and other business groups have denounced rent control, arguing, in part, that it leads to deterioration and sales of rental buildings. Tenant groups have disputed these assertions, contending that other economic factors, such as rising fuel and maintenance costs, are to blame.
The 24-year-old luxury apartment house at 4200 Cathedral Ave., near New Mexico Avenue NW, includes 184 apartments, with rents ranging from $275 a month to $550. It owned by Howar, his brother and three sisters. Howar said his family has accepted a contract to sell the building for about $7 million, an amount he termed a "top price." Settlement is expected to take place by May 15.
The prospective purchasers, who plan to convert the building to a condominium project, include Maurice Berk and Gary and Scott Nordheimer. They are partners in a real estate firm known as Norbeck Development Associates. A fourth member of the group that plans to buy the building is Myer Feldman, a lawyer and former White House counsel in the Kennedy and Johnson administrations.
Gary Nordheimer said in a telephone interview that he expects many of the building's present tenants to purchase their apartments. Tenants will be offered reduced prices, ranging from $35,000 for a one-bedroom apartment to $90,000 for a three-bedroom apartment, he said.
Several tenants said in interviews, however, that the shift from rental to condominium would cause financial hardship, especially for elderly tenants. In general, they said, the switch would increase many tenants' housing expenses.
Howar is a former president of the Apartment and Office Building Association of Metropolitan Washington, the largest local building owners' group, which has lobbied against the city's control program. He is currently first vice president of the Washington Board of Realtors.
In an interview, Howar attributed his decision to sell 4200 Cathedral Ave. to an earnings decline that he said stemmed from the city's rent ceilings. He said the building yielded only about $25,000 in earnings last year, a return he described as inadequate. He said his family plans to invest in office buildings or other commercial ventures rather than rental housing. Such commercial buildings are not subject to rent control regulations.
Howar and his relatives have financial interests in five other apartment houses in the District. Howar said he is examining what he described as "alternative uses," including conversion to condominium, for all of these buildings. He added, however, that no further sale or conversion is imminent.
Council member Shackleton disputed Howar's explanation for his decision to sell 4200 Cathedral Ave.She said the primary factors appeared to be rising fuel and maintenance costs and the recent popularity of condominiums, rather than rent control.
In addition, Shackleton argued, a provision of the city's new rent control law, expected to go into effect later this year, would allow landlords to raise rents it 70 per cent of their tenants petition the city's rent control agency to authorize a rent increase. "This provision, of course, is designed to prevent a landlord from using rent control as an excuse if he decides to get out of the rental business for whatever reasons," Shackleton said in her letter to tenants of the Cathedral Avenue building.