Twenty years ago, the owners of the Embassy Apartments started the ball rolling to convert the Mount Pleasant building into a condominium, as was happening across the city. Tenants were notified, papers were filed. Then nothing happened.
But now, with real estate prices soaring again, the elegant though somewhat faded stone building at 16th and Harvard streets NW is the subject of a bitter fight and a tangle of lawsuits. In November -- out of the blue, tenants said -- the building's owner notified them that the Embassy will become a condominium and that they had to leave within four months to allow renovations to take place.
Most of the tenants were not living in the building during the city's wave of condominium conversions a quarter-century ago. Many said they had not been told when they moved in that their units might be converted. They fought back, and, to their surprise, the D.C. government joined their side.
The battle illustrates a new assertiveness by the city's Department of Consumer and Regulatory Affairs (DCRA) to weigh in on the side of tenants fighting conversions. This more forceful attitude could have ramifications for tenants and landlords well beyond the Embassy. It also shows what is at stake in the city's scorching real estate market, where half-million-dollar condos are growing in number and modestly priced rentals shrinking.
The dispute has not been settled. A D.C. Superior Court hearing is scheduled for next week on the city's assertion that the owner, the 1613 Harvard Limited Partnership, did not follow the city's condominium conversion rules and should not be allowed to evict the tenants. The owner, saying proper procedures were followed, shot back with a U.S. District Court lawsuit claiming that city officials' efforts to stop the conversion violated the landlord's civil rights. The owner also has sued tenants for money damages in the Superior Court's Landlord and Tenant Branch.
The partnership that owns the property says it has taken out a $17 million loan, has signed purchase contracts that could lead to lawsuits if breached, and has incurred legal costs. The tenants -- a mix of middle-income professionals and retirees -- say they are being forced out of a neighborhood they love and want the landlord to offer a better deal that would let them stay in their units or would subsidize a move.
"If they made me a decent offer, I'd like to stay," said Angela Manso, 35, the acting executive director of a small nonprofit organization. "I like this area," with its access to Metro, its potpourri of neighbors and a Target store coming soon, she said.
Manso, who is secretary of the building's recently formed tenants association, pays $1,187 a month for a two-bedroom apartment with high ceilings, crown molding and parquet floors. "Have you tried to rent in Mount Pleasant?" she asked. "For what I'm paying now, I'd have to move to an efficiency." She said she was told that her 1,048-square-foot unit, which she moved into in 1997, would be renovated to sell for $409,000, a price she is not sure she can afford, though she put a deposit on a unit just in case. She worries that if she is evicted, "I'll be living in Stafford [County] with my mother."
Growing Appeal of Condos
The Embassy, whose lobby features carved wooden pillars, a mosaic tile floor, a chandelier and potted palms, was built in 1925, during the height of the neighborhood's development. An ad in The Washington Post that year boasted that it was "Washington's smartest apartment house," with units that had "a luxurious living room, 26 feet long," as well as "refrigeration supplied" and "an attendant on premises."
Fifty years later, the city's real estate economics had changed. High interest rates made it difficult for many people to buy detached homes. Condominiums were especially appealing to the city's large supply of young single people, couples without children at home, and retirees. Starting in 1976, a growing number of apartment buildings began converting. By 1980, condominiums accounted for half of the city's home sales.
Fearing that some tenants, especially the elderly, were being forced out of their longtime homes by the booming market, the D.C. Council approved a series of laws requiring landlords to get the consent of a majority of renters before converting a building. Landlords also were required to file various papers with the city, to offer tenants the option to purchase their units and to notify new tenants that their units could be converted.
The building's owners first filed papers to register the Embassy in 1980 and 1981 but didn't follow through. In 1985, when the current owner bought the building, tenants were paid $12,000 per unit in exchange for agreeing not to buy their units and not to challenge its condominium status. The last of those tenants moved out after the conversion notice was mailed out in the fall. In January, after the owner applied to activate the condominium status, the DCRA issued a certificate of registration, which gave the go-ahead to convert the building.
"Our position is that the District on three separate occasions . . . confirmed the validity of the registration of the condominium," said Richard W. Luchs, attorney for the 1613 Harvard Limited Partnership. "The District has not come forward with any reason to invalidate the registration."
But city officials say there were numerous flaws in the original registration and subsequent paperwork and that officials were unaware when they granted the certificate on Jan. 14 that the landlord had failed to tell some tenants that their units might be converted. Tenants say that most people who moved in since 1999 were never told and that some learned in 2003 when they were asked to sign a paper stating they had been told.
After their initial panic at receiving the letter from their landlord in November, the tenants formed an association, sought help from a housing counseling group and lobbied the city to help them. They found an ally in D.C. Council member Jim Graham (D-Ward 1), who represents their neighborhood and chairs the Committee on Consumer and Regulatory Affairs, which oversees the DCRA.
Two weeks after granting the certificate, the DCRA notified Ronald D. Paul, president of the partnership that owns the building, that it had launched an investigation and asked him to halt efforts to evict tenants or market the condominium. In between issuing the certificate and launching the investigation, the agency -- which has been criticized as poorly run by both business and consumer advocates -- had received a new acting director, Patrick J. Canavan.
"I said to Canavan, 'You've got to investigate this,' " Graham said. "He said to the owners, 'Please don't take any further action.' Their reaction was to thumb their noses at him. We kept talking, and I said, 'Pat, you've got to issue a formal cease-and-desist order.' To his credit, he did it."
DCRA officials declined to comment on the case because of the lawsuits.
The cease-and-desist order was issued in March. In April, the city sued the building's owner in Superior Court.
Traci L. Hughes, spokeswoman for the D.C. attorney general's office, said she knew of no other similar situation in which the city has intervened. Graham said he hopes the agency's action "signaled the beginning of the new DCRA, no longer closely aligned with its regulated industries -- a new DCRA that is far more balanced in its views, especially toward tenants but also toward consumers."
Luchs, the lawyer for the building's owner, doesn't see it that way. In his view, the city "spent an awful lot of time and an awful lot of manpower on this case. If, as we expect, it turns out that our client didn't do anything wrong, that's not a particularly wise expenditure of taxpayers' dollars."
The outcome for the Embassy could reverberate elsewhere. "There are literally hundreds of what are described as 'shelf condominiums' in the District of Columbia registered in the last 25 years, where for one reason or another the owner elected not to convert," Luchs said. "The statute and law contemplates that that can be done."
Wanting to Stay
The Embassy is about half full, with 33 occupied units, according to Corine Hegland, president of the tenants group. Tenants say they should have realized something was up when the owner stopped renting empty units last year and maintenance began going downhill.
"My husband and I became business owners in April 2004, and we had our baby at the same time," said Lee Abbott, 38, who moved into the building in 1998. "We were juggling a new baby and a new business, and it's Thanksgiving time and we get a notice slipped in our door about going condo and you have to have $20,000 right now" in order to reserve a unit.
Still, she said, "we would like to own our apartment at this point. We want to own it not under duress and under terms more favorable to us."
Carl Sumter, 44, a restaurant manager, moved into the building a decade ago with his partner. "We love our apartment," he said. "We love the neighborhood."
He would like to buy his unit, too, but "just seeing our neighbors in so much distress made us think we shouldn't talk to them about buying it," said Sumter, who is vice president of the tenants group.
Claire Antoine Jones, 62, a retired psychiatric social worker who began renting there in 1999, was "ready to boogie on out of here" to a less urban locale when the condo conversion was announced.
Now, she said, she wants to stay and help her neighbors finish the fight. Jones's father was a diplomat from Haiti who taught at Howard University. "This area has always represented all kinds of people of all kinds of strata, and it's fast diminishing," she said.
The work of the tenants organization has made for late-night phone calls, pizza parties and sometimes three meetings a week. For some, the shared concern about the building's future, anxiety about the lawsuits and opposition to their landlord have helped build a community feeling.
"I didn't know anybody in the building except one or two, and now we are all best friends," said tenant Richard McKewen. "People in the building are going to stick together."