Last year, Harold F. Lawson owner of small apartment buildings in some of Washington's poorest neighborhoods evicted the tenants from one of his buildings and closed it.
This year, Lawson says, he may have to evict more tenants and board up more buildings.
Lawson does not view himself as a harsh landlord or someone insensitive to the plight of low income tenants. He is a businessman, he says, who was able to survive a tough year last year only by shutting down the one apartment building.
He thought that would be enough to tide him over financially, but now he says he may have been wrong. Soaring utility bills and sporadically paid rent at some of his remaining buildings mean that he does not have enough income each month to meet his expenses.
"I'm so scared now, I don't know what to do," Lawson said the other day.
Lawson's financial problems, likely to be exacerbated by still higher heating and electrical costs this winter, have city officials on edge, too. Dozens of other small- or medium-sized investors who own apartment buildings in the city are coming face to face with business decisions that they say transcend the issue of housing the poor.
Those decisions range from trying to win approval from the city for rent increases, to not paying utility bills, to simply walking away and letting buildings deteriorate, often leaving tenants living in buildings that slowly are falling apart around them.
Some are trying to sell their properties to developers who eventually convert them to condominiums or other uses. Some, who own small buildings, are trying to sell to buyers who can be exempt from rent control if they own fewer than five apartments.
In a city already faced with a severe shortage of affordable housing for its low-income residents, the choices present major problems, particularly in far Southeast and far Southwest Washington, said D.C. housing director Robert L. Moore.
"Lanlords are walking away from their buildings," he said recently.
Neither Moore nor others interviewed knew how many low-income families are threatened by the trend, but the number could be in the thousands if some city figures are indicative of the scope.
By late summer, for instance, the owners of about 100 apartments in far Southeast had been notified by the Washington Gas Light Co. that their service would be cut off because of unpaid bills. And last year, before the latest surge in the cost of utilities, buildings with more than 400 apartments, nearly all of them in far Southeast and Southwest, had their electricity turned off because lanlords failed to pay their bills.
In addition, the housing department last year had to pay for emergency deliveries of heating oil to apartments housing more than 500 families whose landlords failed to make such payments. lawson's bills for oil, gas and electricity, to take one example, jumped from $8900 in 1974, to $14,400 in 1975, to $18,950 in 1976, to $22,200 in 1977. By last year, the costs had risen to $26,450 -- an increase that came despite the fact that one of his properties was shut down most of the year.
To help prevent a crisis from developing, the city has set aside $1.4 million to pay unpaid utility bills while passing at the same time emergency legislation that prohibits gas and electrical cut-offs to all apartment buildings with master meters.
But if many landlords follow Lawson's example and opt to close their buildings rather than meet their operating expenses, Moore says the city will have a disaster in the making.
"They're all under the gun," said William Fitzgerald, whose Independence Federal Savings and Loan Association holds mortgages on a number of apartment buildings in far Southeast. "They get behind [in their mortgage payments] by 60 to 90 days and we've had to work with them.It's been rough. This coming winter, I suspect that lot of them are just going to have to give up."
The head of one of the city's largest savings and loans said that his company holds the mortgage on a large apartment complex in far Southeast whose owner is more than a year behind in his payments. "We let these people slide and slide," he said. "But there comes a time when you just don't want to screw around with them any more. . . We're not in the housing business."
Under the emergency 90-day bill the D.C. City Council passed last months, tenants and utility companies can petition the court to appoint a receiver to collect rents and pay utilities. In the past, when gas and electricity cut-offs have occurred, the city has often entered the picture -- restoring service, paying the unpaid bills, placing a lien against the landlord's property, and citing the owner for violation of the city housing code.
The council has also given preliminary approval to a measure that would let landlords increase rents silghtly to cover increased heating costs. The increase -- determined by a formula -- works out to about 5 percent.
Buit it's a solution that does not come close to satisfying many landlords.
John H. Crawford, for example owns a four-unit apartment building at 25m Newcomb St. SE. When he bought it several years ago, it seemed like an "encouraging investment" to the 80-year-old retired postal clerk.
But now, with the price of oil skyrocketing, Crawford has to budget $405 per month -- 72 percent of his $560 monthly income from the building -- just to pay the heating bill.
By the time he pays the mortgage taxes, insurance, management fees and maintenance costs, he's operating the building in the red.
The city's newly allowed 5 percent increase would add only $28 to his monthly rental income -- just a fraction of the $208 increase in Crawford's average monthly heating bill since last year.
Lawson is fairly typical of the small investor squeezed by soaring utility costs.
Real estate was his part-time hobby from about 1967 to 1974, when he retired from his job as a psychologist with the Department of the Army and made his real estate brokerage and management firm a full-time occupation.
Lawson, 57, said that when he began to buy properties, he charged rents as low as $137 a month for a one-bedroom apartment with utilities included. His interest then was not in reaping huge profits but in getting a tax shelter for his income, he said.
Once I got into it, I enjoyed it," Lawson said. "That is, until I bought that stuff around the corner. It has been a downhill grind ever since."
"The "stuff around the corner" are apartment buildings at 419 and 421 32nd St. SE that Lawson closed more than a year ago.
Lawson estimated that his five projects are worth about $1.2 million, with more than $300,000 still owed on them in mortgages.
Running those properties last year resulted in a $59,000 operating loss, only $20,000 of it due to depreciation for income tax purposes, Lawson said. He said he also came close last winter to having utility shut-offs at some of his properties. Already this month Lawson said, he had to pay $1,800 to restore on E Street SE containing 17 apartments.
Lawson managed to get by last year by refinancing his upper Northwest home for $15,000, using his family's credit cards to pay some bills, and plowing some of his salary as a real estate agent and manager into his rental properties. He still owes $4,000 for fuel oil bills from last winter, he said , and maintenance has been deferred on many of his buildings.
So tight has the situation become that some fuel oil companies are refusing to deliver oil this winter without cash in advance. Lawson said he recently borrowed $7,100 from the savings and loan where he has certicates of deposit, hoping that will enable him to pay some of his heating oil bills
That loan was necessary because oil company notified him that, unless he signs a statement allowing the distributor to get payments directly from his bank account each month, the company will refuse to provide him oil -- an agreement Lawson refuses to make. "I'm in trouble, he said.
Lawson estimates that he lost about $10,000 in rent last year that tenants owed but did not pay. Over the years he said, the rents he charges have gone up form about $101 for a one bedreoom apartement including all utilities to about $155.
Lawson said he hasn't applied for rent increases through "hardship petition," a process set up by the city whereby landlords in financial trouble can apply for special rent increases. The preocess is too costly, complicated and cumbersome, Lawson said, a comment that often is made by other landlords.