The District’s attorney general is suing a California company for allegedly turning units in four D.C. apartment buildings into illegal short-term rentals.
Attorney General Karl A. Racine on April 21 filed a lawsuit against Ginosi USA, a Los Angeles-based travel accommodations company, alleging that the short-term rentals are prohibited under the District’s Rental Housing Act, which states that apartment units may not be converted into transient rentals. At least two of the four apartment buildings in question are rent-controlled properties, according to the lawsuit.
The suit also alleges that Ginosi USA — part of an Armenia-based chain — has failed to pay taxes to the District, even though it charges customers a 15.5 percent sales tax. The lawsuit is seeking an injunction to stop the rentals, as well as back taxes and civil penalties that amount to more than $1 million.
Ginosi did not respond to multiple requests for comment.
“My office is using all of the tools available to us to preserve affordable housing for District residents,” Racine said in a statement. “We will aggressively pursue individuals and companies that seek to circumvent the District’s rent-control laws, and we are actively investigating other instances where apartment managers or owners are treating rent-controlled apartments like hotel rooms and renting them out on sharing-economy platforms.”
Hundreds of District residents gathered before the D.C. Council last week to discuss proposed restrictions on short-term rentals. For more than eight hours, they debated a bill introduced by Council member Kenyan R. McDuffie (D-Ward 5) that would limit property owners to renting one unit at a time, and only in their permanent homes. A vote is planned for later this year.
The goal of the legislation, McDuffie said, was to clamp down on commercial operators like Ginosi that are essentially turning housing units into hotel rooms.
“The allegations outlined in this lawsuit are deeply troubling and illustrate the need to create a sensible regulatory framework for short-term rentals,” McDuffie said in an email.
The bill would also create a new business license for short-term rental hosts. Under current rules, District residents must have basic business licenses, but McDuffie says those rules are not well understood and are seldom enforced.
“Demand is much higher than supply,” McDuffie said in a January interview, “and when you turn an apartment building into a de facto hotel, it has a deleterious ripple effect on the housing stock.”
In the case of Ginosi, the lawsuit states that the company has been advertising short-term stays on its website for at least four years. Nightly rates range from about $150 to $360 — amounts that the lawsuit states are “significantly higher than permitted under rent control laws.”
“By including rent-controlled units in their partnership, defendants are diluting the stock of affordable housing available to District residents,” the lawsuit says.
The short-term rentals are located in the following buildings: Mass Court (300 Massachusetts Ave. NW), the Phoenix (1421 Massachusetts Ave. NW), the Rodney (1911 R St. NW), and the View at Waterfront (1100 6th St. SW). Units in those buildings are marketed on Ginosi’s website as “apartels” — which the company says combine “the concept of a hotel with the conveniences of a fully furnished apartment.”
According to Ginosi’s website, guests have spent a total of 42,053 nights at its D.C. properties. An additional 964 bookings are in the works.
The company’s owner, Eric Ginosian, is also named in the suit. He could not be reached for comment.
In addition, the lawsuit names the owners and management companies for those buildings — Daro Management Services, Daro Realty, Greystar Real Estate Partners, T-C Mass Court, Mill Creek Residential Trust and John Hancock Life Insurance Co. USA — for allowing Ginosi to operate short-term rentals in the buildings they manage. Representatives for the companies did not respond to requests for comment.
“Each of the defendants knew of each others’ unlawful trade practices in violation” of District law, the lawsuit states.