The District has for years subsidized substandard housing owned by one of the city’s most controversial landlords, despite evidence of wretched conditions and official promises to ensure safe dwellings in the nation’s capital.
Over the past eight years, District officials have issued more than 200 warnings for housing code violations at apartment complexes owned by Sanford Capital, charging the company more than $150,000 in fines — about a third of which have gone unpaid.
Yet the city has continued to boost Sanford’s bottom line, funneling millions in tax dollars to the company annually to subsidize rent for the poor and formerly homeless residents living in its 19 apartment buildings, concentrated around Wards 7 and 8.
City officials say they have no choice because the supply of affordable housing is so limited.
“As a bad actor, I don’t want them to benefit from everyone’s tax dollars that’s collected in this community. I don’t think that’s fair,” said D.C. Council member Anita Bonds (D-At Large), who chairs the council committee that oversees housing. She pledged a year ago that the city would stop sending subsidies to Sanford. “But we have to find some other locations that would work with government and be willing to accept the government process for housing people, and that’s not always easy.”
LaTonya Johnson was living in a Quality Inn at taxpayer expense until she found a Sanford apartment at an orientation for housing voucher recipients. Her unit failed pre-inspection by the city twice before it was approved and she moved in, only to deal with intermittent gas, a leaky ceiling and rats on her balcony, she said.
“They know we homeless,” said Johnson, who lives in the apartment with her two sons. “So they rush us up in these apartments, and they are falling apart.”
D.C. Mayor Muriel E. Bowser (D), who campaigned on a commitment to safe, affordable housing, declined several requests to discuss Sanford or the city’s oversight of rental properties that receive public subsidies.
Laura Zeilinger, director of the District Department of Human Services, which oversees homeless programs, said she felt that her hands were tied because of the District’s affordable-housing shortage. Sanford owns 1,300 units.
“When you have somebody who controls a large portion of the affordable housing in the city and we have a problem with them, there’s no way that we can say we are never working with that company again,” Zeilinger said.
Out of frustration, D.C. Attorney General Karl A. Racine (D) took the rare step last year of suing Sanford — the first of two lawsuits he has filed alleging that the company has failed to fix chronic problems such as rodent infestation and mold at two properties.
“You can’t tolerate lack of compliance with the law because you feel as though there won’t be enough people to provide the service,” said Racine, the District’s first elected attorney general.
City officials say at least 170 previously homeless families and an additional 235 individuals were living in Sanford properties using housing vouchers in 2016 — providing Sanford millions of local and federal taxpayer dollars. That included one in 15 homeless families given “rapid rehousing” vouchers in 2016 to stay out of shelters.
Patrick B. Strauss and A. Carter Nowell, who together launched Sanford Capital in 2005, declined repeated requests to discuss their business. Their attorney, Stephen Hessler, has said the company has been a responsible manager of its properties and made adjustments when necessary. In court filings, the company has blamed tenants for causing damage and for withholding rent payments that could fund repairs.
Bowser is not unacquainted with Sanford. The company gave $3,000 to her 2014 campaign for mayor and Strauss’s wife, Mary, gave an additional $753 to Bowser’s bid, according to campaign finance reports.
Washington’s two-decade-long building boom has attracted investors of all stripes, among them sovereign wealth funds, pension mangers and wealthy individuals from around the world.
Much of that investment has resulted in the shiny new office buildings, restaurants, hotels and apartment towers that have remade Washington.
In 2005, the market also attracted Strauss and Nowell, whose began buying properties in mostly black, low-income neighborhoods.
Strauss had dabbled in other businesses. In 2008, three investors sued him, two members of his family and other associates, saying they had been defrauded after they gave hundreds of thousands of dollars to pension and employee benefit businesses run by Strauss, according to court records. Strauss denied any wrongdoing, and a D.C. Superior Court judge ruled in his favor in 2013.
While that case was pending, two other Strauss companies were accused by the U.S. Department of Justice of bilking investors in a tax-shelter scam in which they allegedly offered financial stakes in nonexistent cemeteries in Virginia and New York. Strauss and his father, Michael, admitted no wrongdoing but signed a permanent injunction ordering them to close the businesses and notify the alleged victims of the court ruling.
In the rental real estate world, when tenants vacate, owners typically freshen the units and try to quickly rent them again to maximize the revenue per square foot.
At Sanford properties visited by The Washington Post, however, empty units were boarded up to sit vacant; in some buildings, there were just a handful of occupied apartments tucked between swaths of dark, abandoned units. At Terrace Manor, just 14 of 61 units were occupied in the fall.
“This is the sorriest place I’ve ever lived in,” said Mary Mason, a 64-year-old resident of Martin’s View Apartments in the Bellevue neighborhood. Mason has been calling Sanford about faulty hot water and heat and leaking ceilings since the company bought her building in 2013. Her complaints go to voice mail, she said. “I wish I could find something better, but I’m just going to try to fight. The only reason I’m here is because of the rent.”
Tenants of Sanford buildings said they knew little about the men who own their buildings, but described a constant turnover of staff in rental and maintenance offices.
Fed up with what she said were repeated failures by the rental office to respond to complaints about her unheated apartment in January 2016, Mary Shuler tried to take her pleas directly to management.
The 50-year-old tenant hitched a ride with a neighbor to Bethesda, Md., where Sanford is headquartered in an office building.
In the lobby, Shuler, who is blind in one eye, demanded to speak to a supervisor. A receptionist left for a few minutes and returned with a promise that Shuler wouldn’t spend the winter without heat.
“She said someone was going to come that day, but nobody ever came,” Shuler said as she ran her oven with its door open on a recent morning. “I called again. And they said someone would come. But nobody came.”
According to a marketing document obtained by The Post that Sanford circulated last year among potential buyers of its rental apartment portfolio, the company grossed about $12.9 million annually from its holdings.
Strauss owns a home assessed at $1.6 million in the Chevy Chase area of the District, and registered a 35-foot boat called Hooptie and another similarly sized vessel named Manny Rounds, according to public records.
His business partner, Nowell, lives in a Bethesda home with an assessed value of $2.8 million, according to property records.
Bowser has made affordable housing a priority since she took office in 2015. But Sanford’s frequent violations of housing codes overwhelmed the city’s enforcement system, exposing flaws in oversight that advocates say they’ve been flagging for years.
No single D.C. agency is responsible for ensuring safe conditions in rental housing. Some housing agencies oversee properties built with tax breaks or city subsidies but lack the power to penalize offenders. Others administer housing vouchers that tenants can use to supplement their rent but have no role in verifying whether the housing meets standards.
The Department of Consumer and Regulatory Affairs has the ultimate responsibility for ensuring that apartment buildings meet building code requirements. Its director, Melinda Bolling, said she had no system to monitor owners of multiple properties, which makes it impossible to spot patterns of noncompliance.
“It’s not unusual that we won’t know about bad actors because we deal with properties and resolving issues at individual properties,” Bolling said.
Fines don’t appear to be an effective deterrent. Sanford has yet to pay nearly a third of the fines levied against it — more than $40,000, according to city records. The oldest unpaid fine dates to 2009. Records reviewed by The Post do not indicate whether Sanford disputes those fines or has failed to pay them for some other reason.
Consumer and Regulatory Affairs placed liens on some properties to recoup the costs of fixing housing conditions, but it has not exercised that power at other Sanford buildings with unpaid penalties. A spokesman for the agency said it places liens on properties after appeals are exhausted, and the timeline can vary. Properties that are fined are not scheduled for regular follow-up inspections.
“Those fines are a joke,” said Marc Borbely, a private housing attorney whose firm has represented several Sanford tenants. “If anyone knows they are never collected and nothing ever happens if you don’t pay them, then they lose their power.”
District officials say they are reluctant to condemn the buildings or fine the owners so heavily that they go out of business, which would displace hundreds of low-income residents.
But other jurisdictions have ways to increase pressure on landlords who routinely violate housing codes.
New York City has a program that targets the worst buildings for regular follow-up inspections, with fines escalating as problems go unfixed, while requiring companies to list the people responsible for conditions to prevent them from hiding behind shell companies.
Pennsylvania allows cities to deny development permits if a company faces violations at other properties.
The Montgomery County Council passed legislation enabling housing inspectors to target “problem” apartments for regular follow-up inspections after a gas explosion at a complex left seven dead in the summer of 2016.
At a February 2016 hearing examining the plight of Sanford tenants in a Congress Heights property, Bonds said her biggest takeaway was “bad actors should not be a part of any subsidy whatsoever.”
Bonds then successfully shepherded legislation allowing the city’s Office of the Tenant Advocate to place liens on property owners to collect the costs of relocating residents from substandard housing. But that assumes a resident can find a better alternative, and it doesn’t prevent violations in the first place. She said she is working on additional legislation that would block the city subsidies from going to “bad actors.”
Last year, Racine took the unusual step of suing Sanford, charging that it had violated housing codes at Terrace Manor and a nearby Congress Heights complex.
The company agreed to abatement plans for both properties and is fighting another effort by Racine’s office to use consumer protection laws to recover rent paid by Terrace Manor tenants while they lived with rodent infestations and lack of heat.
After Racine filed the first lawsuit, District social workers checked some of the tenants living in those Sanford buildings but did not find reason to relocate any.
Rapid rehousing vouchers, worth about $1,000 a month on average, are meant to be a temporary lifeline for homeless families, covering most of their rent for up to a year to give adults time to find jobs and become self-sufficient. In practice, about half the recipients receive vouchers much longer, sometimes several years.
Housing in Washington has become so expensive, however, that voucher recipients sometimes conclude that a Sanford property is their best option.
In July 2014, Rasheda Savoy discovered a Sanford building on D Street SE after seeing it on a list distributed at a city-backed orientation for homeless families.
There were early red flags, she said: Mouse holes, water bubbles bulging from the ceiling and warnings about Sanford’s reputation from friends in the neighborhood. Savoy said that when she brought up these issues with her case manager, the social worker warned that the alternative was the former D.C. General Hospital, the city’s megashelter for the homeless where 8-year-old Relisha Rudd disappeared in 2014.
“I felt like I sold my soul to the devil,” said Savoy, a mother of five.
After moving in, she said she spent two winters without heat and fending off mice before she moved out last summer after finding another landlord willing to take her voucher.
LaCrecia Johnson, a 21-year-old mother of three, has been trying unsuccessfully to find an alternative to her Sanford apartment.
Since she moved into the Oak Hill apartments in Congress Heights in April 2015, she said feces backed into her bathtub more than a dozen times — including once while bathing her 1-year-old.
“We would never intentionally direct anybody to a unit we knew was substandard, ever,” said Zeilinger, the head of the homeless family services agency. “But oftentimes what people are able to get and able to afford may be in a place where there’s a higher risk they would experience some conditions.”
After months with intermittent hot water and suing Sanford Capital to force repairs, Tirita Bady moved out of the Belmont Crossing apartments in Southeast Washington in November. She said she lost her job at an H&M store after missing shifts while trying to attend to problems and take her two boys, ages 9 and 12, to shower at her mother’s house.
Now she lives in Oxon Hill, in Prince George’s County.
Inspectors from the D.C. Department of Housing and Community Development had flagged Belmont Crossing for mold, roaches and unsecured doors in July, and said the problems were resolved by December.
But on a recent visit, reporters found that problems persisted, including trash and feces in a laundry room and unsecured doors that, tenants said, allow vagrants and drug users to enter.
On a District website listing city-financed affordable housing with vacancies, just two complexes are named.
One is Belmont Crossing.
Paul Duggan contributed to this report. Courtney is attached to The Post’s investigative unit through a program at American University.