When several small buildings in Northeast Washington were put up for sale last year, threatening to displace the working-class families and fixed-income residents inside, something unusual happened: The tenants won.
The odds were not in their favor.
Renters in small buildings whose homes are on the market rarely manage to scrape together the money needed to hang on. In this case, the homes were being sold by the biggest Catholic church in North America, the National Shrine of the Immaculate Conception, which ignited outrage among neighbors, housing activists and Catholics and enticed a developer to try something new to help residents keep their homes.
“Tenants can be poor or low-income, we can be working day or night, and it can seem next to impossible” to fight displacement, said Heather Benno, vice president of the 636 Girard St. NE Tenants Association. “But, actually, those things are flexible and regular people can find a solution — especially if it is addressed by the community, together.”
In the District, tenants in multifamily apartment buildings have the right to buy the building upon its notice of sale through the Tenant Opportunity to Purchase Act. Because residents typically don’t have cash on hand to make an offer, tenants typically assign their right to purchase to a developer in exchange for assurances like affordable rent, an option to buy their unit at below-market rate and renovations.
But developers are often loath to invest in helping tenants in buildings below a certain occupancy.
In 2016, Joanne Doyle, a Catholic and active member of the Polish American Society of Washington, D.C., died and left her portfolio of 13 properties to the National Shrine.
Five of the properties were single-family homes. The remaining eight were small multifamily buildings — comprising about 30 households altogether — scattered throughout rapidly gentrifying neighborhoods like Edgewood, Trinidad and Brookland.
The National Shrine took possession of the properties in 2018 and transferred them to a holding corporation owned by the basilica, which would then sell the buildings.
“As a Roman Catholic Church, the Basilica is not permitted to manage or own rental properties as a trade or business,” Kevin Kavanaugh, secretary and treasurer of the holding company BNSIC Title Holding Corporation, wrote in a letter to tenants.
The tenants were panicked. If the building was sold, rents would probably rise. Some could lose their homes.
Benno, who was pregnant at the time, said tenants thought appealing to the church’s moral calling might allow them to exercise their TOPA rights and purchase the building at a lower price.
“We ask you to meet and work with us as tenants of Northeast Washington, D.C., and to craft a solution that protects the affordability and future of our homes, and we respectfully call on the Catholic Church to take action against the wave of displacement that has already hurt the lives of so many of us in this neighborhood, and across the entire city,” residents of four buildings wrote in a letter to the National Shrine last year.
Housing activists from LinkUp and Justice First organized protests outside the basilica, gathering with signs that read, “Catholic church chooses profit over people: D.C. tenants and families fight back.” Members of several Catholic parishes led letter-writing campaigns to church leadership, imploring them to intercede.
Meanwhile, the tenants tried for months to find a nonprofit housing developer to purchase the property on their behalf. They asked the National Shrine to aid in finding a benevolent buyer, but the church declined.
“While we are deeply sympathetic to your situation, we are unable to provide any assistance beyond what the law provides because the Shrine is, at best, only a temporary holder of the property,” Kavanaugh wrote in the August 2018 letter.
The National Shrine said it did what it could to help residents purchase the building at 636 Girard St. NE, agreeing to a sale price of 15 percent below its market value — an $85,000 drop. The church agreed to a similar discount for a building at 1364 Bryant St. NE, although it wouldn’t disclose the amount, because the sale is pending. Church officials said the National Shrine also agreed to extend the tenants’ financing deadline by 90 days.
A National Shrine spokeswoman said in an email that “the public activity had no impact on our decision-making because the Basilica was already doing everything it could, within the confines of the law, to enable the tenants to purchase the property.”
To Bob Cooke, a member of Pax Cristi, a national Catholic organization that advocates peace and social justice, the basilica’s solution wasn’t enough.
“Either the church is going to have to start living by its best principles or it will just continue shooting itself in the foot, because people, especially young people, are not happy with a church that doesn’t show care for the poor among us,” he said. “They talk the talk, but when a situation like this comes about, it was very difficult to get them to do anything.”
John F. Settles II, a mortgage originator and two-time D.C. Council candidate, learned about the tenants’ struggle earlier this year from a resident who called him for advice. How could they keep their homes at a price they could afford, while not buying the building outright, the resident asked.
Settles had an idea: Turn the buildings into condos and add other units.
“Obviously at first, I wanted to see if there was a way for the tenants themselves to be the owner of the building, but we quickly realized they didn’t have the financial capability — and then it just dawned on me,” Settles said. “Blended economics are how you make the deal work.”
Settles plans to renovate the structures — old buildings that need to be brought up to code — and add additional units to each, “by either going up or going out the back, and not only preserving existing units but creating new units” to sell or rent at market value.
Existing residents, meanwhile, will have an opportunity to buy their apartments at a reduced rate or continue renting at an amount subject to rent control.
“The city needs to figure out how to solve these issues with smaller buildings because there’s a lot of them. And a majority of these smaller buildings end up without tenants being able to fulfill their TOPA dreams because they don’t have the resources to buy.”
Settles closed on the first of three buildings in mid-July. He said he expects to close on the other two buildings before the end of the year. Residents will need to move out for several months during the renovation.
Settles said he is using them as a pilot program, a way to test his theory and see if there’s a way to prevent displacement in small buildings across the District. If it works, he said, he hopes to pitch his strategy to the mayor’s office.
“There’s no silver bullet for the housing affordability issue, so we need to push new tools and innovation and get past the old way of doing business and old paradigms,” Settles said. “It’s cheaper to invest in helping people now than after the fact, when they’re displaced.”