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WP: Profits in Decay


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The Profit in Decay

Landlords Who Empty Buildings of Tenants Reap Extra Benefit Under Law

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Wrong Side of Renewal

In recent years, landlords in the District have emptied hundreds of apartment buildings and taken steps to convert them to condominiums. Tenants say they have been pushed out, sometimes by bad building conditions. Landlords say they have tenants offered move-out offers, and that tenants often report frivolous code violations for leverage in negotiations.

Landlords determined to cash in on a lucrative real estate market pushed thousands of tenants out of apartments across the District in recent years and then reaped more than $328 million by converting the buildings into condominiums.

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Dozens of landlords refused to make repairs, forcing families to live in filth -- at times without heat, hot water or electricity. Other landlords delivered urgent letters or mass notices demanding that tenants leave.

In the past four years, landlords emptied more than 200 buildings from Columbia Heights to Southeast, most of them rent-controlled, thwarting the intent of one of the nation's toughest tenant rights laws with the approval of the city government, a Washington Post investigation found.

It was the hidden toll of a frenzied condominium boom that turned aging neighborhoods into coveted urban communities.

At 3872 Ninth St. SE, three floors of misery in the heart of Southeast Washington, tenants lived for years with leaking pipes, crumbling ceilings and kitchens that reeked of rat urine. When Sherita Evans returned home from work with her young son, she'd shield his eyes and step over addicts who broke into vacant, unsecured apartments to get high or get warm.

After new owners took over in 2005, tenants pleaded for months for repairs. Most eventually moved out, allowing the owners to turn the rent-controlled apartments into a $9 million condominium complex.

"It was clear. They wanted us out," said Evans, among a handful of tenants who struck a deal with the owners to stay on as renters. "It got so bad, all I wanted to do was leave."

Nearly three decades ago, city leaders created a law that gave tenants extraordinary power: the right to vote on whether property owners could convert rental buildings into condominiums. The law also requires owners to pay the city a fee on the sale of new condominiums, which would help displaced renters with relocation costs.

But as the District's real estate market thrived, landlords found a way out: The law doesn't apply to vacant buildings.

By emptying buildings and taking advantage of a provision known as a "vacancy exemption," landlords can avoid the tenant vote and the tax and turn rental apartments into condominiums. City officials have granted the exemptions even when government records chronicled widespread evictions and buildings riddled with code violations.

In the past four years, nearly three-quarters of the landlords who received permission to begin converting apartment buildings into condominiums did so through a vacancy exemption, not a vote by tenants -- saving $16 million in condominium conversion fees while families across the city lost their homes.

"The exemption is providing every incentive for a landlord to be aggressive, in some instances bordering on actually being criminal," said Joel Cohn, legislative director with the District's Office of the Tenant Advocate. "You have a real concerted effort to get rid of tenants."

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/08/AR2008030802735.html

interesting article, but i think its fairly one-sided... to put the blame squarely on the landlords is completely unfair. alot of the code violations may have resulted from the tenants themselves and their actions. moreover, condo conversions are a high risk venture -- 750k in fees off of 15 million dollar property could respresent a sizeable portion of the profit.

dc is becoming an expensive city and if they want to increase their tax base convert to condos is probably the best way to do it. its an unfortunate displacement but given a limited amount of space it has a finite tax base. i'm really starting to think affordable housing is a luxury that a state can afford but dc not being of a state should really reconsider its approach.

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