By: Marisa Beirne

The District of Columbia (“DC”) provides need-based housing to residents with low incomes for the purpose of supplying decent places of living and to effectively promote economically diverse housing.[1] Specifically, rental subsidy programs consist of relationships between the federal government, rental property owners, and prospective residents.[2] As DC becomes substantially more metropolitan, rents are rapidly increasing causing landlords to opt out of their assistance-based programs. This in turn causes elders and minorities, who depend on the rent assistance, to be displaced. In an effort to combat this rising trend, DC enacted the Tenant Opportunity to Purchase Act (“TOPA”).[3]

TOPA discusses that prior to an owner of a housing complex selling, vacating, or demolishing their property, the owner must give the current tenants an opportunity to purchase the complex.[4] An owner must follow specific guidelines to comply with TOPA. For example, for buildings containing five units or more, once the owner makes an offer to the tenant organization of the building, that owner must provide certain documents (such as floor plane or itemized list of operating expense) within seven days after tenants request them.[5] For a reader friendly version of TOPA and other helpful resources check out the DC Office of the Tenant Advocate website![6]

Currently, in the Chinatown area of DC, the issue of affordable housing could not be more real for the tenants of Museum Square, a predominately elder housing building that is in danger of being demolished. The federal government offers different incentives to landlords who sign a contract and offer low-income housing to qualified tenants.[7] One of these programs is known as the Section 8 voucher program.[8] Museum Square receives Section 8 housing subsidy from the federal government.[9] In most cases, Section 8 subsidies pays for 70% of the tenants’ rent and the tenants are responsible for paying the remaining 30% each month.[10] Following TOPA, the property owner, the Bush Companies of Williamsburg, VA, offered to sell the building to tenants for $250 million even though the building was assessed for $36 million.[11] The options for these tenants then became pay the $250 million or lose their homes. Tenants of Museum Square are becoming increasingly nervous that they may actually have to move. One tenant, 76-year-old Jianhong Wang, stated that she would not even know where to begin to look as she is unaware of other low-income buildings in DC.[12] Wang, along with many other tenants, are panicked about the thought of having to move at this stage in their lives.[13] Instead of just sit back and potentially lose their homes, tenants decided to take action and fight against this outrageous offer, which most tenants believe “was picked out of the sky.”[14]

The owner’s attorneys stated that, “the price of $250,000,000 was not an arbitrary number, but rather was a price derived from detailed and extensive calculations made by a company whose general partner has decades of real estate development experience in the metropolitan area.”[15] The main issue is due to the demographics of the building (mostly elder and non-English speakers) the complex litigation and strict guidelines of TOPA make this almost an impossible battle. Different organizations such as the Legal Aid Society and the Asian Pacific American Legal Resource Center have become involved in this ongoing controversy and they have all agreed on one point: the price prohibits interested investors and developers from making offers.[16]

Another aspect of TOPA is that the tenant organization can choose to assign or sell their rights to other groups, allowing the tenants to negotiate a better price or other benefits.[17] That being said, the problem still remains that the $250 million price tag scares away any potential investors.

Another rising issue in this battle is the vagueness of TOPA. TOPA specifically states, “the owner shall give the tenant an opportunity to purchase the accommodation at a price and terms which represent a bona fide offer of sale.”[18] The law does not elaborate on what makes an offer “bona fide,” nor does it explain what the owner must do in order to justify the price he offers to tenants.[19] The meaning of a “bona fide” offer then comes down to interpretation—as most legal issues typically do.[20] TOPA also states that the tenant association and landlord must negotiate in “good faith” but does not define the meaning of “good faith.”[21] The statute instead gives examples of “bad faith” such as, “intentional failure of a Tenant Organization or Landlord to comply with the TOPA statute.”[22] TOPA needs to become more specific in order to ensure that landlords and tenant organizations participate fairly while maintaining benefits for all parties involved.

If the tenants are unable to win this dispute this will not only cause DC to lose 302 units of affordable housing, but it will also promote other current Section 8 landlords and building owners to do exact same thing.  If Bush Companies wins this dispute, what would stop any owner from following this example and selling the property for an outrageous price and displacing more families and elders?

 

 

[1] 42 U.S.C.S. § 1437f (2015).

[2] Id.

[3] D.C. Code § 42-34-4.02(a) (2015).

[4] Id.

[5] See. Steps To Assert TOPA Rights, 5 or More Units, Office of the Tenant Advocate, https://ota.dc.gov/sites/default/files/dc/sites/ota/publication/attachments/TOPA%20-%205%20or%20More%20Units%20%28FINAL%29.pdf.

[6] Id.

[7] 42 U.S.C.S. § 1437(f) (2015).

[8]  Id.

[9] Martin Austermuhle, Museum Square and the Fight for Affordable Housing in D.C.: An Explainer, WAMU 88.5: American University Radio (Sept. 30, 2015), https://wamu.org/news/15/09/29/museum_square_and_the_fight_for_affordable_housing_in_dc_an_explainer.

[10] Id.

[11] Robert Samuels, Black, Asian Residents Unite to Save Low-Income Building near Chinatown, Wash. Post (Aug. 6, 2014), https://www.washingtonpost.com/local/black-and-asian-residents-unite-to-savelow-income-building-on-edge-of-chinatown/2014/08/06/552accf0-189c-11e4-85b6-c1451e622637_story.html.

[12] Aaron Wiener, Bull in Chinatown: Developer Tells Section 8 Tenants to Pay Up or Get Out, Wash. City Paper: Housing Complex (July 9, 2014), https://www.washingtoncitypaper.com/blogs/housingcomplex/2014/07/09/bull-in-chinatown-developer-tells-section-8-tenants-to-pay-up-or-get-out/.

[13] Id.

[14] Id.

[15] Martin Austermuhle, Museum Square and the Fight for Affordable Housing in D.C.: An Explainer, WAMU 88.5: American University Radio (Sept. 30, 2015), https://wamu.org/news/15/09/29/museum_square_and_the_fight_for_affordable_housing_in_dc_an_explainer.

[16] Aaron Wiener, Bull in Chinatown: Developer Tells Section 8 Tenants to Pay Up or Get Out, Wash. City Paper: Housing Complex (July 9, 2014), https://www.washingtoncitypaper.com/blogs/housingcomplex/2014/07/09/bull-in-chinatown-developer-tells-section-8-tenants-to-pay-up-or-get-out/.

[17] Steps To Assert TOPA Rights, 5 or More Units, Office of the Tenant Advocate, https://ota.dc.gov/sites/default/files/dc/sites/ota/publication/attachments/TOPA%20-%205%20or%20More%20Units%20%28FINAL%29.pdf.

[18] Martin Austermuhle, Museum Square and the Fight for Affordable Housing in D.C.: An Explainer, WAMU 88.5: American University Radio (Sept. 30, 2015), https://wamu.org/news/15/09/29/museum_square_and_the_fight_for_affordable_housing_in_dc_an_explainer.

[19] Id.

[20] Id.

[21] Steps To Assert TOPA Rights, 5 or More Units, Office of the Tenant Advocate, https://ota.dc.gov/sites/default/files/dc/sites/ota/publication/attachments/TOPA%20-%205%20or%20More%20Units%20%28FINAL%29.pdf.

[22] Id.