In a first-of-its-kind lawsuit, the D.C. attorney general’s office has accused the major developer Petra Management Group of skirting rent control by renting only to voucher holders. In a lawsuit filed January 30th in D.C. Superior Court, the office of Attorney General Brian Schwalb contends that Petra is guilty of source-of-income discrimination at three D.C. buildings with over 100 apartments. This is the first time the city has sued a landlord for discrimination against non-voucher holders. At the three buildings cited in the lawsuit - just a portion of Petra’s portfolio - Petra rents exclusively to tenants with vouchers, the suit alleges. Rashid Salem, Petra’s founder and a named defendant in the suit, did not immediately respond to requests for comment.
Petra’s alleged scheme follows a shift in D.C.’s incentives for housing vouchers, under which low-income residents pay 30% of their income toward rent and the government covers the balance. A decade ago, in an effort to deconcentrate poverty, the D.C. Housing Authority began raising the rent limits for homes subsidized with vouchers - allowing many voucher holders to move to neighborhoods with better schools and less crime. But not only was the Housing Authority frequently overpaying for apartments, D.C.’s rent-control law granted an exemption for units rented to voucher holders, so landlords could get out from strict rent caps and collect far more money.
Petra began buying up residential buildings and filling them with as many voucher holders as possible, a Washington Post investigation found. As some of the buildings filled with people struggling with addiction or mental illness, neighbors complained of a lack of case workers and security and drug dealers operated out of the properties. Upscale apartment buildings along Connecticut Avenue NW managed by one property company began filling up with formerly homeless voucher holders, leading some residents (both longtime tenants and new voucher holders) to complain that there was not adequate support or security services.
A landlord can get an exemption from rent-control caps for voucher holders only after getting city approval, according to the attorney general’s office. But at the three Petra buildings, the suit alleges, Petra advertised the higher, non-rent-controlled rate both to lenders and to prospective tenants, violating the law and making the apartments unaffordable to many people without vouchers. At one of the buildings, the Adams on North Capitol Street NE, one three-bedroom unit would be capped at $1,000.25 under rent control, but Petra advertised and rented it at $3,131 per month, according to the attorney general’s office.
