Attorney General Racine Secures Restitution for Terrace Manor Tenants, Continued Court Supervision after Bankruptcy Sale

Current & Former Tenants Will Receive Average Rent Refunds of $9,500 Each

WASHINGTON, D. C. – Attorney General Karl A. Racine announced today that he has secured restitution and monetary penalties under a settlement of the District’s consumer protection claims against the owners and managers of the Terrace Manor apartments. Last year, the Office of the Attorney General (OAG) brought suit against Sanford Capital LLC, Oakmont Management Group LLC, Terrace Manor LLC and Aubrey Carter Nowell, the owners and managers of the Ward 8 complex, alleging multiple violations of the District’s housing code and Consumer Protection Procedures Act.

Under the settlement, the property’s longtime owners will pay $325,000 in restitution and penalties, including an average repayment of approximately $9,500 to eligible former residents who lived in the complex while the violations existed. The restitution payment represents a disgorgement of 75 percent of the rent tenants paid while being forced to live in substandard housing. Attorney General Racine reached the settlement in connection with the property’s sale in a bankruptcy case, and in conjunction with a separate agreement providing refunds to current tenants. OAG also secured a guarantee that necessary repairs will be made by the new owners under court oversight.

“These agreements will provide tenants with the return of a substantial percentage of the rent they paid, temporarily relocation to a safe and habitable building while their units are rehabilitated to code, and ongoing court supervision to ensure compliance,” Attorney General Racine said “This settlement is a victory for Terrace Manor’s current and former tenants, and puts unscrupulous landlords in the District on notice that they cannot force their tenants to live in unsafe and unlawful conditions or push them out of their homes through neglect.”

In addition to securing rent refunds for tenants, Attorney General Racine also secured a commitment from WC Smith, the purchaser of the apartment complex approved by the bankruptcy court, that all necessary repairs will be made to the property. WC Smith has agreed to be substituted in place of the former owners in the pending portion of the lawsuit regarding housing conditions and to present its renovation plan as an abatement plan for the property. This means that repairs to the property will proceed under court supervision, which should end the cycle of neglect that the inhabitants of the Terrace Manor apartments were forced to endure through prior owners.

Pursuant to separate agreements with current tenants and the tenant association negotiated by private counsel, Terrace Manor has agreed to pay similar refunds to current tenants. WC Smith will relocate the tenants to move-in-ready units nearby, where they can remain during the rehabilitation of the property. WC Smith has also agreed to place a cap on rent increases that will apply to tenants during and after the rehabilitation of the property.

Attorney General Racine expressed his thanks to all those who worked hard to reach these agreements with the best interest of the tenants in mind: “I commend the work of the Legal Aid Society of the District of Columbia, Bread for the City and Arnold & Porter Kaye Scholer on behalf of current Terrace Manor tenants. I also want to thank the new purchaser, WC Smith, for its commitment to reaching agreements with current tenants, and for working with the District to ensure that rehabilitation can proceed under court oversight,” he said.

A copy of the bankruptcy court’s order confirming the plan is attached.

Preserving Affordable Housing and Helping Tenants
This settlement is one of several recent victories for tenants in the District resulting from OAG lawsuits and other actions to preserve affordable housing. As part of his commitment to ensuring District residents have access to quality affordable housing, Attorney General Racine will continue to bring actions to ensure safe and habitable housing conditions and to ensure that consumers get what they pay for with their rent checks.

District residents with questions about this settlement or with any other consumer complaint can contact OAG’s Office of Consumer Protection through the OAG Consumer Hotline at (202) 442-9828, by sending an e-mail to consumer.protection@dc.gov, or online using OAG’s Consumer Complaint Form.

Tenants with landlord-tenant concerns can contact the Office of the Tenant Advocate at (202) 719-6560; if you believe your issue may be building-wide, please ask them to share your information with the Office of the Attorney General.