INTRODUCTION

Chairman Mendelson and members of the Council.  I am Assistant Deputy Attorney General Jimmy Rock, and I am testifying on behalf of Attorney General Karl Racine and in support of the Abatement and Condemnation of Nuisance Properties Amendment Act of 2019.  This legislation is designed to enhance the Office of Attorney General’s (“OAG”) enforcement powers under the District’s Tenant Receivership Act.

Under General Racine’s leadership, OAG has focused on ensuring that low- and moderate-income District residents have safe and habitable rental housing.  OAG has two primary enforcement tools to hold landlords accountable for failing to provide healthy and safe housing: (1) the Tenant Receivership Act (“TRA”), which allows OAG to seek Court oversight over an apartment building that evidences a pattern of neglect, and (2) the Drug-, Firearm-, and Prostitution-Nuisance Abatement Act (“Nuisance Act”), which enables OAG to require landlords to enact Court-ordered plans to address properties that have drug, firearm, or prostitution issues. 

In 2016, General Racine created the Public Advocacy Division (“PAD”) to bolster the Office’s affirmative enforcement work.  PAD’s Social Justice Section currently enforces the TRA and the Nuisance Act, along with the District’s wage and environmental laws.  With the assistance from the Council, PAD currently has three Assistant Attorneys General FTE’s who focus full-time on housing enforcement work.  Based on the Office’s now four-year experience with enforcing the TRA, OAG seeks a package of amendments designed to bolster our ability to seek relief for tenants forced to live in housing that suffers from a pattern of neglect.

SUMMARY OF HOUSING ENFORCEMENT WORK

OAG’s first TRA case filed under General Racine’s tenure was against the infamous D.C. real estate company, Sanford Capitol, concerning the Congress Heights apartments in 2016.  OAG has litigated four TRA cases in total against Sanford Capital properties in Wards 5,7, and 8. In those cases, the Superior Court ordered over $1 million dollars to repair various properties, awarded an average of $8,000 per tenant in restitution for their deplorable living conditions, and OAG eventually obtained an order removing Sanford Capital from the D.C. market.

In 2017, OAG filed a key TRA case against Jefferson-11th Street. This case concerns a 26-unit building in Columbia Heights with 13 remaining tenants located at 2724 11th Street NW. For several years, the owner and property manager refused to repair failing systems and address chronic issues at this building, exposing the low-income tenants to toxic mold, rat and bedbug infestation, and utilities that did not consistently function. After extensive litigation, the Superior Court appointed a Receiver over the property, and eventually ordered the property owner to pay $1.8 million to repair the property. Construction is currently underway, and the tenants will likely return home before the end of 2020.

Since 2016, PAD’s Social Justice Section has filed ten cases under the TRA and obtained orders from the Superior Court securing over $3.5 million to repair neglected properties. Often with the help of the advocate community, including Housing Counseling Services, Children’s Law Center, Bread for the City, and the Legal Aid Society, among others, OAG has been able to preserve and create affordable housing as well as improve the lives of tenants in D.C.

OVERVIEW OF AMENDMENTS

Based on this enforcement experience, OAG has proposed several categories of substantive amendments to facilitate our investigation and litigation of TRA cases.  First, to assist in our upfront investigation of TRA cases, OAG requests that the Council add pre-suit investigative tools.  This includes the ability to request documents and take written and oral testimony to confirm whether there are grounds to bring a TRA case.  The TRA contemplates the Superior Court deciding the issue of appointing a Receiver on an expedited basis, so this pre-suit investigative authority will be especially useful in making sure OAG has a complete documentary and evidentiary record in place by the time it files any TRA action.  This investigative authority will also bring the TRA in line with other statutes that PAD enforces with similar investigative authority, including the Consumer Protection Procedures Act, Wage Fraud Act, Nonprofit Corporations Act, Antitrust laws, and the False Claims Act.

Second, OAG is seeking amendments that clarify the Superior Court’s powers in connection with funding and implementing a Receivership.  OAG’s experience is that even after a Receiver is appointed, it is often a difficult and time-consuming process to ensure proper funds are available to the Receiver to carry out the needed repair work and protect tenants at the property. To address these issues, OAG is seeking three changes to the TRA provisions that govern the administration and funding of Receivers.  (1) First, OAG seeks to adopt a definition of “owner” of a property that includes both the owner of record as well as others (such as a property manager) that has care or control of the property.  (2) OAG requests that the TRA be changed to require the Superior Court to order all “owners,” as broadly defined, to contribute funds in excess of available rents to repair the Property. The TRA currently only says, at D.C. Code § 42-3651.05(f), that the Superior Court “may, in appropriate circumstances” require owners to pay amounts in excess of the rents to fund the Receivership. Changing this to a mandatory requirement will facilitate the funding of the Receivership and remove the step of requiring litigation over whether funding is appropriate in each particular case.  (3) Third, OAG is seeking to add clarity to the TRA about the types of expenses the Court can order an “owner” to fund in excess of the rents to include not just abating health and safety issues, but also relocating tenants if needed as well as reimbursing the District or the Receiver for any up-front costs incurred in safeguarding the property.  It is important to note that these amounts would only be assessed after the Superior Court has found it is appropriate to appoint a Receiver because of a pattern of neglect at the Property.

Third, OAG is also seeking a change to the TRA to allow the Superior Court to award back rent to tenants forced to live in neglected housing.  Currently, OAG seeks to recover similar amounts of back-rent amounts by bringing CPPA claims within a TRA case.  OAG seeks to streamline the enforcement process by allowing the Superior Court – after it has found evidence of a pattern of neglect justifying a Receiver – to also order “owners” to refund at least half, and up to two-thirds, of rent that tenants paid in the three years prior to the Receivership. This requirement that “owners” will have to refund rents to tenants will serve as a useful deterrent to neglectful owners and lessen the incentive for owners to attempt constructive eviction that may play a part in many of OAG’s TRA enforcement cases.

Fourth, OAG seeks to clarify the Superior Court’s powers in connection with ending a Receivership.  In this respect, OAG seeks two main changes to the TRA at D.C. Code § 42-3651.07.  The first change is to make it clear that a Receiver should not be terminated unless the District has been reimbursed for all of its direct or indirect expenses for addressing health and safety issues at the property all outstanding housing code fine paid.  The second change is to permit the Superior Court, as part of winding down a Receivership, to enjoin “owners” from engaging in similar patterns of neglect at other properties they own or manage.

This concludes my testimony. Thank you for your time and I am happy to answer any questions the members of the Committee may have.