Is this Van Ness apartment complex misleading tenants about the cost of rent?

A Van Ness apartment building misleads tenants about how much their rent would be through the use of rent concessions, the District of Columbia alleges in a lawsuit filed this week by Attorney General Karl Racine.

The practice in use at 3003 Van Ness Apartments has the effect of circumventing the city’s rent control by subjecting tenants to higher rent increases than the law allows, Racine says. In a rent controlled building, rent may go up by no more than a certain percentage that’s tied to the consumer price index, which is a measure of inflation.

If you aren’t familiar with a rent concession, here’s how it works: Let's say a rent-controlled apartment is registered with the DC Department of Housing and Community Development as costing a certain amount per month. The landlord may advertise it and rent it out at a lower amount. Then, when it's time for the annual rent increase that's allowed under the rent control law, the landlord may calculate the new rent as a percentage of the higher amount registered with DHCD, rather than as a percentage of the lower amount that the tenant was actually paying.

Washington City Paper’s Andrew Giambrone wrote about the challenge facing residents at 3003 Van Ness last year. One resident who had been paying $2,000 expected her rent to increase by 1.5 percent to $2,030. Instead, the landlord told her it would shoot up to $2,783, a 39.15 percent hike.

Tenants can negotiate a smaller increase than 3003 Van Ness proposes if they agree to sign a new one-year lease, Racine says. Ordinarily, a lease becomes month-to-month after a year.

Racine described the lawsuit as a consumer protection measure. “Landlords should clearly inform consumers up-front about the base rent from which subsequent increases will be calculated–but, we allege in this case, the defendants misled them,” he said in a statement.

The lawsuit names Equity Residential Management, LLC, a Chicago-based company that owns 3003 Van Ness and owns or has a stake in about 300 other properties in five US cities and Southern California, as a defendant. It also names Smith Properties Holdings Van Ness, LP.

Officials in Chicago and at 3003 Van Ness didn’t get back to me by deadline. When I checked the website for 3003 Van Ness after Racine filed the lawsuit Dec. 13, I found listings for dozens of apartments ranging from a studio at $1,660 per month to a two-bedroom at $3,049 per month.

“Actual rental rates may be higher than the amounts quoted,” the website said. “Quoted amounts reflect your rental payment after a concession, if one has been applied.”