A fix or a setback? DC may strip tenant purchase rights from all single-family homes

When a landlord sells a rental property in DC, the law gives tenants the right try to purchase the property instead for the contracted sale price. A bill just approved by a DC Council committee would exempt all single-family homes from the law. Realtors say that's necessary to prevent abuses, while tenant advocates say it will harm vulnerable populations.

The bill, introduced by councilmember Anita Bonds (at-large), would exempt single-family homes from the Tenant Opportunity to Purchase Act (TOPA). TOPA currently has slightly different provisions based on the size of the property — single family, properties with between two and four units, and properties with five or more units.

The bill widens from just exempting accessory apartments to all single-family homes

Last year, the Housing and Neighborhood Revitalization Committee, which Bonds chairs, held a public hearing on a draft bill to exempt single-family homes with accessory dwelling units (ADUs) from TOPA. Typical ADUs include so-called English basement apartments, converted garages, and carriage houses.

The DC Association of Realtors supported the draft bill. Realtors argued that the 180-day timeframe makes it hard for property owners to sell their property in a timely manner, or to arrange a timely follow on-purchase using proceeds from the sale, given the uncertainty of in-situ tenants’ intentions, financing, etc. Realtors also complained that some tenants had no interest in home-ownership but were using the TOPA process to extract hefty buyouts in exchange for not invoking their TOPA rights.

Polly Donaldson, the Director of the District’s Department of Housing and Community Development, expressed concerns that the draft bill would create two classes of tenants (those with and without TOPA rights) based on an arbitrary criteria (total number of rental units in a property). Tenant advocates argued that small fixes could be introduced to prevent abuses of the law, including narrowing the timeline and limiting who tenants can assign their rights to (e.g. to third parties who will guarantee affordability).

Given the gulf between the two sides, Bonds convened a working group of tenant advocates and real estate folks to hammer out the differences. The idea was to find a compromise position that both sides could agree on, and tenant advocates say the group were making progress.

The revised draft that Bonds brought to the committee did not contain such a compromise. Instead, the revised draft of the bill proposes to exempt all single-family homes from TOPA, not just those with tenants living in ADUs. Bonds' new bill does carve out two exemptions: TOPA rights of elderly persons (70 or older) and tenants with disabilities will be grandfathered into the bill.

The committee approved the bill at a mark-up on February 23. Councilmember Brianne Nadeau (Ward 1) offered an amendment to widen the definition of elderly to include anyone 62 or older. It was accepted unanimously by the committee.

Realtors are pleased with the change

Members of the city’s real estate community are happy with the new bill. It means that tenants in single family homes can no longer hold up legitimate sales just to score a hefty payout. Realtors also have argued that some homeowners may be reluctant to rent out a basement or carriage house for fear that it would then complicate selling the home in the future.

Other supporters of the bill note that if past is prologue, the exemption might not affect that many tenants. Council committee staff analyzed TOPA offers in single-family homes between October 2009 and August 2015 and found that of 427 offers, only 19 resulted in sales to tenants.

Some who otherwise support the bill aren't sure it even covers buildings they'd expect it to. The Dupont Circle Advisory Neighborhood Commission and Dupont Circle Citizens' Association argued that in many row house zones, actually, a house with a basement apartment is not technically considered an ADU or a single-family home but a two-family apartment building. It's unclear if the definition of “single-family home” in this bill encompasses that or not, but it's at odds with the zoning definition.

Tenant advocates feel betrayed

Tenant advocates are very unhappy about the bill. A group of housing nonprofits, led by the Latino Economic Development Center (LEDC), released a public letter condemning it. They argue that the exemption will make it easier for speculators to flip houses (which increases prices). And, with tenants out of the way, speculators can more easily convert single-family homes into multi-unit condominiums. Given that the District’s rental housing stock is already dominated by studio and one-bedrooms, tenant advocates argue that protecting the dwindling supply of family-sized homes should be a priority.

Tenant advocates would like to see more carve-outs if the bill goes forward. At the moment, Nadeau’s amendment tries to soften the impact by lowering the age limit for elderly from 70 to 62. I spoke to Rob Wohl at LEDC, who told me that the amendment does not target the right group. “The demographic category most at risk for housing insecurity today is not the elderly, it's families,” Wohl said. The majority of the District’s rental housing is studios and one-bedrooms. Families, nuclear or multi-generational, have fewer and fewer options if they want to stay in the city.

Ed Lazere, who is challenging council chairman Phil Mendelson in the Democratic primary, also weighed in. He said that the working group established by Bonds had been making progress on problems with TOPA in single-family homes with ADUs, and claims, “Mendelson upended this progress by introducing and pushing a proposal that is far more harmful to tenants.” ​​​​​​

Wohl made a similar point. He told me, “We were willing to find fixes for people in that situation, but the new bill exempts all single family homes.” As Wohl explained to me, “that’s a bigger category.” It includes not just people who live in their homes and rent ADUs to tenants, but also people who do not need help, like “owners of investment properties.” In some cases, low-income residents have been renting a whole house for years or decades — it's not just about the transient renter in a basement apartment.

There's still time for changes

For my part, I agree that this bill is overly expansive. It will take TOPA rights away from a wider category of tenants than many people assume. When we talk about single-family homes, we often think about stand-alone houses, or row houses, but single-family home can also include condominium units being rented by individual owners. The early condo building boom in the early 2000s means there are a lot of renters in the city who live in single-family homes in condo buildings. They should continue to have a right to buy their units if and when their owners decide to sell.

It’s also interesting to note that the data collected by Bonds committee found that two-thirds of successful TOPA sales were for units in condominiums. TOPA currently gives tenants in these units the right to buy. Bonds new bill will make that impossible.

There’s still time to rework this bill. The council still can amend the bill to incorporate the compromises already hashed out by Bonds' working group and find further ones that can work for all sides.