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Attorney General Brian L. Schwalb today announced a settlement requiring the owners of Foster House, an apartment building located in the Shaw neighborhood at 801 Rhode Island Avenue, NW with 76 subsidized, affordable housing units, to pay at least $1.65 million to harmed tenants and the District and to ensure that that level of affordable housing is preserved at the site for no less than 30 years.

This settlement resolves a lawsuit the Office of the Attorney General (OAG) filed to protect tenants at Foster House who were forced to leave their homes because of unsafe and unlawful conditions. In its lawsuit, OAG alleged that New Bethel Baptist Church Housing Corporation, Inc. (New Bethel) and its business partner, Evergreen 801 RI Apartments LLC (Evergreen), had severely neglected repair and maintenance of the building and endangered tenants-including many low-income seniors who had lived in the building for decades. OAG secured a Court-appointed receiver to oversee emergency repairs. On the eve of trial, OAG reached a settlement with New Bethel and Evergreen pursuant to which New Bethel and Evergreen will sell the property to a buyer who will covenant and agree to develop and maintain at least 76 affordable apartments and keep them affordable for 30 years. New Bethel and Evergreen will pay $650,000 in restitution to harmed tenants and $1 million in civil penalties to the District. And, if they fail within one year to secure a buyer that will agree to the affordable housing covenant, they must pay more than $6 million in restitution and penalties.

"My office will always have tenants' backs, and especially at a time when affordable housing in DC is increasingly scarce, we will not allow District landlords to systematically neglect their buildings to force longtime residents out of their homes," said Attorney General Schwalb. "This settlement is a significant win for dozens of Foster House residents and the community as a whole - putting money back in tenants' pockets, holding the owners accountable for threatening tenants' health and safety, and preserving affordable housing in the rapidly developing and historic Shaw neighborhood."

"My family lived with terrible conditions for far too long and our landlord refused to make repairs," said Joy Perry, a former Foster House tenant. "The mold in our apartment left my young nephew struggling to breathe, and my mom's health declined rapidly because of the conditions we were living under. She passed away in June, and I believe she might still be with us if we had been living somewhere else. I am grateful that the team at the Office of the Attorney General stood up for us and is working to make sure no one else goes through what we did at our building."

"No one should have to live with rats coming into their home through holes in the walls and cabinets, infestations of huge flying bugs, or water coming through the roof, floors, and ceilings-but that's exactly what my neighbors and I were dealing with," said Ericka Malloy, President of the Foster House Tenants' Association. "Conditions in our building were awful, and we were totally abandoned by our landlord. We appreciate Attorney General Schwalb and his team for fighting for us and making us feel heard. We also appreciate the work of the receiver, Mr. Slover, who came into a tough situation and gave us some relief. Now, the Foster House tenants are grateful that we will get our money back for the rent we paid while the building was in such bad condition, and we are continuing to fight for our TOPA rights and compensation for our pain and suffering."

OAG's Lawsuit Against New Bethel and Evergreen

Foster House is a 76-unit apartment building located in Shaw and owned by New Bethel, a nonprofit organization. In March 2021, OAG filed a lawsuit against New Bethel and its business partner, Evergreen, over systemic housing code violations, including large-scale water leaks and mold, rodent and pest infestations, broken heating and HVAC systems, exposed wires, missing fire control systems, malfunctioning elevators, and doors and gates that did not lock.

After OAG filed suit, New Bethel signed two separate consent orders promising to make repairs at Foster House but it failed to do so, causing the U.S. Department of Housing & Urban Development to terminate the contract that had subsidized rents at the building for years. The conditions at Foster House had deteriorated so severely that the DC Fire and Emergency Medical Services Department ordered New Bethel to employ 24-hour fire monitors to sit on all seven floors of the building.

In April 2023, a D.C. Superior Court judge granted OAG's request to appoint a receiver, finding that "the definition of insanity is doing the same thing over and over again and expecting different results…it would be irresponsible... to just allow [the owner of Foster House] to continue to engage in the same pattern of neglect about the conditions of the building that have persisted in this case for far too long."

OAG's Settlement Agreement

Under the terms of a settlement agreement, New Bethel and Evergreen plan to sell the property for affordable housing development. The settlement requires them to enter into a purchase and sale contract within one year and to close on the sale within one year after that. Under the terms of the agreement, New Bethel and Evergreen will:

• Preserve at least 76 affordable apartments at the Foster House site for 30 years: New Bethel and Evergreen plan to sell the property to a purchaser that will sign an affordable housing covenant keeping at least 76 units of affordable housing on the site for 30 years. A covenant is a binding legal agreement that applies to and runs with the land, meaning that even if the property is sold again, or ownership is transferred, the agreement will still apply. Under the terms of this covenant, Foster House's purchaser would agree to reserve at least 46 apartments for households earning less than 50% of the Median Family Income (MFI) and at least 30 units for households earning less than 80% of the MFI, and would charge affordable rent at all these units based on household income. The purchaser would also agree that tenants who occupied Foster House as of April 2023-including those who have relocated since then-shall have the right to return to the property to units similar to the ones they formerly occupied.
  
• Pay a minimum of $1.65 million to tenants and the District: If New Bethel and Evergreen enter into an agreement to develop affordable housing at the Foster House site within one year, and close on the sale within a year after that, they will pay $1.65 million to tenants and DC.
  
  • $650,000 in restitution to 53 harmed tenants.
    
  • $1 million in civil penalties to DC.
    
• Repay the District more than $700,000 for funding emergency repairs: New Bethel and Evergreen must reimburse the District for funding emergency repairs to Foster House after a receiver was appointed. OAG paid $700,000 out of the Tenant Receivership Abatement Fund, which New Bethel and Evergreen will be required to repay with interest within two years.
  
• Forgive all back rent owed by current and former Foster House tenants.

If New Bethel and Evergreen fail to enter into a contract that includes the proposed affordable housing covenant within one year, or fail to close on the sale and record the affordable housing covenant within one additional year, they must pay a significantly larger amount in restitution and penalties:

• Pay $6,050,000 to tenants and the District.
  
  • $800,000 in restitution to 53 harmed tenants
    
  • $5.25 million in civil penalties to DC.

A copy of the settlement agreement is available here.

This matter was handled by Assistant Attorneys General Francesca Gibson, Alec Bowman, Jude Nwaokobia, Senior Trial Counsel Ryan Wilson, Assistant Deputy Attorney General Beth Mellen, and Deputy Attorney General Jennifer Jones.

OAG's Enforcement Authority

OAG exercises its enforcement authority under several District statutes to protect tenants, including the Tenant Receivership Act (TRA), under which OAG can force landlords to fix health and safety issues at rental properties, and the Consumer Protection Procedures Act (CPPA), which protects consumers-including tenants-from deceptive and unfair business practices.

Resources for Tenants

OAG works to ensure that residents across the District have access to safe and affordable housing and holds landlords accountable if they violate the law. Access OAG's resources to help renters for guidance on how to report problems with your landlord or your housing conditions. Tenants may send complaints about your housing conditions to [email protected].

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