A lawsuit filed by D.C. Attorney General Brian Schwalb over alleged artificial rent inflation will hit some of the region’s biggest landlords, including companies with properties in Alexandria, DCist first reported.
Schwalb’s lawsuit alleges the landlords of acting as a rent-setting cartel that use Texas-based property management software company RealPage to artificially drive up rent prices around the region.
According to the lawsuit:
In practice, RealPage has focused on recruiting into the cartel the buildings with the largest number of units (i.e., buildings with fifty or more units). In the District, a sizable
majority of units in large multifamily buildings — approximately 60% — set their prices using RealPage’s RM software.
In the Washington-Arlington-Alexandria Metropolitan Statistical Area, that number is even higher: over 90% of units in large buildings are priced using RealPage’s RM software.
As a practical matter, this leaves many District residents with no choice but to pay RealPage’s inflated rents.
The largest defendant in the lawsuit is Greystar, which manages six communities across Alexandria and uses RealPage RM Software for pricing:
- Bailey’s Crossings Apartments
- Del Ray Tower at Fuse
- Station 650 Apartments
- The Blake
Other defendants in the lawsuit include Avenue5 Residential, which owns e-lofts in the West End, and Avalon Communities, which owns Avalon Potomac Yard. Another developer in the lawsuit, JBG Smith, has been part of plans to redevelop Potomac Yard.
“RealPage, the Defendant Landlords, and other Participating Landlords have unlawfully agreed to forgo competition in favor of using a central entity — the RealPage RM Software — to set apartment rents,” the lawsuit said “Their agreement is reflected in existing documents, has been
publicly acknowledged by cartel members, and is closely policed to ensure compliance.”
The lawsuit said RealPage suppresses landlords’ independent price decision-making and requires the landlords to impose rents generated by the company’s software. Landlords using the software have touted their ability to raise rents by 20% or more, the lawsuit said.
The lawsuit comes on the heels of years of rent increases, with many of the defendants in the lawsuit owning the Class A apartments in Alexandria that have seen an average 4.7% rent increase over the last year.
Image via The Blake/Facebook
Those Class A units comprise the majority of new construction around the region and are generally developments built after 1991 and featuring amenities. The effective rent per month in one of those units in Alexandria, which includes a mix of studios, one and two-bedroom rentals, is $2,475 per month.
That increase is one of the sharpest increases in the region, behind only Upper Georgia Avenue (increased by 5.6%) and Bethesda (increased by 5.2%).
Rents for those types of units increased across most of the region, only decreasing slightly in NoMa and the Capitol Hill neighborhoods of D.C.
Rents for Class B units, generally mid/high-rise units, has also increased over the last years, rising by an average of 18% in the region. UrbanTurf reported last year that West Alexandria saw a 116.8% increase in Class B unit rents while Arlandria saw a 108.1% increase.
Anita Morrison, principal at Partnerships for Economic Solutions, said in a panel earlier this year that despite a surge in new residential units being built in Alexandria, rents have continued to climb.
“The fastest growing age category is people ages 65-74 and children under 20, but folks 20-24 dropped in Alexandria and 25-34 did not grow as much as the rest of the market,” Morrison said. “We think that’s a reflection of not being able to buy here.”
Morrison said the problem is that, even with the new housing units, Alexandria’s housing supply isn’t keeping pace with the demand.
“The scale of developments haven’t met the need,” Morrison said. “We’re always running a few steps behind the demand. It’s about getting enough supply to increase vacancy rates and create competition, but we’ve never moved the needle enough with supply to see that happen.”
Residents of an Arlandria affordable apartment complex say the new owner is drastically, and illegally, raising rent and not notifying tenants within 60 days.
Potomac West Apartments LLC bought the four-building, 60-unit apartment complex in June. Last month, residents with expiring leases were notified via letter of a rent increase.
“We just wanted to say thank you for being a wonderful resident of Potomac West Apartments,” begins an Aug. 1 letter to a resident. “We are planning on upgrading the property to include new washing and drying machines, renovated laundry rooms, landscaping upgrades and much more.”
The property manager then reminded residents in the letter that they must provide a 60-day notice if they are going to vacate.
Residents protested the action on Tuesday afternoon with a rally organized by Tenants and Workers United (TWU). The property is directly across the street from Housing Alexandria’s massive affordable apartment complex development at the corner of Mount Vernon Avenue and Glebe Road.
Jose Coca saw his rent increase by more than $500. The 85-year-old custodian at the Pentagon has lived on the property for more than 30 years and said that no improvements have been made to the property.
“When we go to the leasing office about a maintenance issue, they don’t pay attention to us,” Coca said.
Medical assistant Soraida Cruz has lived in her two-bedroom apartment for 18 years. She said her rent is being increased from $1,498 to $1,725 per month, and that Potomac West Apartments and property manager Chapman Management are not responsive.
“It hurts,” Cruz said. “It really does. I’m the only one working. If we had better conditions, paying less than what they are raising right now, I would continue living here, but it’s tough.”
Cruz also said that the buildings have rodent and maintenance issues that residents pay out of pocket to fix.
Larisa Zehr, an attorney from Legal Aid Justice Center, said that the new apartment building owners are breaking the law by not giving tenants at least 60 days notice of a rent increase.
“This makes common sense and it’s a basic protection for tenants,” Zehr said. “That did not happen here. As this area sees increased economic interest, we’re seeing this pattern developers are hiking rents and driving out long term stable families. This is purely profit-driven. We see rents increase without any improvement to living conditions.”
Zehr continued, “Potomac West Apartments is intended to be long-term affordable housing, which is subsidized by the Low Income Housing Tax Credit Program. That means the owner has to cap rent at 60% of area median income. In Northern Virginia, as low income people are pushed out and displaced by wealthier households, that number keeps going up. The cap is not low enough to protect working class families like the families in this neighborhood.”
TWU mailed two letters to the property manager and owners asking for a sit-down to discuss rent increases and tenant needs. They did not receive a response.
“I know it’s not easy to be here after you work two jobs, after you cook for your family,” TWU Executive Director Evelyn Urritria told the protestors. “You are here because you care about your housing situation. It’s unfair what’s happening, it’s unjust what’s happening.”
Potomac West Apartments LLC and Chapman Management did not return calls for comment.
After years of battling between residents at Southern Towers and building management, a program next week aims to help renters get a better understanding of their rights.
The Tenant’s Rights workshop, presented by Mary Horner of Legal Services of Northern Virginia, is scheduled for Thursday, Aug. 17, at 1 p.m. at the Workforce Development Center (4850 Mark Center Drive).
The program is specifically aimed at helping Southern Towers residents and residents at Morgan Property locations in the West End, like Stoneridge at Mark Center Apartment Homes.
The free workshop is in English, but translation into Spanish and Dari will be available.
Join us on Thursday, August 17 starting at 1 p.m. in person at the Workforce Development Center with Mary Horner from Legal Services of Northern Virginia for Tenant's Rights: "Know Your Lease." To learn more and register, go to https://t.co/KtZxGp8x4p pic.twitter.com/klrGVlnDAf
— WDC Alexandria VA (@WDCAlexVA) August 7, 2023
(Updated at 11 a.m. on June 29) U.S. Senators Mark Warner and Tim Kaine sent a letter to CIM Group highlighting the concerns of residents regarding evictions, increased rents and living conditions at their Southern Towers Apartments complex.
In a letter Monday, the Virginia Democrats urged the building owner to resolve long standing disputes with residents. Since buying the property at the height of the pandemic in 2020, residents have protested against evictions, claiming that CIM Group has raised rents and evicted hundreds of residents from deteriorating properties.
“Tenants have shared with our offices that, under CIM ownership, they have been subjected to eviction filings during the eviction moratorium, changes in how utilities are billed combined with rent increases that have led to substantial price hikes, and unaddressed maintenance issues that pose health and safety risks,” the senators wrote. “Further, tenants have voiced that CIM issued unclear eviction notices indicating that tenants who were late on their rent payments had only five days to ‘pay rent or, alternatively, to terminate lease and vacate premises’ – only mentioning later in the notice that tenants located on a ‘covered property’ as defined by the CARES Act were entitled to a 30-day notice before vacating.”
Protests against CIM Group have been led by the People’s Actions Homes Guarantee campaign and African Communities Together (ACT), which say that Southern Towers residents are at the mercy of a major private equity landlord that only cares about profit.
Consequently, last month Southern Towers also got a visit from the Director of the Federal Housing Finance Agency.
CIM Group says that they only 31 residents have been evicted due to non-payment, and that living conditions have improved under their ownership.
CIM Group sent ALXnow the following statement:
CIM Group has long been a proud member of the Alexandria, VA community as the owner and operator of several properties, including Southern Towers where the firm took over operations in 2020. It was immediately clear to Southern Towers Management that they needed to address years of deferred maintenance and make important quality-of-life improvements to the development including long-overdue roof replacements; renovation of apartments, corridors, and common areas; resurfacing parking areas and tennis courts; new playgrounds and much more.
While Southern Towers is not an affordable housing community, CIM Group has worked diligently to keep rent 20% below comparable properties in Alexandria, while at the same time, making significant improvements to the habitability of Southern Towers. Residents have always paid a portion of their utilities and continue to be responsible for the costs they incur.
Southern Towers Management has never violated the CARES Act or any local, state or Federal laws. In fact, CIM Group is legally required to utilize a form provided by the State of Virginia–referred to as a 5-Day Notice–to notify residents when they are in arrears. CIM Group has no control over the language used in the form and any call for modifications should be directed to the State of Virginia.
Despite much disinformation, Southern Towers Management will not be deterred from their commitment to the community they serve, their legal obligation and the fiduciary duty the company has to investors who have also helped improve the living conditions at Southern Towers from what existed prior to CIM Group’s ownership.
CIM Group has made significant improvements for the overall wellbeing of the residents at Southern Towers, including:
- Providing assistance during the pandemic to residents who suffered financial setbacks that resulted in more than $5 million in rental assistance secured for hundreds of families.
- Increasing the level of regular maintenance well beyond what was the norm under the prior owner by 96%, which is more than $8.2M to address significant deferred maintenance issues.
- Instituting an online resident portal that provides transparent and open communication, as well as a seamless way for residents to submit work orders, which expedites necessary repair and maintenance.
- Prioritizing community involvement by organizing farmers markets, job fairs, food drives, and vaccination clinics.
- Engaging residents in a transparent and ongoing way by holding monthly meetings and appreciation events, as well as communicating important dates and information in the resident portal, as well as the weekly and monthly newsletters.
Fostering a secure and healthy environment by:
- Installing security cameras in each elevator landing in each tower and upgrading cameras on the lobby level in each tower. The entire project is anticipated to be completed by the end of July 2024.
- Upgrading all smoke detectors and replacing every unit on the campus with smoke detector/CO2 combo units.
- Repairing the retaining wall near the Ashlawn.
- Installing Flock Security – license plate reading cameras installed at each entrance to the property.
- Upgrading the fire alarm panel at Sherwood.
- Purchasing a new Jeep for patrolling the campus.
- Performing a thorough Pest Control inspection and preventative treatments of all common areas and every apartment home as well as sealing of any holes found during the inspection.
Making material upgrades to improve the quality of living at Southern Towers:
- Making significant laundry room upgrades, including purchasing new washer and dryer equipment for each floor at every building. The new equipment also included upgraded payment panel allowing residents the option to use cash, credit/debit cards or an app to pay for service.
- Enhancing and upgrading the dog park.
- Tennis Court resurfacing, striping and new nets. Upgrade also included replacing the solo player wall.
- Resurfacing the overflow parking area.
- Asphalt resurfacing at Beauregard entrance near The Graham and Monticello.
- Replacing all of the playground equipment.
- Beautifying the property including removing 26 dead or rotting trees from the campus and pruned trees in the community park to raise tree canopy by 3 feet, allowing better sight lines.
- Replacing 4 outdoor gas grills at Graham.
- Installing new grilling areas throughout the community park.
- Expanding concrete pads at grilling areas which include new accessible seating.
- Installing a new pergola over the grilling area closest to the Monticello pool.
- Complete resurfacing of the Monticello main and small pools.
- HVAC convector project completed at the Sherwood.
- HVAC system inspections completed across the campus.
- Window and Balcony door mock-ups completed at Ashlawn and Monticello. Each building scheduled for full window replacement byQ4 2023.
The full letter from Warner and Kaine is below. Read More
The Director of the Federal Housing Finance Agency visited Southern Towers in the West End this week, signalling to housing advocates that years of protests against rent hikes and evictions are finally paying off.
On Wednesday, FHFA Director Sandra Thompson toured the 2,261-unit Southern Towers complex at 4901 Seminary Road. The tour was hosted by the People’s Actions Homes Guarantee campaign and African Communities Together (ACT), and the groups say that affordable housing residents are at the mercy of a major private equity landlord that only cares about profit. The groups say that since buying the property at the height of the pandemic in 2020, California-based owner CIM Group has evicted more than 250 residents, and that many of them endured uninhabitable conditions and rent increases.
“What we’re seeing at Southern Towers is what happens when we allow corporations to commodify the human right to housing and put profit over lives,” said Sosseh Prom, Housing Program Director, African Communities Together. “Immigrant families and blue collar workers deserve to be safely housed, and we cannot afford to sit back and watch their displacement.”
CIM Group, however, says that only 31 residents have been evicted due to non-payment, and that 158 eviction notices were filed with the District Court in Alexandria.
“Southern Towers Management has, and will continue, to support individual residents of the community and work cooperatively with all stakeholders including the Federal Housing Finance Agency,” CIM said in a statement. “Southern Towers Management has never violated the CARES Act and despite continued malicious attempts to paint Southern Towers Management as a faceless Wall Street investor, management will not be deterred from their commitment to the community they serve, their legal obligation and the fiduciary duty the company has to investors who have helped improve the living conditions at Southern Towers from what existed prior to CIM Group’s ownership.”
Thompson’s tour was not open to press, and FHFA had no further comment beyond last month’s request for input (RFI) to Fannie Mae and Freddie Mac to study easing multifamily tenant protections on properties they finance. One of those properties is Southern Towers, which CIM Group bought with a $346.7 million government-backed loan through Freddie Mac.
“The Enterprises have a responsibility to not only ensure liquidity is available for affordable rental housing, but also to address challenges faced by tenants and property owners in the multifamily housing market,” Thompson said in a statement last month. “FHFA is seeking public input to help identify these challenges nationwide, particularly in underserved communities.”
Thompson’s tour was made six months after ACT filed a complaint with FHFA and Freddie Mac. In that complaint, ACT said CIM Group is “using the federal funds received from Freddie Mac to finance predatory behavior in an affordable community.”
In Alexandria, CIM Group owns Mason at Van Dorn, a 1,180-unit residential community, and Park Place at Van Dorn, a 285-unit residential community. CIM also converted the former Crowne Plaza Hotel Alexandria at 901 N. Fairfax into the upscale Venue apartment complex.
Southern Towers resident Haram Elsheikh said that residents should not be forced to fight a landlord for habitable living conditions.
“Imagine finding out that your kid has developed asthma because of the unresolved mold in your AC unit,” Elsheikh said. “As blue-collar workers, we are already working hard to make ends meet with the rising cost of living.”
A video of the years-long residential protest is below.
With a potential wave of evictions incoming next month, a group representing tenants of Southern Towers is trying to indirectly pressure the building’s owner into giving residents a reprieve.
The 2,261-unit Southern Towers complex at 4901 Seminary Road is one of the last bastions of market-rate affordable housing — housing that’s affordable without being set at a certain level by agreement with the local government. The West End building was purchased in 2020 by California-based real estate company CIM Group.
While there were some eviction protections put in place during the pandemic, CIM Group still pursued eviction proceedings against some residents, and tenant advocacy group African Communities Together has expressed concerns those evictions could escalate now that Virginia Rent Relief Program (RRP) has closed its application process.
The RRP was created during the pandemic to keep families in place as job loss impacted local residents’ ability to pay rent. But with the application window closing, the City of Alexandria said in a release that eviction protections put in place with that program will expire starting on June 1.
Bert Bayou, director of African Communities Together, said affordable housing advocates are scrambling to put together protections for residents.
“This came as a surprise,” said Bayou. “We were expecting this program to continue. This came so quickly and was a shock to the community that it was ending on May 15. We were still trying to get data on how many people used this program for rent relief but still not provided by the state.”
Bayou said that many of Southern Towers’ residents are service-industry employees or Uber drivers who work in jobs that haven’t fully returned to pre-pandemic levels.
“We know this community, we’ve been in this community for many years,” Bayou said. “These are service workers, hospitality workers, Uber drivers. Most of the jobs are dependent on federal workers coming back and they either haven’t or is still part-time. When this is over, when the eviction moratorium ends, we’re going to see a floodgate opening on evictions. It’s going to be massive.”
Bayou said in April 2021, African Communities Together did a study that found CIM Group had started 541 eviction proceedings since buying the property in 2020, and Bayou said they’ve seen another 50 or so since then.
ALXnow reached out to CIM Group to comment or confirm these numbers but received no response.
“They own around 9% of the apartment units in the city,” Bayou said, “but their eviction filings were about 25% of the total. That’s higher than any other landlord in the city.”
Bayou said they’ve tried to reach out to CIM Group to work out a way to offer rent relief for residents of Southern Towers who are still out of work, but that the real estate company will only negotiate with individual residents rather than with tenant groups.
“What we could do is for tenants to sit down collectively with CIM to address this and other issues, but CIM as a multi-billion dollar landlord could sit down and work with tenants not to be evicted and be homeless,” Bayou said. “CIM could do this. They’ve raised hundreds of millions of dollars when they purchased the building. When they come to the city, there has to be some compassion from the landlord to talk to tenants.”
Instead, Bayou said they’re trying to target CIM Group’s investors to try to get them to apply pressure on the real estate company to come to the table. It is, admittedly, a long shot. It’s been one week since African Communities Together started to reach out to investors, and so far the few responses the group has received are from investors that say they’re no longer involved with CIM Group and haven’t been for years.
“They are real estate investors, but there are a good number of public pension funds that have invested in CIM,” Bayou said. “Those are the ones we are really focusing on. Most of the union members for which this pension is being invested would not support this kind of investment.”
African Communities Together is part of the city’s Eviction Prevention Task Force that’s been working on alternative rent relief programs, but it can’t fully replace the statewide program. The city is offering assistance like temporary housing and storage units, but can’t intervene to prevent evictions.
“There is some assistance available through the city for temporary housing and storage units and other assistance,” Bayou said. “I think that’s where we’ll be looking if this happens, but we’re trying not to think about that. We’re trying to keep tenants in their homes. If they lose this apartment building, there’s basically no affordable housing for them.”
A statewide rent relief program is closing to new applicants soon with eviction protections expiring soon after. The City of Alexandria is urging those in need to apply within the next week or lose access to rent relief.
The application portal for the Virginia Rent Relief Program (RRP) is set to close on Sunday, May 15.
“RRP was created to keep families stably housed and landlords paid during the COVID-19 pandemic,” the city said in a release. “RRP emergency rental assistance is prioritized for households earning less than 50% of area median income or households with one or more members who have not been employed for the 90 days preceding the date of application.”
The program has distributed $713 million in rent relief statewide since it started in March 2022.
The city release also noted that starting July 1, several tenant eviction protections that were put into place during the pandemic will be expiring, including:
- A return to five-day notices to pay or face eviction (For the past year, landlords had to provide at least a 14-day notice to tenants.)
- Removal of the requirement to inform tenants of the availability of rental assistance (For the past year, landlords had to inform and help tenants apply for RRP before initiating eviction.)
- No requirement for landlords to provide notice of or offer payment plans
The city specified that, because landlords cannot proceed with eviction within 45 days of an RRP application being submitted, there is likely to be an influx of eviction proceedings starting around July 1.
“The City of Alexandria’s Eviction Prevention Task Force will continue to work with partners and stakeholders across the state to create comprehensive strategies to increase the supply of affordable housing, address and prevent evictions and reduce barriers in housing,” the release said.
Aslin Beer Co. opens new scratch kitchen in Alexandria — “For the past two years, Chef Taylor Gates has been learning about pizza and dough — and now the taproom at Aslin Beer Co. in Alexandria’s West End is ready to serve it up. Aslin is opening a new scratch kitchen concept this week called Knead.” [Alexandria Living]
City Council approves additional eviction prevention resources — “City Council’s decision funds $457,000 for two service navigator and two housing relocator positions; storage assistance for household belongings; and additional legal services provided by the Legal Aid Justice Center to assist people at risk for eviction due to the COVID-19 pandemic.” [City of Alexandria]
Inova Alexandria Hospital brings peer recovery to the emergency room — “Patients visiting the E.R. for a substance-related crisis can speak with a specialist once they are medically stable. The idea is to help them take that first step toward recovery.” [Zebra]
Today’s weather — “Plentiful sunshine. High 74F. Winds NNW at 5 to 10 mph… A mostly clear sky (in the evening). Low 51F. Winds light and variable.” [Weather.com]
New job: Employee Rotation Program with the Office of Historic Alexandria — “Work involves writing, editing and planning layout of brochures and flyers, newspaper articles, press releases, and/or planning and implementing publicity and fundraising campaigns. Work requires the exercise of creativity, independent judgment, and a familiarity with Alexandria’s African American history. The work is performed under general supervision of the Director of the Alexandria Black History Museum in consultation with the Director of OHA.” [Governmentjobs.com]
Via Claire Going/ACPS
Alexandria Redevelopment and Housing Authority’s (ARHA) newly released Annual Agency Plan outlines the public agencies ongoing efforts at modernization and acquisition of affordable units in Old Town, with a particular focus on being more involved in rental-assistance programs.
The plan outlines areas of change for the organization, with the organization required to explain new activities in the current fiscal year. This year, one of those categories involves changes in “Mixed Finance Modernization or Development”. In its explanation, the document explained that ARHA is continuing to work on demolition of older units under Housing and Urban Development code Section 18 and rental assistance demonstration — rental assistance that ensures existing low-income units remain affordable — of others.
“To date, the repositioning has resulted in HUD Section 18 approval of 213 units (Ladrey, Park and Saxony). ARHA has received CHAPS for the RAD conversion of 220 units (James Bland I, James Bland II, Old Dominion, West Glebe, Chatham Square and BWR),” ARHA said. “The goal is to reposition as many properties as possible over the next five years so that ARHA can voluntarily convert its portfolio of units when there are less than 250 remaining public housing units. ARHA is implementing the repositioning policy consistent with HUD rules requiring that tenant protections remain in place and that tenant share of rent will not change beyond the current 30% of household income.”
The documents also noted that ARHA has selected 11 potential development partners to increase the overall number of affordable units by making units available to households earning between 30-60% of area median income.
The next big project for ARHA will be the redevelopment of the Ladrey building that will replace the existing units with units kept affordable through housing vouchers in addition to other residential development.
“In 2021, the Board of Commissioners will issue a redevelopment opportunity for the combined site of the existing Ladrey building together with the adjacent former ARHA site,” ARHA said. “The goal is to construct a multifamily building to house the existing 170 units at Ladrey by converting the units to project-based vouchers (HUD has approved the Section 18 reposition for this property) and add additional affordable and market rate units. The building will have an onsite management office, amenity space for use by all the residents, underground parking and units that meet current building codes.”
In the annual plan, ARHA said the push for more rental assistance can offer more flexibility and can supplement the public housing with project-based vouchers — units where residents pay some costs and ARHA makes up the remaining difference in utility and rental costs.
“Through the Rental Assistance Demonstration (RAD) program, ARHA will continue to own its properties and provide its residents with expanded choices and opportunities,” the public agency said. “ARHA will also have the ability to evaluate and immediately address many needed capital improvements and will continue to serve the same population. The RAD program offers ARHA an opportunity to transition from its current public housing funding platform to a more stable, predictable and sustainable funding source, the Project-based Voucher (PBV) program, which will be administered by the ARHA. The same families who are eligible today for public housing will be eligible for the PBV program.”