Sedgwick Gardens Infinity’s address. So, as of Nov. 22, 2013, is the ownership of each of the nine buildings, according to D.C.’s property records. Infinity Managing Partner Etienne Locoh signed the certificate of formation, certificate of conversion, and confirmatory deed for Daro Realty, LLC. And Locoh and Infinity Managing Partner Steve Kassin both came to meetings with Boak Terrell and Quigley and presented themselves as the new owners of the LLC, according to the two tenant association presidents. (Infinity did not respond to requests for comment.) The crux of the legal dispute, as usual, is the definition of the term “sale.” The D.C. Code, as amended in 2005 to close the 95/5 loophole, states that the definition of “sale” includes “the transfer of an ownership interest in a corporation, partnership, limited liability company, association, trust, or other entity which owns an accommodation as its sole or principal
asset, which, in effect, results in the transfer of the accommodation.” This clearly covers the purchase of an LLC that controls a property. The more contentious phrase is “sole or principal asset.” Because Daro Realty, LLC owns nine buildings, none of which comprises more than half the total value of the company, the owners argue that there’s no accommodation that constitutes the sole or principal asset. “The sale of interest in an entity which owns a portfolio of housing accommodations,” Luchs and a colleague state in their response to the tenants’ lawsuit, “is not a sale under TOPA.” That’s the newest wrinkle in the law that’s supposed to protect tenants’ rights. “Daro has absolutely exploited a loophole, because if you look at what they’re saying, it’s that because they sold all of their buildings, none of what they’re selling is a building,” says Boak Terrell. “It makes no sense. It makes a mockery of the
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spirit of the law.” Joel Cohn, legislative director at the Office of the Tenant Advocate, also thinks Luchs’ legal argument is dubious. “The problem with that interpretation is that the statutory language is inclusive,” he argues. “The legislature intended to capture the principal asset scenario as something that is included. The language doesn’t say that anything is excluded.” But the District authorities with TOPA oversight have so far sided with Luchs. Last August, Lauren Pair, the rental conversion and sale administrator at the Department of Housing and Community Development, responded to an inquiry from Boak Terrell about whether TOPA applied to the sale. “It is the agency’s position,” she wrote in an email, “that the housing provider has not violated TOPA if 1900 Lamont Street NW was transferred as part of a sale of the corporate owner whose as-
sets included a multiple property portfolio.” Her explanation hinged on the “principal asset” issue. “The interests which were transferred were in a corporation which owned multiple assets, none of which was the corporation’s principal asset,” she wrote. “Because the transfer involved a multiple-building portfolio, TOPA was not applicable because the transfer was not deemed legally to be a sale; that is, tenants were not entitled to receive either an opportunity to purchase or a notice of transfer.” The law may not be clear on whether such a sale triggers TOPA rights, but the question of notice to tenants appears to be spelled out more clearly. If property changes hands and TOPA doesn’t apply, the D.C. Code states, “the owner shall provide each tenant and the Mayor written notice (‘Notice of Transfer’) of the transfer of an interest in a housing accommodation or of any ownership interest in a corporation, partnership, limited liability company, association, trust, or other entity which owns a housing accommodation.” Pair was not authorized to comment for this story. DHCD spokesman Marcus Williams says by email, “As represented to DHCD by Daro’s counsel, Daro intended to transfer its entire portfolio of properties to a third party purchaser; none of the single properties represented Daro’s sole or principal asset. As represented to DHCD, the Daro transaction appeared to be outside the definition of a ‘sale’ and TOPA does not apply to the sale of Daro’s portfolio sale.” Graham, for one, isn’t surprised by the city’s stance. “They have always ruled for the landlords,” he says of city regulators. “What this suggests is the need for eternal vigilance by those who care about these issues.” Luchs is a registered lobbyist, and has lobbied the city officials who make housing law on behalf of real-estate clients including Daro. According to the Office of Campaign Finance, Luchs has donated $4,750 to candidates for mayor and Council since 2000 as an individual, plus $4,500 between 2006 and 2008 under the business name Richard W. Luchs Attorney At Law. In addition, Greenstein DeLorme & Luchs contributed $13,400 to Council and mayoral candidates from 1999 to 2006. A disproportionate number of the buildings involved in recent TOPA disputes are in Ward 3, including Sedgwick Gardens. Ward 3 Councilmember May Cheh looked into the need to address TOPA’s ambiguities after several properties in her ward were part of a big national package sale in late 2012. Those conversations died down amid concern that allowing TOPA to govern the transfer of interests in property-owning entities could have unintended consequences, like triggering TOPA whenever someone buys stock in such a company. After that, the issue “seemed to have faded,” she says. But now it may be time to take it up again. “There are legislative fixes that might have to be done,” she says. “I don’t know why the problem was shelved. I guess we dropped the ball at the Council.” Michael Czin, a spokesman for Mayor Muriel Bowser, says the mayor is conducting a “top-