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FOR IMMEDIATE RELEASE:

January 31, 2024

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OFFICE OF THE ATTORNEY GENERAL SUES PETRA MANAGEMENT GROUP FOR ILLEGALLY LIMITING AFFORDABLE HOUSING OPTIONS IN DC

Landlord Uses Elaborate Scheme to Exploit District Housing Subsidies and Rent Control Exemptions For Profit, Discriminating Against Low-Income District Tenants

WASHINGTON, DC – The Office of the Attorney General for the District of Columbia (OAG) today sued the owners and manager of three District apartment complexes—4825-4829 North Capital St L.L.C., 5616 13th St NW L.L.C., 743 Fairmont St NW LLC, Rashid Salem, and Petra Management Group, LLC (collectively, “Petra”)—for discriminating against prospective tenants without housing subsidies through an elaborate, unlawful scheme to maximize profits. Together, the three buildings have over 100 units.

An OAG investigation found that, at these buildings, Petra is illegally exploiting a District law that exempts apartment units from rent control requirements when leased to tenants with government-funded housing vouchers. Under this scheme, Petra rents units exclusively to voucher holders, deliberately excluding low- and moderate-income tenants without vouchers in order to skirt rent-controlled rates and charge higher rates subsidized by the federal and District government. The renters Petra bars from the three buildings include lower-wage workers who make too much to qualify for subsidies, senior citizens, and individuals with disabilities on fixed incomes. In its lawsuit, OAG alleges that Petra’s rent-maximization scheme violates the District’s Human Rights Act (HRA) and Consumer Protection Procedures Act (CPPA) by discriminating against individuals without housing vouchers based on their source of income.

“Petra is exploiting the District's affordable housing crisis for profit—lining its pockets by limiting housing options for tenants who don't have subsidies but still struggle to afford a home. It is illegal in the District for landlords to discriminate against tenants based on their income, and Petra’s elaborate scheme just further distorts a market that already puts rents out of reach for many,” said Beth Mellen, Assistant Deputy Attorney General and Senior Counsel for Housing Protection and Affordability. “Our lawsuit seeks to put an end to Petra’s illegal conduct and help ensure that every Washingtonian has equal access to an affordable place to live.”

Rent control laws ensure that residents with limited means who do not have housing vouchers can still afford to rent safe, habitable housing in the District. In 2020, the most recent year for which data is available, the median rent for non-rent-controlled units was $2,554 per month compared to $1,442 per month for rent-controlled units.

Rent control applies to all units built before 1976, unless there is an exemption. One exemption allows a landlord to charge more than the rent-controlled amount for a unit leased to a tenant with a government-subsidized housing voucher. The exemption is permitted only after the landlord leases the unit to the voucher holder and obtains District approval. Once approved, the landlord may charge the higher rent—paid partly by the tenant and mostly by the government—as long as the tenant occupies the unit. The unit must revert back to rent control when the voucher holder moves out.

The three rent-controlled buildings where Petra is abusing this exemption to rent control are The Adams at 4825-4829 North Capitol St NE, The Madison at 5616 13th St NW, and The Keystone at 743 Fairmont St NW. Petra’s scheme to exclude renters without subsidies from these buildings has been evident at every stage—from acquisition to advertisement to rental. Petra financed the purchase of each building by telling lenders they would only charge the higher government-subsidized rates for all units, rather than the rent-controlled rates required by law. Next, Petra has advertised vacant units at these buildings only at the higher subsidized rate, even though they are prohibited from charging that rate until after they receive an application from a voucher holder and obtain an exemption for the unit. Finally, since owning these buildings, Petra has rented vacant units only to voucher holders at the higher subsidized rents. At these rents, the units are unaffordable to renters with limited means who do not have vouchers. At The Adams, for example, one three-bedroom unit would be leased to a tenant without a voucher at a rent-controlled rate of $1,000.25, yet Petra has advertised and rented it at a subsidized rate more than three times that amount, at $3,131.00 per month.

By excluding tenants without subsidies from The Adams, The Keystone, and The Madison, Petra is discriminating against prospective tenants based on their source of income, in violation of the HRA. Petra also has made discriminatory, false, and misleading statements, in violation of the HRA and the CPPA, by advertising vacant units only at higher subsidized rates despite not having an exemption from the lower, legally required rent-controlled rates at the time of advertisement. As a result of their unlawful conduct, Petra is limiting affordable housing options in the District for low- and moderate-income renters who need them, all while profiting from public funds intended to create more affordable housing,

OAG’s lawsuit seeks to put an end to Petra’s illegal scheme, secure restitution and damages for any identifiable victims, and obtain civil penalties, costs, and attorney’s fees payable to the District.

A copy of the complaint is available here.

This matter is being handled by Assistant Attorney General Nadeen J. Saqer, Kevin Vermillion, Deputy Director of the Office of Consumer Protection, and Alicia M. Lendon, Chief of the Civil Rights & Elder Justice Section.

**Attorney General Brian Schwalb is recused from this case.

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The Office of the Attorney General (OAG), led by Attorney General Brian L. Schwalb, works to protect and defend District residents, enforce District laws, and provide legal advice to DC government agencies. Visit www.oag.dc.gov to learn more.

First Legislation Passed in CP 26

In January 2025, the District of Columbia enacted several significant legislative measures:

1. Climate Commitment Clarification Emergency Amendment Act of 2025: This emergency legislation was introduced to address immediate concerns related to the District's climate commitments. The act aims to clarify and strengthen existing environmental policies to ensure the city meets its sustainability goals. 
2. Working Conditions and Compensation Agreement between DC Public Schools and the Washington Teachers’ Union: An emergency approval resolution was passed to formalize the agreement between DC Public Schools and the Washington Teachers’ Union, Local #6 of the American Federation of Teachers. This agreement outlines the working conditions and compensation for educators, aiming to improve the quality of education in the District.
3. Eliminating Restrictive and Segregated Enclosures (“ERASE”) Solitary Confinement Act of 2025: This legislation was introduced to address the use of solitary confinement within the District's correctional facilities. The act seeks to eliminate restrictive and segregated enclosures, promoting more humane treatment of inmates.

Additionally, effective January 1, 2025, the District implemented a new law requiring fully insured DC individual and group health plans to provide coverage for the diagnosis and treatment of infertility. This includes services such as artificial insemination, in vitro fertilization, and standard fertility preservation procedures.

These legislative actions reflect the District's commitment to environmental sustainability, education, criminal justice reform, and healthcare accessibility.