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Bread for the City and Arnold & Porter win hard fought victory along with Terrace Manor tenants

Last week, the U.S. Bankruptcy Court for the District of Columbia approved a settlement that will compensate tenants of Terrace Manor who endured years of severe housing code violations and ensure that they have access to the safe and habitable housing they deserve.

Terrace Manor is a 61-unit apartment complex in Southeast D.C. with a multitude  of housing code violations, including rodent and roach infestations, non-working HVAC systems (making for freezing winters and scorching summers inside their apartments), severe plumbing and roof leaks, and untreated mold. Many tenants have lived there for decades, some their entire lives.

In 2011, the owner of Terrace Manor entered into a contract to sell the property to Sanford Capital LLC (“Sanford”), triggering the tenants’ right to purchase the building. Bread for the City, with attorneys from Ballard Spahr LLP and organizers from Housing Counseling Services (HCS), represented the Tenant Association to help them through that process. Unfortunately, the Tenant Association’s chosen buyer pulled out before the sale was complete, so Bread and Ballard Spahr helped the Tenant Association exercise their only remaining option to secure an agreement with Sanford for the much-needed property repairs.

Sanford honored none of its commitments. Instead, it allowed the property to deteriorate from years of willful neglect. Rent-paying tenants called management constantly, complaining of rodents, of bedbugs, and of the need to heat their homes in the winter by leaving their ovens on and open. Frustrated and exhausted tenants gave up and moved out over the years, or withheld rent due to the conditions and were evicted. Today, only 13 of the 61 units are occupied.  Many of the others are unfit for living.

Because Sanford refused to honor the agreement, BFC, HCS and the Tenant Association coordinated with the D.C. Office of the Attorney General (“OAG”), which ultimately filed a complaint against Sanford and its property management company, Oakmont Management.

Rather than making the legally required repairs, Sanford placed Terrace Manor into bankruptcy to avoid giving the Tenant Association another opportunity to exercise its rights. Sanford tried to sell Terrace Manor to another landlord with unknown intentions and no guarantee of repairs or continued affordability for the tenants.

BFC and Arnold & Porter Kaye Scholer (APKS) agreed to represent the Tenant Association in the bankruptcy proceeding and asked The Legal Aid Society (“Legal Aid”) to represent 11 individual tenants in pursuing compensation for the many years their homes were in deplorable conditions.

Meanwhile, Bread and APKS actively litigated bankruptcy issues, and worked to identify and negotiate a favorable agreement with WCSmith, a purchaser committed to providing safe and habitable housing. WCSmith was willing to rehabilitate the decrepit property and house the tenants elsewhere at their current rents until construction is complete and they can return to their homes.

Days before the bankruptcy hearing to determine the buyer for the property, the tenants, the Tenant Association and OAG resolved their monetary claims with Terrace Manor LLC. In the settlement, each of the tenants represented by Legal Aid will receive substantial funds for their years of suffering and for costs including repair bills, storage units and belongings damaged by mold and flooding. The total compensation to the 11 tenants is almost $360,000. Separately, OAG also negotiated for $325,000 in fines and compensation for former tenants at the property, with an average benefit of $9,500 per tenant. But perhaps most importantly, the tenants will receive the benefits of an extensive agreement that BFC and AKPS negotiated with WCSmith, which includes ongoing rent protections, immediate relocation to safe housing in the same neighborhood, and the right to return to a rehabilitated Terrace Manor that will remain affordable for not just these tenants but future tenants as well.

Bread for the City, Arnold & Porter Kaye Scholer, Legal Aid, Housing Counseling Services and the Office of the Attorney General each played a vital role in obtaining relief for the former and current tenants of the property. But it is the tenants of Terrace Manor who truly deserve the credit for their victory. It was their determination and years of endurance in the face of horrific housing conditions that led to this favorable outcome. We congratulate and thank our clients for their willingness to stand up and fight for their rights.

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