jonetta rose barras: Are DC OAG actions in a lawsuit a form of backstabbing?

The answer to that question is absolutely. Judge for yourself.

When the Office of the Attorney General (OAG) filed a lawsuit last year against the Janet Keenan Housing Corporation (JKHC), accusing it of violating the city’s nonprofit laws — most notably by the “unauthorized diversion of [a] charitable asset”; “abusing or exceeding authority conferred by law” under DC Code 29-412.20 (a)(1)(B); “acting contrary to nonprofit purpose”; and various breaches of “common law” — many of the city’s affordable housing advocates were excited. So were Peter Farina and others who lived at 1304 Euclid St. NW, the property in question. 

With the lawsuit, then-Attorney General Karl Racine seemed to open a new door to pursue the preservation of affordable housing. He had in a practical sense already slayed a few large commercial rental property owners, forcing them to pay restitution to tenants who had been living in squalid conditions as those landlords violated the city’s housing codes. 

For Farina and other residents living at the place they call the Victor Howell House, the AG’s lawsuit against JKHC had a simpler meaning: It was their rescue. Farina, a senior citizen on a fixed income, foresaw an end to his worries of being displaced from the only home he has known since 1989 — one for which he and others specifically created the Keenan corporation and found funding to purchase and maintain as affordable housing.

JKHC’s scofflaw tendencies and its abuse of its authority would be checked — or at least that was the hope. 

Long ago, JKHC booted Farina and another founding member from its board. Then, in 2022, without obtaining or seeking permission from DC Superior Court as required under the city’s nonprofit laws governing liquidation of charitable assets, JKHC placed the six-bedroom, three-bathroom Euclid Street house up for sale with an asking price of $750,000; soon after, a private buyer signed a contract. Board members told Farina and other Victor Howell House residents that the pending owner intended to live in the house. 

Raise your hand if you believe that. How many times have you heard that story only to see property split into tiny condominiums going for $400,000 and up?

Howell House residents found out about the sale of their home when a sign appeared in their yard. Farina had been speaking with lawyers around the city, including those at the OAG about the plight of Euclid Street residents. 

After AG Racine and his team publicly announced their lawsuit, JKHC board members claimed they had intended all along to transfer proceeds from the sale to another nonprofit to help finance affordable housing elsewhere. Meanwhile, Farina and his housemates established the Victor Howell House as a nonprofit organization.

If, in fact, JKHC wanted to continue providing low-cost rental housing, why sell the property it already had and displace as many as six individuals? Since Farina and the Howell House residents now have a nonprofit organization, why not deed the property to that group?

The OAG’s original complaint against JKHC may be filled with the language of indignation, but in recent months Farina has watched the OAG — now under the leadership of Brian Schwalb — essentially turn against him and his housemates. Farina thought the AG would force JKHC to follow all applicable laws and would act to advantage low-income DC residents.

Think again. 

In no uncertain terms, OAG lawyers have told Farina that he and Victor Howell House residents are not their clients whenever they have directly sought updates of the case. They speak instead about representing the District of Columbia.

Adding injury to that insult, Schwalb’s team has been negotiating a settlement with JKHC — one that would in effect endorse the violation of local, and possibly federal, laws by that organization. The AG apparently is considering permitting the pending sale of the property to move forward, with the possibility of proceeds going to Volunteers for America (VOA). This group would provide housing for Farina and others at a place located east of the Anacostia River, far from their current residence in Ward 1’s Columbia Heights neighborhood; Farina told me they have not been shown the property. Their lease with VOA might be for only one year. There is no indication of what will happen after that time runs out. 

Farina and his housemates have been locked out of those conversations, which undoubtedly could cause future havoc for them. They have had to obtain information secondhand from a staffer at Housing Counseling Services, a nonprofit with a DC contract to provide support to tenant groups that are attempting to exercise their right to purchase their building under the Tenant Opportunity to Purchase Act (TOPA). That financial relationship raises concerns about the organization’s objectivity.

It all stinks to high heaven if you ask me.

The AG appears to be sanctioning the actions of lawbreakers, while mistreating low-income citizens who are guilty of nothing more than trusting the board of a nonprofit organization that claims to want to preserve affordable housing — and then believing that the city’s chief legal officer would backstop residents rather than backstab them.

“Normally the AG is looking out for residents. This is an odd turn of events. It’s unusual for the AG to step back from residents so much,” said one DC lawyer familiar with the case.

“The change in the OAG caused a shift. Somebody has decided that this [case] is not a priority for them,” said another lawyer who has worked with nonprofit housing organizations in the city. 

Not surprisingly, the OAG’s unusual — I would call it unethical — behavior recently prompted Farina to file a motion to intervene in DC Superior Court. With no one in the DC government to stand for him or with him and his housemates, he is representing himself pro se.

Farina made clear in the filed document that he is requesting permission to intervene because his own “beneficial interest, and that of other similarly situated persons … is being harmed by the on-going actions of the [JKHC] and threatened by the pending action of the Plaintiff, District of Columbia … by and through its Attorney General.”

“If the transfer of the Property as JKHC intends is approved, the charitable purpose and affordable housing at the Property will be eliminated for the Petitioner, his low-income housemates, and potentially scores of future low-income people of the District who could live there,” wrote Farina. 

He asserted that the sales contract enriches “a private investor with a property that will immediately have potential resale value far beyond the contract price thereby exacerbating the rising cost of housing and living in the District.” 

Even if the proceeds are transferred to another nonprofit housing organization, Farina said the funds likely will be used to pay “staff and vendors of that nonprofit.”

“In other words, sale of the Property benefits everyone involved at the expense of the persons for whom JKHC was created to protect,” added Farina in his motion.

He has asked the court to take various actions: “Declare as soon as possible that the current Property sales contract between JKHC and the non-501c3 buyer is void for being unlawful as against JKHC’s corporate purposes and beneficiaries’ interest, as well as against the public interests and policy of the District”; “Suspend settlement talks or any settlement agreement pending the Court’s findings and declaration of the lawfulness of the Property sales contract”; “As per DC Code 19–1307.06(c) … appoint a receiver to take over JKHC or possession of the Property in order to collect and use the money being paid by the [Victor Howell House residents] to make immediate needed repairs starting with the roof”; “If the Property sales contract is found unlawful and voided then order the trustees of JKHC to reimburse to JKHC all money spent to procure and defend it and / or remove the current board of JKHC for its long-standing neglect of its duties, its wasteful handling of trust assets, and hostility toward resident trust beneficiaries”; “Appoint competent counsel to represent the resident beneficiaries of the Property as prescribed by DC Code 19–1303.05(a)”; “Issue such orders as the Court considers equitable and necessary to sustain the low-cost housing at the Property in the most affordable way possible”; and “In the event the [Court] upholds the current Property sales contract, Petitioner gives Notice of Intent to Appeal that decision and requests the Court stay the sale of the Property pending the Appeals Court’s decision.”

Farina acknowledges that it’s a desperate move. “It’s a Hail Mary pass. If the court throws out the sales contract, there will be a chance to preserve affordable housing on the site. [But] who knows what will happen,” he told me last week during an interview about his motion. 

The motion was placed on the court docket Aug. 1. The District and JKHC have 10 days to respond.

“I haven’t heard anything from anybody,” he added.

I didn’t either: JKHC did not respond to an email requesting a comment. 

Through its spokesperson, the OAG declined to comment on the motion to intervene.

“The housing crisis is really a trust crisis, given the direction the city is moving. It could set a direction that moves away from exploiting people and property,” Farina told me, adding this is a concern about not just the OAG but also Mayor Muriel Bowser, who has made affordable housing one of her priority issues but hasn’t substantially moved the needle. 

“This happens every day. It’s not unique,” continued Farina. “Either the District is in this to help low-income people or it’s not.”

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jonetta rose barras is an author and freelance journalist, covering national and local issues including politics, childhood trauma, public education, economic development and urban public policies. She can be reached at thebarrasreport@gmail.com.