Lawmakers Scramble To Reform Eviction Law That Upended D.C.'s Housing Industry

An under-the-radar tweak to Washington, D.C.'s Emergency Rental Assistance Program passed in 2022 created a loophole that is at the heart of the existential crisis engulfing the District's affordable housing sector.

The new rule barred tenants from being evicted from their homes as long as they had a pending application for ERAP funds, and it removed judges' discretion to weigh whether a tenant has hope of receiving assistance or whether it would cover their debt. 

Landlords say tenants and their attorneys have taken advantage of the rule and collectively racked up millions in unpaid rent that there is no hope of recouping. There have been more applications filed for ERAP in the past six months than in all of 2022, according to D.C. government data provided to Bisnow.

Now, as tens of thousands of units are at risk of foreclosure and the city's most vulnerable tenants find themselves in limbo, D.C.'s top elected officials are scrambling to come up with a fix.

“It’s clear that how the program is being executed in conjunction with the courts may not align with our intention of providing relief to residents but also ensuring that landlords have a sense of stability,” D.C. Council Member Zachary Parker told Bisnow.

Council Chairman Phil Mendelson's office has circulated draft legislation that would reform ERAP, writing in an accompanying memo Monday that ERAP-fueled delays in the eviction process have contributed “in large part” to the financial crisis facing the city's housing industry.

The memo, which was obtained by Bisnow along with the draft legislation, cited Bisnow’s report last week detailing the issue facing housing providers.

“Affordable housing providers in the District are currently facing a financial crisis due to increasing rent arrearages, which have grown so large that many properties are not bringing in sufficient rental income to pay operating costs,” Mendelson Senior Policy Advisor Blaine Stum wrote in the memo.

Mendelson is seeking co-sponsors for the bill, Stum wrote, and intends to introduce it after the council returns from its recess next week. A Mendelson spokesperson told Bisnow the legislation isn’t complete and declined to comment further.

Officials from two D.C. landlord lobbying groups, the Apartment and Office Building Association and the Small Multifamily Owners Association, told Bisnow they have seen the draft bill and provided feedback on how it could be improved. AOBA’s Brian Gordon and SMOA’s Dean Hunter said they appreciate that Mendelson is taking action, but they think the bill doesn't fully address the issue and hope the council will tweak it further.

Rebecca Lindhurst, an attorney who represents tenants and advocates on city housing policy, said she has seen the draft bill and is concerned it could result in renters being evicted while they wait to receive their assistance payment.

Council Member Robert White, who chairs the Committee on Housing, told Bisnow last week that he has talked to many landlords and other relevant parties and understands that ERAP's eviction restrictions have been among the factors causing mounting piles of unpaid rent and financial distress for housing providers.

The crisis was brought to light in a June report from AOBA, and it began drawing much more attention from the industry and city leaders after longtime D.C. developer Adrian Washington announced last month he would be shutting down his real estate firm, Neighborhood Development Co.

White said he plans to move “with a sense of urgency” on legislation to address the issue. He declined to comment on Mendelson’s draft bill.

Mayor Muriel Bowser testified to the D.C. Council in April, when lawmakers were debating ERAP’s funding levels, that she believes some applicants can pay their rent and are misusing the program.

D.C. Department of Human Services Director Laura Zeilinger told NBC Washington in May that “there is fraud in the program” and that it had found 147 cases of suspected fraud over the prior two years. A DHS spokesperson told Bisnow Thursday the department has found another 108 in just the past four months.

The Bowser administration declined to comment on Mendelson’s draft proposal or the idea of reforming ERAP, but Deputy Mayor Nina Albert said in a statement that the administration is working on solutions.

“We recognize the serious challenges facing our affordable housing ecosystem,” Albert said. “We are focused on policies that ensure that DC remains a leader in affordable housing, and we will engage the Council, stakeholders, and residents on these solutions.”

ERAP has existed in D.C. since 2006 as a way to help tenants who earn less than 40% of the area median income pay their rent and avoid evictions when they face emergencies. It became a critical lifeline when the pandemic left thousands of residents without income and unable to pay their bills, and the District used tens of millions of dollars of federal pandemic aid to expand the program.

The D.C. Council this year approved $26.8M in funding for ERAP, more than Bowser’s $20M proposal but well below last year’s total of more than $60M, which had been bolstered by federal funds.

But in 2022, before the funding was cut by more than half, the council passed an ERAP reform bill that changed D.C. law to say that courts “shall stay any proceedings” in which a tenant submits documentation showing they have a pending ERAP application.

The amendment, which also applies to applications that are unlikely to be accepted, was enacted in March 2023.

Doug Buchanan, a spokesperson for the D.C. Superior Court, which handles these cases, confirmed to Bisnow in an email that adding the word “shall” to the law eliminated judges' option to impose a stay.

“The statute provides the Court with no discretion to deny a stay based on the judge’s view of the tenant’s likelihood of receiving ERAP assistance, the number of stays already imposed in the case or on behalf of a particular tenant, the ability to the tenant to satisfy the entire amount of their arrearage if they do receive assistance, or for any other reason,” Buchanan wrote.

As of Monday, the draft bill didn’t change the use of the word “shall,” but a source familiar with the legislation told Bisnow Thursday that Mendelson's office removed that key word and replaced it to say a judge “may stay any proceedings,” granting them more discretion in these cases.

The source said three lawmakers so far have agreed to co-introduce the bill with Mendelson and his office plans to introduce it by the end of next week.

Dantes Partners founder Buwa Binitie identified ERAP as the No. 1 policy issue that has caused the crisis facing affordable housing owners in D.C. He also said he has seen many tenants “taking advantage of just applying” for ERAP funds.

“So long as they apply, there’s no reason for them to pay rent,” Binitie said.

The program accepts new applicants every quarter and has seen intense demand this year. When it opened Jan. 2, more than 3,500 applicants signed up in the first few hours, leading DHS to close the application portal, DCist reported at the time.

DHS has received 19,646 applications in fiscal year 2024, which ends Sept. 30, more than 12,000 of which have been filed in the past six months, a spokesperson told Bisnow Thursday.

In the previous two fiscal years, it received 8,682 applications and 8,236 applications, respectively, the spokesperson said.

While tenant advocates say this high demand indicates renters are in dire need of aid, landlords and their attorneys say it shows how people have begun to routinely abuse the program by applying every quarter as a way to delay eviction proceedings.

“ERAP gets swamped with applications, but everyone files an application even if it’s going to be rejected,” said CIH Properties Chairman Michael Huke, who said 25% of his firm's 2,013 apartments in Wards 7 and 8 have unpaid rent balances of at least $1K.

“We’ve got tenants who file every three months even though they’ll never get it,” Huke said. “We’ve had people doing this for one, two years or more.”

An attorney representing landlords in D.C., who was granted anonymity because they have active cases in front of judges, said more than half of the eviction cases they work on are granted stays because of pending ERAP applications. Many of those tenants have racked up unpaid rent balances of more than $10K, including at least one over $70K.

The maximum amount tenants can receive from ERAP under the law is equal to five months of fair-market rent for the applicant’s ZIP code, and attorneys say tenants can only receive this payment once every 12 months. Many of D.C.’s lower-income areas have market rents under $2K per month, meaning the total ERAP payment in those areas couldn’t exceed $10K.

“I see this every single day,” the attorney said. “It is, I think, the most common reason to be stalled in landlord-tenant [court], and it’s been like that since 2023 when this amendment was made.”

Mel Zahnd, a supervising attorney for Legal Aid DC who represents tenants in these cases, said he doesn’t think tenants are abusing the program.

“In our experience, tenants are using this program exactly the way it’s supposed to be used, to try to get rental assistance to stay in their homes,” Zahnd said.

He said the delays are caused in part because D.C.’s process for approving ERAP applications takes too long. DHS' spokesperson said ERAP applications this fiscal year have been processed in 51 days on average, but the agency has worked to identify applications of tenants facing eviction proceedings and expedite them.

“I don’t think in most cases tenants are looking to take advantage [of the law] to get stays,” Zahnd said. “I think what’s happening is tenants are trying to get ERAP money, and there are these long delays in getting those payments out.”

Parker, who joined the council in January 2023 after the ERAP amendment was passed, said he understands the intent of it while acknowledging it has helped to destabilize the housing industry in the District.

“The goal there was to ensure protections for tenants because one of the reports from the ERAP program is that it was taking a long time to process or payments were slow, and the goal of what that legislation was aiming for was to ensure that someone in the process wouldn’t be evicted,” Parker said.

Lindhurst said she worked with the council on the amendment and also saw the intent as making sure evictions wouldn’t happen while ERAP money was pending.

“It was done at a time when there was an abundance of rental assistance money,” she said. “There have obviously been changes that have affected the amount of money out there.”

The draft version of Mendelson’s bill from Monday addresses that section of D.C. law.

The bill would tell judges to stay proceedings if the tenant provides evidence that their application could result in sufficient assistance to pay the full amount of rent they owe, or if they have reached a repayment plan with the landlord for the remaining balance.

It would also limit the court to providing one stay per case for ERAP proceedings, and it would repeal a portion of the ERAP law that allows applicants to self-attest to certain eligibility requirements.

Lindhurst said she has problems with each of these provisions. She said some tenants need to self-attest to their source of income because it comes from informal work like street vending or babysitting. She said the one-stay-per-case limit could allow landlords to evict tenants while the city is still processing ERAP applications or payments.

While landlords and their attorneys want judges to have case-by-case discretion over whether a pending ERAP application merits a stay in the case, Lindhurst said that is a bad idea.

“It puts the onus on the court to determine whether or not the application is viable, and I don’t think that’s the court’s job,” she said.

AOBA’s Gordon said he “sincerely appreciates” Mendelson moving with urgency on this issue, especially because the next ERAP application window opens Oct. 1.

Binitie, a former chair of the D.C. Housing Finance Agency, said the draft legislation doesn’t go far enough. It would maintain avenues for tenants to delay eviction proceedings while they have pending applications without providing any guarantees that the landlord will receive what they are owed, he said.

“It’s simple: You pay your rent or you don’t pay your rent,” he said. “It’s just a protracted process to delay rental payment, and unfortunately, tenants have taken advantage of this. [The proposal] would not move the needle.”

Hunter described the draft bill as “a step in the right direction” but added that “there’s a whole lot more that needs to be done to stop abuse of the program and to protect the D.C. rental housing industry.”