An affordable housing travesty in Southeast at the center of a Northwest developer’s vision
By Jeffrey Anderson
Asphalt and concrete radiate scorching heat on a 93-degree August day at the Congress Heights Metro Station on Alabama Avenue in Southeast D.C.
Vacant brick apartment buildings and a thicket of trees and summer growth form a horseshoe behind the station; another pair wrap around the street corner, fending off ivy and weeds.
Pedestrians trudge wearily up the avenue to a shelter where they wait for the 92 bus.
The boarded up doors, fake windows and loose litter speak to broken promises and neglect here, in Ward 8, across from the Wizards practice facility, and the St. Elizabeths East “Campus,” all too rare harbingers of hope.
Revival in the form of housing, retail and good jobs is what Geoffrey Griffis and A. Carter Nowell were promoting, in 2013, when they applied to the Zoning Commission for approval to build a modern town center that would be transformative to this forlorn cluster.
The idea didn’t occur overnight: Nowell, a property and management company owner, began acquiring the properties–four of them, on three different lots–in 2008; Griffis, an architect, developer and political insider, formed the first of two partnerships with Nowell, in 2011.
By 2013, the plan was for the two of them to get city approval to redevelop the site, after which Nowell would sell the properties to Griffis, who would take it from there.
First they’d have to convince the Zoning Commission that the proposed project was of higher quality than what would result from “matter-of-right development,” and convince neighborhood stakeholders that it would benefit the community.
By 2015, they had obtained approval for what is known as a Planned Unit Development (“PUD”).
There was a hitch:
Neither of them owned a fifth building, a three-story brick vacant on a fourth lot at the corner of Alabama Avenue and 13th Street that they had included in the PUD application.
That piece of property, 3200 13th Street, S.E., aka Square 5914/Lot 0007, aka Lot 7, was encumbered with debt, a strict affordable housing covenant, and a lawsuit over a real estate contract.
Yet Griffis, a well-connected developer, had positioned himself to someday realize the kind of project he is more accustomed to developing, a short distance (and a world away) from Congress Heights.
All it would take, was for District housing officials to let a pair of recalcitrant community developers walk away from a $920,100 affordable housing loan; get sucked into a lawsuit over purchasing rights; pay more city money to get the property back; flip it to a pair of wily Ward 8 figures; and strip away a covenant intended to benefit adolescent wards of the city.
Which, as the available public records show, was exactly what they were willing to do.
The question was, why?
$$$
Way back before the Congress Heights Metro site was a glimmer in the eyes of Griffis and Nowell, there were other designs on Lot 7.
It’s provenance as a developable property dates to 1995, when a Ward 8 community developer named Phinis Jones and a number of private owners sold Lot 7 and a pair of adjacent lots to the Washington Metropolitan Area Transit Authority for $145,000 to make way for the Congress Heights Metro Station, according to a “Declaration of Taking” filed in the U.S. District Court.
When the station was completed, Lot 7 made its way back into private hands for a short time, according to land records filed at the Office of Tax and Revenue.
In 2000, the bank foreclosed on it; in 2002, a local community developer named Kelvin Elmore purchased it for $190,000.
Elmore financed it with a 15-year mortgage of $96,304, property records show.
In 2003, he took out a second, in the amount of $188,000 on Lot 7 (and three other properties), and a separate one on Lot 7, for $78,665.
Over the next several years, D.C. land records show that Elmore acquired two more properties in Northwest, and several more in Southeast, taking out mortgages in excess of a million dollars.
Recorded loan assignments, modifications, foreclosure notices, “wrongful housing” notices, certificates of satisfaction, a partial release, a reconveyance and a refinance later, he hooked up with Baltimore-based real estate developer Zed Smith.
According to the Department of Consumer and Regulatory Affairs (“DCRA”), Smith and Elmore formed a limited liability company called 3200 Thirteenth Street LLC (“3200 LLC”), in 2007.
At that time, Elmore was president of a for-profit behavioral health agency called Fihankra Place, which the Department of Housing and Community Development (“DHCD”) selected for a Community Development Block Grant (“CDBG”).
The grant would allow 3200 LLC to take out a $920,100 bridge loan so that it could acquire Lot 7 and develop it into 12 affordable units for “foster adolescents and young adults who are wards of the District of Columbia,” D.C. land records show.
The grant program’s “National Objectives” require recipients to use such funds to “benefit low to moderate income persons, aid in the elimination of slums or blight, or meet community development needs having a particular urgency…” a July 31, 2008, Loan Agreement states.
Under the agreement, 3200 LLC would take possession of Lot 7 and receive the entire loan that same day. The loan was for three-years, with interest deferred for two of them.
Payments for the length of the term would be $3,845 per month, the agreement states, at which time the remainder of the loan would come due.
A deed and deed of trust also were recorded, accompanied by a Declaration of Covenants and Rent Regulatory Agreement that, along with DHCD emails, indicated Fihankra Place was to provide “supervised independent living” for residents of those 12 affordable units.
The housing covenant specifically called for Lot 7 to remain “100% affordable to extremely low-income foster adolescents and young adults who are wards of the District of Columbia with incomes at 30% or less than the Area Median Income (“AMI”).”
(AMI is determined on a metropolitan area statistical basis by the Department of Housing and Urban Development. As of July, the AMI for the D.C. area was $126,000 for a household of four.)
According to the declaration, the covenant would remain in place for 40 years or until the loan was paid off, and would run with the property should Lot 7 change hands, with an important exception:
“The covenants contained herein shall apply to [3200 LLC] and its successors and assigns, except for any purchaser or nominee at foreclosure or in the instance of a deed in lieu of foreclosure, given by [3200 LLC].”
A deed in lieu of foreclosure is a more expedient way to transfer property in the District when a borrower defaults on a loan, in that it does not require a judgment, court order or any notice requirements.
Essentially, DHCD was handing close to a million dollars to a fledgling company Elmore had formed with Smith, so Elmore could sell Lot 7 to that company, so his for-profit agency could run a supervised independent living program for youth under a deeply affordable housing covenant for the next four decades.
This was a bad bet.
Court records show that at the time 3200 LLC took ownership of Lot 7, in addition to Elmore’s trail of mortgage debt, he had been sued more than 20 times in D.C. and Maryland over tax and property disputes.
Within two weeks of 3200 LLC receiving the bridge loan, he put Lot 7 up as collateral to retire $362,969 in personal mortgage loan obligations, D.C. land records show.
It’s hard to imagine how Elmore and Smith planned to pay back the DHCD loan in three years time–Elmore died on September 20, 2017, according to court records and an obituary notice; Smith, Chief Operating Office of The Cordish Companies in Baltimore, declined to comment for this story–and there’s little to suggest they intended to.
According to DHCD, 3200 LLC never made a payment.
$$$
It was 2013, but the saga of Lot 7 was just beginning.
Default notices and unpaid tax bills piled up on 3200 LLC’s doorstep.
Nowell, whose company Sanford Capital specialized in acquiring “value-add” properties in “up and coming submarkets with tangible growth prospects,” and Griffis, were advancing their PUD application.
Once that was approved, and Nowell could transfer the properties to Griffis, Nowell was intended to fade from the picture. This was fine with Griffis, perhaps desirable.
Griffis has done well for himself–mostly on the other side of the Anacostia River, where Mayor Muriel Bowser has handed out lucrative subsidies in the name of affordable housing to politically connected developers of upscale mixed-use real estate projects.
He describes his company CityPartners, which he founded and manages, as “a Washington-based group that is dedicated to redeveloping urban areas and strengthening communities.” On his personal website, he touts affordable housing bona fides that date to the 1990s.
“Over a long and distinguished career as a developer and designer, CityPartners’ founder Geoffrey Griffis has been committed to improving the lives of District citizens, particularly those in need,” reads a statement from a personal representative, in response to questions for this story.
“Griffis began his career as an affordable housing specialist and, more recently, he formed a hospitality apprenticeship program for 18-24 year-olds from Wards 7 and 8 that has trained dozens of young women and men in all areas of the hospitality industry.
“Today, Griffis remains dedicated to redeveloping the Congress Heights neighborhood and strengthening the community near the Congress Heights Metro site.”
(After Part 1 of this series, Griffis agreed to speak with The Dig, then rescinded his agreement. He has not returned subsequent calls or responded to any questions.)
Charitability aside, Griffis checks a number of the boxes of a high-end developer who fits right in with the District’s political and business elite.
He is a founder and the Chairman of the Board of Directors for the S.W. Business Improvement District; the economic advisor to Mayor Muriel Bowser’s 2015 transition team; one of two Bowser appointees to the National Capital Planning Commission; and a former chair of the Board of Zoning Appeals.
He has been a consistent, if moderate, political donor, contributing personally and through CityPartners more than $18,000 to city candidates dating back to the mid- 2000s, according to the Office of Campaign Finance.
He partners with a premier Bowser insider, Benjamin Soto, a title officer, developer, campaign treasurer for the mayor and her allies, and board member of EagleBank–lender of choice for D.C.’s ruling class–which financed Griffis’ acquisition of the Congress Heights properties adjacent to Lot 7, with additional investment from Soto’s development company, land records show.)
Together, Griffis and Soto are involved in at least four major projects across the river from Congress Heights, several of which the District has subsidized as a means of incentivizing community-based affordable housing.
At 555 E Street, S.W., as part of a project that consists of a boutique hotel, residential building and underground parking, they received $10.9 million from DHCD through the Housing Production Trust Fund, $1.3 million for permanent supportive housing for seniors, and $1.5 million for median family income units, according to a February 4 letter to the D.C. Council from DHCD.
That project also received $12 million in bond financing from the D.C. Housing Finance Administration, which underwrote $7.21 million in 4% low-income housing tax credits, according to a press release.
At The Wharf/Southwest Waterfront, Griffis and Soto teamed with Hoffman & Associates founder Monty Hoffman and received $145 million in revenue bonds from the District, according to the Office of the Chief Financial Officer, and $100 million through the EB-5 immigration investor program–a funding stream that Bowser has solicited from China.
At Waterfront Station II, a mixed-use project featuring retail and art space and a movie theater, the same three–Griffis, Soto and Hoffman–will receive a 9% Low Income Housing Tax Credit credit equal to $1.1 million per year for 10 years, according to DHCD and the Office of the Deputy Mayor for Planning and Economic Development, on top of an automatic 4% credit.
And at 400 E Street, S.W., Griffis, Soto and some different partners are doing another hotel (with a rooftop bar) on top of a state-of-the-art fire station, premier retail space, underground parking and a headquarters for a local non-profit for underserved D.C. children.
Earlier this year, when the coronavirus pandemic hit, Griffis and Hoffman organized DC2021, a group of developers–including Soto’s company–and restaurant and sports and entertainment companies to lobby (successfully) for corporate stimulus money from Bowser.
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Developing the Congress Heights Metro site was a more complicated endeavor with less immediate appeal.
In 2008, Nowell started to acquire properties adjacent to Lot 7; by 2010, land records show, he had formed three single-purpose limited liability companies.
With financing from EagleBank (and another lender), he purchased 3210 13th Street, S.E., on one side of Lot 7; and two lots with three apartment buildings–1309 Alabama Avenue, and 1331-1333 Alabama Avenue–on the other side of Lot 7, records show.
He then consolidated his interests with Griffis into two LLCs–both controlled by Griffis–according to records filed with DCRA: Sanford-CityPartners I LLC, in April 2011; and Square 5914 LLC, in January 2013.
On May 2, 2013, Square 5914 LLC submitted a PUD application to the Zoning Commission, proposing a 236,000-square-foot office building, 8,650 square feet of retail and an apartment building with 200-plus units. The transit-oriented, multi-use project would include affordable housing and bring jobs to the community.
PUD approval does not require ownership of all the properties involved, though D.C. law requires applicants to follow through with plans that have been approved.
Although Lot 7 was part of Square 5914 LLC’s application, its inclusion was reduced to a footnote in the introduction: “The Applicant is authorized to process this application on behalf of all of the Subject Property Owners.”
The application also was silent on the affordable housing covenant DHCD placed on Lot 7.
Documents Square 5914 LLC eventually submitted to the Zoning Commission point to another obstacle:
In 2012, Elmore and Smith allegedly promised to sell Lot 7 to a non-profit called Congress Heights Community, Training, Development Corporation (“CHCTDC”) that Phinis Jones had founded in 1988, according to a lawsuit filed in D.C. Superior Court.
The lawsuit, which CHCTDC filed in 2014, stated that on May 2, 2012, it had agreed to pay $240,000 to 3200 LLC and assume its $920,100 mortgage on Lot 7, and that DHCD had agreed to reduce the mortgage to $180,000.
Not only was the price right, DHCD allegedly was serving up vague, less strict affordable housing conditions.
Instead of the specific requirement that the redeveloped Lot 7 units “shall remain 100% affordable to extremely low income foster adolescents and young adults,” DHCD allegedly was allowing CHCTDC to assume the reduced mortgage merely “upon development and rehabilitation of 12 affordable units on the property.”
If any party was making out in that deal, it was CHCTDC.
CHCTDC is a Ward 8 fixture, a 501 (c)(3) non-profit organization founded by Jones “for the purpose of improving the quality of life of D.C. residents in economically depressed areas by providing employment opportunities that would aid in the reduction of unemployment and underemployment by promoting self-sufficiency,” according to its website.
Jones also serves as Vice Chair of its Board of Directors, and according to DCRA, he is the registered agent and one of four “Governors,” along with the corporation’s president, Monica Ray.
If it happens in Ward 8, and it involves community, economic and business development, Jones and Ray are likely to be in the picture, working out of their shared headquarters at 3215 Martin Luther King Jr. Avenue, S.E.
Those two were just as committed to gaining control of Lot 7 from Elmore and Smith as Griffis was to developing the surrounding properties.
On July 29, 2014, however, DHCD delivered some bad news to Ray and Jones:
3200 LLC was not going to sell Lot 7 to CHCTDC.
This was a breach of a pre-existing agreement, CHCTDC claimed, in its demand for “specific performance,” an action that asks the court to order a sale based on the terms of an existing contract.
“CHCTDC fully demonstrated that it was ready, able and willing to close the transaction as per the terms stated in the [real estate contract],” stated the lawsuit, filed on September 8, 2014.
“[3200 LLC’s] actions are in breach of the Agreement, have damaged and will continue to damage CHCTDC, and will result in irreparable harm to CHCTDC if not remedied.”
The lawsuit raised questions:
What real estate contract were they talking about?
If 3200 LLC owned Lot 7, and CHCTDC had a contract to purchase it in 2012, then who were the “Subject Property Owners” that Griffis was referring to when he filed Square 5914 LLC’s PUD application in 2013?
How did Griffis plan to develop the site without control of Lot 7, particularly with two other entities fighting over it?
$$$
Lot 7 started to zigzag between parallel universes: the DHCD bureaucracy, the Zoning Commission’s PUD application process, and a court of law.
By fall 2014, the time had long since passed for DHCD to expect 3200 LLC to repay the $920,100 loan, much less provide a single unit of affordable housing.
Letters from February 1, 2013, to September 26, 2014, from DHCD to Fihankra Place–and 3200 LLC, ℅ Fihankra Place–show persistent requests for audited financial statements, tax returns and property tax receipts.
These default notices seemed of little consequence.
Meanwhile, new interest from an influential figure spoke to the advancement of Griffis’ broader interests.
Same day CHCTDC filed its lawsuit against 3200 LLC, Ward 8 Councilmember Marion Barry, Chairman of the Workforce and Community Affairs Committee, wrote to Anthony Hood, Chairman of the Zoning Commission, in support of Square 5914 LLC’s PUD application.
Barry wrote of the need to “infuse the area with much needed new residential, office and retail opportunities on a transit-oriented development site,” and hailed the creation of service jobs, “over 20 affordable housing units,” and “Retail/Office units set aside for community businesses that are part of this exciting project.”
“I strongly support this project and its developers,” Barry wrote to Hood. “This project is long overdue for Ward 8.”
For anyone trying to keep track of what was happening in these various realms, Lot 7 started to look like a game of musical chairs crossed with three-dimensional chess.
The agreement of 3200 LLC to sell Lot 7 to CHCTDC appears in the court file as a boilerplate “District of Columbia Real Estate Sales Contract,” dated May 12, 2012–not May 2, as the lawsuit states–and signed by Kelvin Elmore as “Seller,” on behalf of 3200 LLC.
The “Purchaser” is not listed as CHCTDC; it is listed as East of the River Clergy, Police, Community Partnership Inc., bearing the signature of “D.L. Isaac.” (The partnership’s website shows Rev. Donald Isaac Sr., of Southeast Tabernacle Baptist Church, as an advisor to its board. DCRA records list him as the sole “Governor.”)
The contract between Isaac and Elmore–which Elmore did not sign, and which Isaac signed on May 10, 2012, two days before the printed date–stated that the sale was subject to existing deeds of trust.
It said nothing about the $920,100 loan, or about DHCD reducing the mortgage to $180,000, as CHCTDC had alleged in its lawsuit.
Aside from the total price of $240,000, any spaces on the contract said “N/A,” or “TBD,” or are left blank.
Something else jumps out: Isaac’s signature was dated eight days after CHCTDC in its lawsuit claimed to have entered into a written agreement with 3200 LLC to purchase Lot 7.
There’s no mention in the lawsuit (or in the PUD file) of an agreement by CHCTDC to transfer its alleged purchasing rights to Isaac or his partnership; or one to authorize him or his partnership to act on behalf of CHCTDC.
Nor do DCRA records or either of the organizations’ websites show any affiliation between them or their principals.
These were the most obvious irregularities.
A General Addendum indicated that the real estate contract was dated May 2, 2013–off by a year and 10 days.
The addendum was executed that same day, offering a clue as to what was going on:
“This addendum #1 serves to modify [the] sales contract referenced above to provide authority to [CHCTDC], represented by its President Monica T. Ray to represent the legal owner of the above referenced property in entitlement processes for pre-development activities ONLY.”
Zed Smith signed on behalf of 3200 LLC as “Seller,” and Ray signed on behalf of CHCTDC as “Buyer.”
This suggested that Ray represented CHCTDC and was authorized to represent 3200 LLC–the legal owner at the time–for the pre-development phase on Lot 7.
A second General Addendum–which indicated the contract was dated December 4, 2012, even though it was dated May 12, 2012–now identified East of the River Clergy, Police, Community Partnership as “Buyer.”
Rather than Isaac’s signature, it was Ray who affixed her signature to that addendum, and hand-dated it on “12/4/2013”–exactly a year after the incorrectly indicated contract date.
The Dig reached Ray for comment on two separate occasions; each time she answered her phone, said she was on another call, and then hung up. She did not respond to additional messages left with her office.
Aside from the original real estate contract, The Dig found no further mention of Isaac or his partnership anywhere else in court records, land records or the PUD file. (Isaac did not return phone calls.)
As strange as it seemed, based on the public documents in the court and PUD files, it appeared that Ray had established (or tried to establish) a claim to Lot 7 predicated on various documents she signed at various times on behalf of three separate, unrelated entities.
And that didn’t include Square 5914 LLC.
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As Lot 7’s legal fate played out in court, its fate as a developable property played out in the Zoning Commission, where the story was no clearer.
Griffis, through lawyer Paul Tummonds of Goulston & Storrs, submitted Square 5914 LLC’s Application for Consolidated PUD and Zoning Map Amendment Application to the Zoning Commission on May 2, 2013–the same date of the real estate contract addendum that gave Ray authority to represent 3200 LLC in Lot 7’s pre-development phase.
By 2015, it was time for the PUD application to go before the Zoning Commission for final approval.
Other circumstances had arisen.
A group of tenants at the properties surrounding Lot 7, fed up with housing code violations and safety concerns, had begun negotiating with Sanford Capital to collectively purchase their buildings under the TOPA; they had retained the Washington Legal Clinic for the Homeless.
They had no idea that Square 5914 LLC had applied for a PUD–which envisioned razing all of the buildings at the Metro site, including Lot 7
If approved, the PUD would affect the feasibility of the project and thus their TOPA rights, the tenants argued.
On the eve of the PUD hearing, the legal clinic’s staff attorney William Merrifield wrote to the Zoning Commission on January 20, 2015, and requested a postponement based on a number of concerns, including site control of Lot 7.
“The site control and title of the Property is clouded in several ways which will prohibit the Zoning Administrator from approving building permit applications if the proposed PUD application is approved and may make moot any consideration and decisions by the Zoning Commission,” Merrifield wrote.
He had a point.
D.C. Municipal Regulations Section 11-2406.5 states that “The name, address, and signature of each owner of property included in the area to be developed, or of the owner’s authorized agent, shall be included in the PUD application.”
In addition, Section 11-2409.12 says, “Unless specifically stated otherwise, the term ‘Applicant’ in any condition of an order approving a PUD…shall mean the person or entity then holding title to the Subject Property.”
If there is more than one owner, the regulation further states, the obligations under the PUD approved by the Zoning Commission would be “joint and several.”
Without a Letter of Authorization from the property owner–3200 LLC–the application by Square 5914 LLC failed to meet those requirements, Merrifield argued.
Though Lot 7 was included in the PUD application, and Tummonds had asserted that Square 5914 LLC was “authorized to process this application on behalf of all of the Subject Property owners,” The Dig could not find an agreement in the application to substantiate that claim with regard to 3200 LLC–or CHCTDC, or East of the River Clergy, Police, Community Partnership, for that matter.
Merrifield also pointed to a number of other issues that he said clouded the title to the property:
The Recorder of Deeds showed a lis pendens on Lot 7 as a result of CHCTDC’s lawsuit against 3200 LLC. (D.C. Code Section 14-1207 defines lis pendens as an official public notice of a pending court action that affects ownership interest, among other things);
3200 LLC was in default on the $920,100 loan;
3200 LLC owed the city $70,100 in property taxes;
3200 LLC had a water and sewer lien from the District of Columbia Water and Sewer Authority.
3200 LLC had accepted a covenant that limited occupancy of residential units at Lot 7 to “Extremely Low Income tenants.”
“The above outstanding issues…must demonstrate to Zoning Commissioners that at this time there is not a full and clear understanding of the control, or ownership stakes of the subject site at the center of the instant matter,” wrote Merrifield.
“Therefore,” he concluded, “the [tenants coalition] is asking for a postponement…until as such time that site control is discretely determined and any promissory responsibilities of associated land covenants and liens are all collectively clarified in writing and re-filed with the Zoning Commissioners in a complete PUD application pursuant to the DC Zoning Regulations.”
A couple of days later, in a letter to Hood dated January 22, 2015, Merrifield added that rather than requiring rental rates for “extremely low income” foster youths and wards of the city, Square 5914 LLC’s PUD application “does not detail compliance with this Covenant nor does it describe the type and distribution of any affordable units.”
“As members of the community concerned with affordable housing we would ask the commission to help provide clarity regarding the status of this [covenant] as well as address the issue of what will become of the approximately 920,000 dollars that is outstanding on the loan that the covenant is premised upon,” he wrote.
Tummonds responded that same day with a letter to Hood claiming that his client was the “contract purchaser” of Lot 7, and that delaying the PUD process would result in “terrible administrative inefficiencies,” because other agencies had already signed off on the application.
$$$
Square 5914 LLC’s PUD application had been pending since 2013, but until the date of the hearing, there was nothing in the public record to back the claim that it had a contract, enforceable right or agreement to purchase Lot 7.
In fact, there was an “Owner Signature Page” that conveyed it the authority to include each of the Congress Heights properties in the PUD application except Lot 7.
Now, two years later, the authorization appeared–in quadruplicate!
“Enclosed please find signature pages for the PUD and Zoning Map Amendment applications that were executed by an authorized representative of [3200 LLC] at the time the [PUD] application was filed, as well signature pages executed by a current representative of [3200 LLC],” Tummonds wrote.
“[Square 5914 LLC] has the authority and authorization to process this [PUD] application.”
Tummonds included a signature page for each application executed that same day, January 22, 2015, by Zed Smith as “Managing Member” of 3200 LLC; and a signature page for each application executed on May 6, 2013, by Monica T. Ray as “Representative” of 3200 LLC.
Ray’s signature pages were executed four days after Griffis filed his PUD application, and four days after she executed (on behalf of CHCTDC) the first General Addendum to the real estate contract that gave her authority to represent 3200 LLC in Lot 7’s pre-development activities, “ONLY.”
These pages, just now making their way into the PUD file, were otherwise blank.
Hood and his fellow commissioners were being asked to approve a PUD application that–three years after 3200 LLC allegedly agreed to sell Lot 7 to CHCTDC, and two years after Square 5914 LLC included Lot 7 in its PUD application–based Square 5914 LLC’s claim to being “contract purchaser” of Lot 7 on Monica Ray’s previously undisclosed signature as an “authorized representative” of 3200 LLC, which her corporation, CHCTDC, was suing at that very same time.
Again, The Dig was unable to locate any documentation in the PUD file to confirm that claim in a timely manner, i.e., when the PUD application was filed in 2013.
And while CHCTDC’s court file contained the addendums to the real estate contract that might–might–tie the arrangement together, Square 5914 LLC had not disclosed the lawsuit to the Zoning Commission–Merrifield had.
The Dig pursued clarification of this menagerie from D.C. planning and zoning officials for weeks, to little avail.
“Everything we had is in the public record at the Office of Zoning,” said Jennifer Steingasser, Deputy Director, of Development Review and Historic Preservation at the D.C. Office of Planning, in an email responding to inquiries.
“Any records that [this office] has would be found in the case file,” echoed Office of Zoning Director Sara Bardin.
Hood was unmoved by Merrifield’s objections. He rejected the postponement request in less than 60 seconds, within the first 10 minutes of the hearing.
“This does not rise to the occasion for us to postpone the hearing at this time,” Hood said, according to a videotape of the hearing. “We have dealt with many cases which relate to zoning, clean hands, how much you owe the city, and all that. That is not germane and is not within our bailiwick. We have even dealt with cases where the city did not transfer the land.”
“We are not an enforcement entity and I vote that we should move ahead,” said Marcie Cohen, seconding Hood.
The Zoning Commission issued final approval of Square 5914 LLC’s PUD Application on May 11, 2015.
This was good news for everyone save the tenants at the buildings adjacent to Lot 7 who had a stake in the development of the Capitol Heights Metro site.
It was especially good news for CHCTDC and another organization run by Ray called Congress Heights Community Association, which under a Community Benefits Agreement (“CBA”) would each receive $75,000 over 15 years from Square 5914 LLC as part of a “working capital fund for small contractors.”
$$$
For Griffis, Square 5914 LLC’s prospects were far from a certainty, and title to Lot 7 still was unsettled.
Thanks to some questionable decision making by city officials, CHCTDC’s lawsuit against 3200 LLC was not without merit.
The deal between the two hadn’t simply fallen through because 3200 LLC backed out, as DHCD allegedly had told Ray in 2014. There was more to the story than that, internal DHCD correspondence shows.
On April 28, 2014, a project manager in the Development Finance Division at DHCD named Washi Wali sent an email to Jones and Ray, saying that the department approved 3200 LLC’s sale of Lot 7 to CHCTDC.
“Monica/Phinis: The Director approved the assumption of the mortgage on Lot 7,” Wali’s email pronounced.
“Good morning Washi,” Ray replied. “I have confirmed with [our settlement attorney] that he will draft the assumption language. Can you provide the name and a contact to whom [he] should be working with in your shop?”
That was Assistant Attorney General Donnette Cooper.
“The Assignment and Assumption document was circulated internally for comment yesterday,” Cooper wrote to Wali on June 27, 2014, copying Ray. “I expect you should be able to have a draft for your review next week.”
Two days later, Wali told Ray and Jones the deal was dead, according to an email that is filed in CHCTDC’s lawsuit. It wasn’t 3200 LLC that had backed out, however.
The Director of DHCD at the time was Michael P. Kelly, a prominent national public housing figure. Whether Wali had misrepresented Kelly’s approval of the assumption of the mortgage on Lot 7, or signals had gotten crossed, Kelly was not approving the sale.
In order to agree to the mortgage assumption by CHCTDC, Kelly himself would have to approve the transaction, in writing, Wali told the anxious buyers.
And Kelly wasn’t signing anything.
An Affidavit by Wali states, “The Director of DHCD had sole authority to sign any mortgage assumption and reduction agreement. However, the Director did not sign a mortgage assumption and modification agreement for 3200 13th Street.”
No signature, no mortgage assumption, no deal.
Kelly did not return calls.
As negotiations between CHCTDC and 3200 LLC continued into 2016, Elmore and Smith racked up water and sewer notices and wrongful condition citations. Lot 7 had become a full-blown nuisance property, with complaints of squatters, drug use and violence.
By fall of 2016, they had given up on Lot 7. Eight years and almost one million taxpayer dollars later, there still was no foster home there for adolescent wards of the city.
The time had come for 3200 LLC to do the expedient thing and get out: They transferred Lot 7 back to DHCD via deed in lieu of foreclosure.
“In an effort to ensure that the property is preserved as decent, safe and affordable housing, notwithstanding default and remedies including foreclosure for deficiency, [3200 LLC] has asked the District to take back [Lot 7] in a deed in lieu of foreclosure,” states a Special Warranty Deed, approved by DHCD Director Mary R. (Polly) Donaldson, on September 12, 2016.
Bowser treated herself to a victory lap.
In a press release dated October 2, 2016, she included Lot 7 in her Real Estate Project Pipeline as one of 19 projects that received a piece of a $106 million investment in affordable housing, heralding it as an “an acquisition designed to preserve the affordability of 12 units.”
“When I took office, we set out to ensure that all residents—no matter their background, income, or ZIP code—could afford to live in the District,” Bowser said in the release, which identified the “Developer” as “3200 13th Street LLC.”
“With over $106 million now fully invested to produce, preserve and protect affordable housing, we are helping to deliver on that promise. This amount of financial commitment—and the speed in which it occurred— has never happened in the District of Columbia.
“Because of our efforts, real money is getting out the door that will allow over 2,600 residents to call the District home.”
Real money was getting out the door alright, but for whose benefit?
Smith and Elmore were in the wind, leaving behind a pile of unpaid bills and a default on a $920,100 loan, and DHCD seemed to be leaving CHCTDC–and Square 5914 LLC–in the lurch.
Or were they?
In March 2017, DHCD Deputy Director Allison Ladd told Washington Business Journal that the decision to take back Lot 7 was unrelated to the PUD, and that the department intended to offer it up for competitive bid. By then, Ladd said, Lot 7 was assessed at $759,260.
Ray and Jones felt they had been double-crossed.
With Ray (on behalf of 3200 LLC) ostensibly having authorized Square 5914 LLC to include Lot 7 in its PUD application, she (on the behalf of CHCTDC) sued the District.
In April 2017, CHCTDC amended its complaint, claiming that it did not learn of the transfer of Lot 7 back to DHCD until after the deal was consummated.
“At no time over the preceding two years did any of the defendants disclose to [CHCTDC] that DHCD planned to or had initiated foreclosure proceedings against [Lot 7] and/or that [3200 LLC] and DHCD were negotiating a deed in lieu of foreclosure,” the amended complaint states.
In a sworn statement, Ray accused DHCD’s Washi Wali of telling her that Smith and Elmore had decided to “go in a different direction,” though “he obviously knew that DHCD made the decision to foreclose on the mortgage and secretly negotiated with [3200 LLC] for a deed in lieu of foreclosure and cash payment.”
What’s more, Ray said she had put in work to gain PUD approval for Square 5914 LLC.
“In reliance of DHCD’s approval of CHCTDC assuming the mortgage on [Lot 7]…CHCTDC continued to invest time and money into pursuing purchase of [Lot 7], including successfully negotiating the property’s inclusion in the planned unit development with the neighboring Sanford [sic] properties,” states the amended complaint.
Adding insult to injury–primarily for D.C. taxpayers–Ray alleged that Elmore and Smith had no equity in the property and had made off with $920,100, yet “DHCD paid them over $300,000 for their interest in [Lot 7] and in disregard of the [real estate contract] between CHCTDC and [3200 LLC], as well as this lawsuit.”
She was in the ballpark: DHCD officials confirm they paid $175,000 to take back Lot 7 from 3200 LLC. They would spend more before it was all over, and that was just part of what they gave up.
Because DHCD took Lot 7 back in a deed in lieu of foreclosure, it was no longer bound by the affordable housing covenant for “extremely low income” youth.
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As 2017 was coming to a close, there sat Lot 7, a vacant brick apartment building among other vacant brick apartment buildings that were now fully embroiled in a separate controversy.
Allegations of slum conditions against Sanford Capital had prompted the Office of the Attorney General to sue Nowell and his limited liability companies that owned the properties adjacent to Lot 7 (in 2016).
After acquiring those properties from Nowell (in December 2017), Griffis, according to court records, got stuck with monthly payments to a receiver appointed in the OAG’s lawsuit to pay for relocation costs and rent differentials for tenants who had to move out to allow for major repairs intended to bring the buildings up to code.
Separately, the tenants coalition alleged that they had been cheated out of their TOPA rights when Griffis acquired those properties from Nowell, and sued them both to challenge the transfer (in spring 2018).
Both cases are ongoing.
Ten years after DHCD made the ill-fated loan on Lot 7, to 3200 LLC, it was stuck in court, with CHCTDC.
Finally, on June 13, 2018, after a court ordered mediation, DHCD agreed to sell Lot 7 to CHCTDC, subject to a $180,000 mortgage–an outcome that after years of wrangling now seemed to have been foreordained.
There would be no competitive bid for Lot 7.
Ray and Jones finally had their hands on it, avoiding the $240,000 that would-be buyer East of the River Clergy, Police, Community Partnership had agreed to pay for it.
Affordability terms were less than onerous. Just 51% of Lot 7’s units would be reserved for “households qualifying at the 80% AMI level,” states the Settlement Agreement and Release signed by Ray, on behalf of CHCTDC, and Assistant Attorney General Andrew Glover, for DHCD.
DHCD even sweetened the deal: Not only did CHCTDC not have to rent to “extremely low income” adolescents, they were not required to rent to adolescents at all!
“The parties agree that occupancy of the property shall not be restricted to foster adolescents and young adults who are wards of the District of Columbia,” the agreement states.
That August, having resolved its lawsuit with the city, CHCTDC released the lis pendens, according to land records. In the early months of 2019, DHCD paid to retire all “wrongful housing” liens–eight in all–and paid the $70,000 in back property taxes.
On May 22, 2019, a trustee executed a series of transactions between DHCD and a single-use company formed by Ray called Metro Apartments LLC, land records and DCRA records show.
Along with a deed, a covenant and a financing statement, the $180,000 mortgage on Lot 7 was recorded as a 3-year deferred, zero-interest loan, according to the department.
“DHCD closed on the disposition of the property to Metro Apartments LLC in May 2019,” a department official says in an email to The Dig.
“Metro Apartments granted an affordable housing covenant in favor of the District, wherein it agrees that at least 51% of the housing units that are developed on the property site will be affordable to households that earn no more than 80% of the area median income for a period of 40 years.
“This covenant replaces the original CDBG covenant that was recorded in 2008.”
No payments have been made, and none are due at this time, DHCD said.
In a prepared statement, Polly Donaldson added, “The mission of the Department of Housing and Community Development is to produce and preserve opportunities for affordable housing and economic development and to revitalize underserved communities in the District of Columbia.
“While it is regrettable [3200 LLC] defaulted on its obligations under the Community Development Block Grant loan documents to develop the property for use as affordable housing, we were glad in 2016 to receive the property pursuant to a deed in lieu of foreclosure.
“We look forward to enforcing the restrictions of the covenant, as is our role, and seeing affordable housing come to the site.”
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Two months after Metro Apartments LLC took ownership of Lot 7, DHCDC retired another lien on the water and sewer charges.
Though the settlement agreement required CHCTDC to “complete the rehabilitation of [Lot 7] within 18 months of purchasing the property,” and gave the District “the right to re-enter and take title to the property,” 17 months later Lot 7 continues to sprout weeds.
The clock is ticking in another critical manner. According to the Office of Zoning, an extension of the PUD was supposed to expire on June 5.
Zoning Commission Order No. 20-07 extended that for six months, so unless there is another extension, Square 5914 LLC’s PUD will run out on December 5.
According to Sara Bardin at the Office of Zoning, a request for another extension would require a show of justification and a recommendation from the Office of Planning, responses to the request from any interested parties and the Advisory Neighborhood Commission, and another ruling by the Zoning Commission.
She said Commissioner Hood stands by his original decision to deny postponing the 2015 PUD hearing.
For all the uncertainty of what lies ahead, there’s as much resistance to revisiting the past.
Lot 7’s tortured history has so many players involved whose actions depended on one another.
Yet no one wants to be associated with anyone else.
In that sense, Lot 7 is a little like the Immaculate Conception: No single entity is responsible for its current state of existence.
Reached at his office at The Cordish Companies several weeks ago, Zed Smith said his former partner, Kelvin Elmore, had passed away, and that he did not care to be involved in the story of Lot 7.
Phinis Jones spoke briefly with The Dig recently, but he deferred to Monica Ray, and denied that he even has an interest in the matter.
“I don’t own [Lot 7],” Jones said. “I did not have an interest in [that property].”
That belies DHCD communications with Ray and Jones, however, and statements by Ray in CHCTDC’s lawsuit claiming that Jones was apprised of every aspect of Lot 7’s precariousness.
Jones said something interesting though. When The Dig observed that Lot 7 is a key piece of the Congress Heights Metro site, he replied, “Absolutely. Monica can tell you why she put it in the PUD.”
Even Geoff Griffis, who has spent years trying to distance himself from his former partner Carter Nowell, is careful to leave some space between Square 5914 LLC and Lot 7.
In a story about Lot 7’s fate on September 14, 2017, Washington City Paper asked Griffis if “he’s still interested in acquiring [Lot 7].” Despite his claim in the PUD application to be the “contract purchaser,” he played it cool: “CityPartners is considering all options,” he said.
Right now his only option is to decide whether and how to settle a TOPA lawsuit with the tenants over the adjacent properties at Congress Heights Metro site. (Both sides recently filed new pleadings.)
There’s certain things about Lot 7 that on the surface don’t appear to involve Griffis. There’s also things he’d have a hard time disputing:
His interest in Lot 7 goes back at least seven years, to Square 5914 LLC’s PUD application, in 2013. And since then, the District has wasted taxpayer money and neglected the property as a carousel of owners and would-be owners fought over it and sat on it, with Griffis staying mostly in the background, waiting to seize what he says is his for the purchasing.
Not everyone can pull that off. It helps to have friends like Ray and Jones, and support in the halls of power, across the river, where the interests of the well-off and well-connected are well-protected.
Ward 8 Councilmember Trayon White, who has written in support of the tenants’ purchasing rights at Congress Heights, says he sees too many housing transactions in which the outcome does not benefit his constituents.
“This site is like many others in the District,” he told The Dig recently. “There are people who have money and an interest in property who get rich, while others get poor.
“Giving hundreds of thousands of dollars to people who do not live here…and then 10 years later to have nothing to show for it…
“If you do a deep dive into projects like this you’ll see that historically some of the laws and processes around housing do not get followed, and the results are not equitable. It’s the same story. That’s a big issue for me.”
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Come back for an exclusive look at Lot 7’s neighboring properties, and the roles played by Nowell, Griffis, and two of Bowser’s closest allies, in keeping a developer’s dream alive.
