Karen Hernandez has been in worse health since October.

The Ward 1 resident and mother of three has multiple conditions that require medical care. Until recently, she says she was receiving injections every six months to help with her chronic back pain, while undergoing physical therapy in preparation for surgery on her arm. That all used to be free for Hernandez through the DC Health Care Alliance, a locally funded insurance program for low-income immigrants who don’t qualify for Medicaid or Medicare.

But it all changed on Oct. 1, when the Department of Health Care Finance (DHCF) reduced Alliance members’ benefits and made it more difficult to access many forms of care. That’s in addition to implementing tighter income requirements as part of a plan to end adult enrollment on that insurance program by October 2027 — a proposal that would leave the vast majority of around 19,000 beneficiaries like Hernandez with few, if any, affordable health insurance options.

Alliance no longer covers physical therapy for adults, while injections and surgical procedures require a doctor to call for a “prior authorization,” according to the most recent member handbook. When Hernandez went to her appointments after the change, however, she says she was told her insurance no longer covers any of these services, and that another injection alone would cost her $7,000 out-of-pocket — several times the amount that her household earns in a typical month.

It all means living with more pain. 

“If I walk, I feel a cramp. I feel hurt,” Hernandez told The 51st. “Sometimes I can’t walk, because it hurts.” In total, the changes mean that over 40,000 low-income D.C. residents like Hernandez have lost some of their benefits or lost their coverage entirely, according to estimates from DHCF and D.C.’s Health Benefit Exchange Authority.

At a breakfast meeting with D.C. Council members last month, Mayor Muriel Bowser characterized the recent cuts to healthcare spending as a way to address rising costs during dire financial times. She presented even bigger potential reductions — including dropping the Alliance income limit to just 24% of the federal poverty level on Oct. 1 of this year, completely eliminating adult enrollment on Alliance next year, and canceling Medicaid coverage for around 93,000 childless adults in fiscal year 2029 — as a difficult but necessary money-saving strategy as the District seeks to close a funding gap of $1.1 billion going into the next fiscal year.

“These changes are going to make these programs more sustainable for more people, for a longer period of time,” said Bowser, who declined to comment on any follow-up questions about her statements or her budget proposal until after it is introduced (it is expected in early April).

DHCF estimates that healthcare rollbacks will save about $189 million in fiscal year 2026 and $233 million in fiscal year 2027. Most of this year’s savings — about $109 million — is from Alliance changes, while $80 million comes from DHCF reducing the income limit for Medicaid.

Patients, healthcare workers, and service coordinators, however, described a heavy human toll, with some patients enduring worse health outcomes because they’re missing medicines and treatments that their insurance no longer covers. They say others are passing up work opportunities in order to meet stricter income limits, getting teeth pulled that they could have saved if they had dental insurance, or facing greater challenges finding transportation to crucial medical appointments.

Another major blow to D.C.’s healthcare programs came on Jan. 1, when DHCF cut Medicaid coverage for about 17,000 people. Most of these beneficiaries transferred to a new program, Healthy DC (also known as the Basic Health Plan), which lacks benefits like dental and vision insurance. Unlike Medicaid, this program is fully federally funded. 

While the transition went smoothly from an operations perspective, many beneficiaries didn’t realize their plans had changed — leaving some care centers overwhelmed with patients who didn’t know how to access their new health plan. 

Despite extensive outreach efforts both before and after the change, Mila Kofman, executive director of D.C.’s Health Benefit Exchange Authority, said she believes many people still don’t know they lost Medicaid coverage and probably won’t learn about it until the next time they try to get care. 

In some cases, the consequences of this confusion might be relatively minor, just requiring a care provider to call an insurance company to get a patient’s new ID number. But other instances may be more serious. For example, Kofman said she has had limited success in contacting about 2,200 residents who lost Medicaid and don’t qualify for Healthy DC — meaning they’ll have to begin paying monthly premiums through D.C.’s Affordable Care Act marketplace.

“All of our tried and proven communications and outreach strategies that have worked well for other populations that we serve, they don’t work for this population,” Kofman told The 51st.

Hernandez, an Alliance member for over two decades, wants local leaders to recognize the impact of their decisions.

“We really need their help,” Hernandez said. “Not only for my family — I am asking for everybody, equally, because we need the insurance for our health.”

At the ER after losing health insurance 

Gabby Salado, a student services coordinator at Briya Public Charter School, has witnessed the impacts of cuts on low-income immigrants firsthand.

She recalled one instance where a student in her adult education classes didn’t show up to class for a few days and then missed an appointment to help him navigate social services. Salado gave him a call, and learned that he hadn’t been coming because his face was swollen and his teeth were causing him too much pain.

“The obvious question was, like, ‘Well, have you gone to the doctor?’” Salado recalled. “His answer was simply, ‘No. I have no money. This is too expensive for me.”

The Ward 1 resident ended up in the emergency room that night, Salado said. He and his wife texted her from the hospital with questions about how to navigate billing.

Salado says he’s a former Alliance member, among the roughly 8,600 people who have lost their coverage since DHCF lowered the program’s income limit in October — a steep drop from 27,600 to 19,000 beneficiaries as of the first quarter of this year. Deputy Mayor for D.C. Health and Human Services Wayne Turnage has attributed the decline to tighter eligibility requirements, a moratorium on new enrollments, and also a fear of immigration enforcement.

Because of their immigration status, the overwhelming majority of these former beneficiaries aren’t eligible for any other publicly funded healthcare programs. Among roughly 2,200 people who lost coverage at the end of September, for instance, only 55 were identified as potentially eligible for Healthy DC or a Qualified Health Plan. 

Before October, Salado said her office often helped students apply to Alliance, but the program now no longer accepts most new enrollees over age 25. Instead, a more stringent income cap at 138% of the federal poverty level — about $22,000 per year, for a one-person household — has brought painful decisions to many families still on Alliance.

“A lot of the families were like, ‘We barely make enough to pay rent, but now they’re saying that we make too much for healthcare,’” Salado said.

Some beneficiaries now must walk a careful line, earning enough money to provide for their families, but not making so much that they lose their healthcare. 

“They pass up the bit of extra income that they could get, out of fear to lose their benefits,” she said.

People who lost Alliance coverage — such as Salado’s student who ended up in the ER — find themselves in an even more precarious position. For instance, Hernandez’s husband, who is the sole breadwinner for their household of four, has been left paying $435 every few months to cover his blood pressure medicine, and can no longer afford another medication that he takes for his diabetes, which would cost $1,000 for a refill, Hernandez said.

Some former beneficiaries have been finding help at federally qualified health centers like Mary's Center and La Clínica del Pueblo, which offer care on a sliding pay scale and are obligated to help people regardless of their insurance status. Even so, tight finances and limited awareness about available options have left many families weighing the cost of taking care of their health against other needs like paying rent and buying food.

“If the medicine is cheap, [families] cover it. If the medicine is expensive, they don’t,” Hernandez said.

Medicaid changes create barriers to care

When around 17,000 D.C. residents lost Medicaid coverage in January, it triggered weeks of confusion for some of D.C.’s most vulnerable patients.

Faith, a social worker at a D.C. cancer center who asked to go by her middle name because she isn’t authorized to speak to the media, said the change brought immediate chaos to her workplace as patients began showing up with Medicaid cards that no longer worked. When administrators checked these patients’ insurance status, they were all listed as uninsured.

“It was just, like, two full weeks of total pandemonium, and we received basically no guidance from the D.C. government ahead of time about how to navigate these changes in coverage,” said Faith, who has since left that facility to work for a different cancer center in Virginia.

The Health Benefit Exchange had mailed new member ID cards and multiple notices to all 15,000 people who were automatically added to Healthy DC, and had coordinated with groups like the DC Medical Society and DC Hospital Association on informing physicians. However, Kofman said that information about how to access new ID numbers may not have reached office managers or front office staff, and that many beneficiaries didn't realize the significance of the mail they received.

Additionally, Kofman said her team has been successful in contacting only about 300 of the 2,200 people who lost Medicaid and are ineligible for Healthy DC, despite multiple rounds of calls, texts, emails, and notices.

“You make things seamless, and run the risk that some patients will not know that things have changed,” Kofman said.

While Faith’s team eventually sorted out the logistics, complications have continued for patients who used to rely on Medicaid to get rides to appointments. Healthy DC doesn’t cover non-emergency transportation, presenting a problem for patients who don’t have a car, can’t afford a rideshare and, in some cases, are too sick or immunocompromised to take transit.

Gwen Umbach, a paralegal at another D.C. healthcare facility, described one instance of a patient calling the fire department for help because ice and snow prevented her from getting to a bus stop. In the past, Medicaid would have covered a ride directly from her doorstep.

Some patients with disabilities are still able to get rides through the MetroAccess Paratransit program for a couple dollars. Even so, Umbach said the cost and the extra effort create new barriers.

“I have one patient who has rescheduled a meeting with me three or four times now, because she doesn’t have a friend or family member available who can drive her … and she doesn’t have the money for any other option,” she said.

DHCF did not respond to questions about how many Medicaid members use non-emergency transportation each year, or how much it would cost to restore Healthy DC members’ access to this benefit.

More issues may be coming down the pipe for Healthy DC beneficiaries because the program also doesn’t cover vision or dental insurance. Dr. Steven Myles, the senior dentist at Bread for the City, has already been witnessing health impacts on members of Alliance since that program stopped covering dental in October.

While Bread for the City provides patients with full-service care whether they have insurance or not, the health center sometimes has to refer patients to specialists for more complicated procedures. But that’s not a viable option for low-income people without dental insurance, who may end up having to choose between living with pain and losing a tooth.

“We’re seeing a lot more extractions, or people just losing their teeth when they could have saved their teeth,” Myles said.

In addition to patients losing their dental insurance, Myles noted that fear from the increase in deportations may be making some people afraid to seek care.

Budget fights begin

Major decisions about the future of D.C.’s healthcare programs are at stake during this year’s budget season — and storm clouds are already gathering. While several councilmembers have joined a push to restore benefits to Alliance and Healthy DC members, Bowser has expressed commitment to keeping current reductions in place and moving forward with plans to end adult enrollment on Alliance by October 2027.

One pressure point concerns $21 million that the D.C. Council approved to restore current Alliance members’ benefits. While CFO Glen Lee greenlit DHCF to spend this funding in December, the agency hasn’t done so yet.

Bowser voiced concerns at the February breakfast meeting about “whiplash” if Alliance members see benefits temporarily restored, but then taken away again this October, when DHCF is on track to reduce the program’s income limit once again.

“We made some very well informed, difficult decisions last year around this, and they’re turning out pretty well in terms of how these programs are operating, so I would invite you to stick with them,” Bowser said. 

Her stance prompted criticism from policymakers including Ward 5 Councilmember Zachary Parker, who noted that the $21 million is in the budget that the D.C. Council approved and that has been signed into law.

It remains unclear when, if ever, Bowser and the Council will reach an agreement on how to spend the money. Neither DHCF nor At-Large Councilmember Christina Henderson, chair of the Council's Committee on Health, responded to inquiries.

In the meantime, four councilmembers have signed a letter urging Bowser to restore funding for various social programs in this year’s budget proposal — returning Alliance to previous eligibility levels and adding benefits including dental and vision coverage for Healthy DC members, among other changes.

“The safety net is at risk of being dismantled and in desperate need of corrective action,” wrote Henderson, Ward 1’s Brianne Nadeau, Ward 4’s Janeese Lewis George and Ward 6’s Charles Allen.

Bowser, by contrast, pointed to healthcare costs that are rising faster than inflation and $700 million less available revenue projected in the coming fiscal year. In financial times like these, she argued, some forms of support for D.C.’s most vulnerable residents are just too expensive.

“I believe that the current changes put us on a more sustainable path, and that’s likely what I would advance again,” Bowser said.

It has been a little more than a year since Leilany Raya testified about the “unspeakable living conditions” in her Columbia Heights building. 

In March 2025, Raya told the Committee on Housing, chaired by At-Large Councilmember Robert White, about the “ongoing mistreatment” of tenants, many of whom were children and seniors, after Ernst Equities purchased the building in 2023.

“Since Ernst Equities acquired our building, we have faced continuous violations of our basic tenants rights,” Raya told elected officials. “The developer’s actions, coupled with the District’s lack of enforcement, have left us in unsafe, unhealthy, and completely intolerable living conditions.”

Many of the units had gone without heat for a week the previous winter, Raya said, and severe leaks, mold, rodent infestations, and an unsecured entrance remained unaddressed despite several requests for urgent repairs. Raya said Ernst Equities continually offered tenants buyouts to leave.

“Why don’t you use that money to actually repair our units? Why are you still buying properties when you don’t have the funds to actually repair our building?” she said.

White, along with reps from multiple government agencies, went to visit the building following the hearing. But Raya says in a recent interview with City Paper that nothing has changed.

By July 2025, the property had accumulated 125 housing code violations, totaling $132,273 in fines, and Raya is now in court battling an eviction case she claims was filed in retaliation for her refusal to take a buyout. As part of the case, Raya now pays $600 a month into the court registry—less than half of the full monthly rent of $1,269; a judge reduced the rate due to the condition of her apartment, she says.

Raya’s experience is a consequence of a calculated business strategy outlined by Ernst Equities’ founder, Felipe Ernst, for transforming unprofitable rent-controlled buildings into cash cows.

Ernst explained his strategy on a 2020 episode of a business podcast: “We’ll be filling up those units with voucher tenants, and then we’re making now a lot more money off the rent,” he said, adding, “The rent comes 100 percent from the government, so, you know, it’s locked in. … There’s not a lot of risk.”

The key to generating profits, Ernst said, was targeting tenants with housing vouchers who could pay up to $1,000 above market-rate rents.

“If you have a market tenant and you have a voucher tenant, and the rates are the same, nine out of 10 times you’re probably gonna go with the market tenant, because you’re like, oh, he has a job, and like, he’s probably not gonna mess shit up,” Ernst said.

Getting the existing tenants out was simple, Ernst explained. “These people, a lot of them, are low-income, minorities, and they’ve never seen, you know, a check for over $5,000,” he said.

But the true “secret sauce” to permanently increasing profits are voluntary agreements. The deals, under Ernst’s strategy, include relatively modest buyouts for tenants, and in exchange they agree to vacate their homes and to permit Ernst to increase the rent-controlled rate more than the law would otherwise allow. In January 2025, the D.C. Council reauthorized the use of voluntary agreements after a three-year moratorium, adding new procedures meant to act as guardrails on large increases. Voluntary agreements are one of the ways landlords in D.C. can legally increase rents beyond the incremental increases allowed by law.

The strategy, in essence, allows developers to extract large, low-risk profits from public funds, which in turn fuel the acquisition of more buildings. Ernst owned three units in Shaw in 2015. He’s since expanded his portfolio to more than 2,300 rental units in the D.C. area, according to his bio for Georgetown University, where he is an adjunct lecturer. 

Ernst is not alone in implementing this strategy. While the District grapples with an affordability crisis and about 17,000 households on the waitlist for housing vouchers, some developers—with the support of lenders and property managers—are exploiting the voucher program to convert affordable rent-controlled properties into lucrative, voucher-only buildings, according to court filings, public records, targeted rental inquiries, and tenant interviews.

Kate Scott, executive director of the nonprofit Equal Rights Center, says the strategy fundamentally undermines the housing voucher program’s original intent.

“The concept that drove the development of the Housing Choice Voucher program to begin with was that it would promote integration,” she says. “So if you are developing buildings or groups of buildings that are only voucher holders, then it’s really contrary to the purpose of the voucher program.”

The displacement push

In March 2025, Jasmine Joyner, White’s constituent services coordinator, sent an email to multiple D.C. agencies outlining “several critical issues affecting the residents’ quality of life and safety” at Raya’s building on Clifton Street NW. 

The list included serious fire safety hazards, excessive mold growth, a “rampant rodent infestation,” and a lack of heat that left residents, including seniors, in “intolerable conditions” for two months.

Joyner wrote the email after White’s staff and reps from various government agencies visited the property to observe the conditions. Management neglect resulted in accumulated trash and a broken front door, according to Joyner. City Paper observed similar conditions on a recent visit nearly a year later.

“Our goal is to address these matters promptly and ensure accountability from Ernst Equities, the property management company,” Joyner wrote.

A month after Joyner’s email, Raya says tenants received notice that Blue Jay Property Management was taking over as the building’s property manager. But after a little digging, Raya was dismayed to learn that Ernst was still behind the company. He announced in a social media post that he rebranded Ernst Equities into Blue Jay Property Management and Capitol Rock as the private equity investment arm.

These days, Raya says she believes all of her new neighbors have housing vouchers. But while taxpayers are paying Ernst luxury-apartment-level rates, his tenants continue to live in hazardous unsanitary conditions, she says. 

A three-bedroom apartment in the building, currently advertised for $4,250, was registered with DHCD with a rent-controlled rate of $1,101 in 2023.

Amelia moved into the Clifton Street NW building in January 2024 after leaving a homeless shelter with her three young children. Her voucher pays $3,400 for a converted two-bedroom unit. The city-wide DCHA average for a unit that size is $2,343. Amelia says the unit is “more like a one and a half” bedrooms.

DCHA policy, outlined in documents provided to the D.C. Council, requires inspectors to verify that any converted bedroom meets HUD and D.C. standards—minimum square footage, a closet, a window, and both primary and secondary egress. The policy is designed to prevent owners from inflating rents by adding noncompliant partition walls to claim higher-bedroom units.

Amelia says a ceiling fixture fell shortly after she moved in, flooding her entire kitchen. She has contended with severe and ongoing maintenance issues, including mold, fungus growing out of the floor, a lack of heat, and a burnt electrical wire behind the stove that an electrician said could be a fire hazard. The property management portal says the electrical wire repair was “COMPLETED,” but Amelia says that’s not true.

“This is not just one thing wrong, like, this is everything,” Amelia says. “Even when they came to supposedly fix my apartment, they did a half-assed job.” She says she reported a broken soap dish in the bathtub to the property manager multiple times, but it has gone unaddressed. A few weeks ago, Amelia’s 3-year-old daughter fell in the tub and was injured by a jagged edge of the porcelain; the toddler cut her back and required nine stitches, Amelia says.

She thought things would improve after White’s office visited her unit last year. “They just came and they looked and they showed interest, but nothing ever was done,” she says. “I’ve called the DOB four times now. They’ve come out twice, but it still hasn’t made a difference. I’m so stuck here.”

Amelia says she has tried to get help from a revolving cast of caseworkers. But inevitably, she says she is told that if she doesn’t like her unit, she can go back to a shelter.

Ernst defends his company’s handling of the property, saying they bought the building out of foreclosure and it had a lot of deferred maintenance.

“The building was in really poor condition,” he says. “And we’ve tried to invest in it as much as we can, and we have spent a considerable amount of money on the property.”

Ernst denies that his strategy is to push out rent-controlled tenants, saying he wants to “lease to the open market and to try and provide housing that everyone can be proud of.” He attributed the high advertised rents to Morningstar, which he says  took over property management in October.

“Everything that’s happened since then has been outside of our purview, our direction, and our control,” Ernst says. 

Mazen Zaatari, managing partner of Morningstar Community Development, which is part of the ownership group of the Clifton Street property, clarifies that his company Earning Housing Management is responsible for operating the property. He tells City Paper the partners voted to remove Ernst’s company, Blue Jay, from managing the Clifton Street property, due in part to the housing code violations, in addition to management of two other properties.

Zaatari insists that the advertised rent of $4,240 is an error, and says his company has spent $130,000 on maintenance and repair backlogs to turn things around since taking over in November. And if repairs were halted after tenants refused buyouts, that was “not on our watch,” he says. “I will assure you that I’ve never and will never force anyone out of their unit.”

Zaatari shared contracts for trash pickup, cleaning services, and pest control, but City Paper observed piled up trash and dead roaches at the Clifton Street property as recently as early March. 

Reasonable rent?

Between 2020 and 2023, while Ernst was building his rental portfolio, the D.C. Housing Authority, which administers the housing voucher program, overpaid for 1,339 apartments, according to the agency’s own rent study, totaling $17.2 million in payments above standard market rate.

DCHA instituted a rent reasonableness review to prevent voucher overpayments in July 2023, a process that landlords tried to manipulate to secure higher rents, according to City Paper’s analysis.

Susie McClannahan, fair housing director at the Equal Rights Center, questions the ongoing lack of transparency from DCHA. 

“Rent reasonableness determinations seem to be exceedingly arbitrary and nobody in the city really seems to know how DCHA is making these determinations, or how the tool that it’s using is coming up with these calculations,” McClannahan says.

City Paper’s review of data retrieved via the Freedom of Information Act on approximately 80 records of approved rents in Raya’s zip code shows DCHA paid an average of $3,950 for three-bedroom, one-bath units in 2024.

Many of Ernst’s properties, such as those in Adams Morgan and Columbia Heights, are located in high-opportunity neighborhoods that enable upward economic mobility for low-income residents. These neighborhoods tend to have higher median incomes, more college-educated residents, and lower incarceration rates. When vouchers are paired with support, studies show, low-income families are much more likely to relocate to these areas.

But the research only looks at neighborhoods as a whole—it doesn’t track what happens when developers create new, highly clustered enclaves of poverty even within high-opportunity neighborhoods.

Even as his business strategy favors concentration of tenants with vouchers, Ernst acknowledged in the podcast interview the importance of creating mixed income buildings: “You have market rate tenants, you have voucher rate tenants, which, in my opinion, is the catalyst for a successful city, as opposed to having, like, isolated poverty.”

‘Two-bedroom with a pantry’

Similar practices that displace tenants are evident at other properties undergoing ownership change, including a complex with nearly 60 units near the intersection of Alabama Avenue and 22nd Street SE in Congress Heights. The distressed property went into receivership after the OAG sued the former owner for life-threatening housing conditions and was sold in bankruptcy in December 2023.

The new owner, Antawan Williams, planned to fully renovate the neglected properties, but tenants say they were shut out from the benefits of renovations. Tenant Joyce Jolly sued Williams in May 2024, accusing him of refusing to make repairs and of “saying the property is uninhabitable to encourage the tenant to move out,” according to the lawsuit.

Water service was periodically shut off and the landlord—an LLC controlled by Williams—had stopped mail and garbage service, Jolly alleged. Her complaint detailed a broken furnace, holes in the floors, a mice infestation, and the smell of mold permeating the building. In the motion for a temporary restraining order, Jolly asked to be moved to a renovated unit during repairs.

Jolly ultimately signed a settlement agreement, agreeing to vacate in exchange for $26,500. The payment was to be made in two installments: $14,000 within three days of signing the agreement and $12,500 within three days of moving out. But Jolly later had to return to court to enforce the agreement after Williams’ LLC failed to make the second payment. The landlord claimed Jolly moved out one day late and violated the agreement; a judge found that argument unpersuasive,

The newly renovated units were advertised by Hart Communities Foundation in 2025, including in a video posted to Instagram aimed specifically at people with housing vouchers. “If you have DCHA, DHS, Career MAP, Rapid Rehousing you are welcome to come with all your paperwork, copy of ID, social, birth certificate, income statement, and updated voucher,” a Hart Communities employee said in the video. “If you don’t have an income statement … or income let us know. We have zero income forms available for you. Come meet us there. You have an opportunity to get some brand new units. Let’s go!”

In a phone call, Williams says that when he purchased the property, the previous owner had already hired someone to relocate the tenants. He says only eight or nine people lived at the property, and four were “squatters.”

Williams denies working with Hart Communities and says his company “accept[s] all tenants.”

“I’m a businessman. I follow the law. I know the laws of D.C. government, so therefore I don’t force any tenant out,” he says.

Williams repeatedly refused to say whether the property was rent-controlled, only stating, “I’m a great landlord, and the D.C. government loves me as a landlord. …We accept any tenant, whether or not they have a market rent, voucher, or whatever.”

Hart Communities did not respond to calls from City Paper. 

By the fall of 2025, three of the buildings had certificates of occupancy, according to court filings from Williams’ LLC, and were filled, in part, by tenants with housing vouchers. But by December, a lawyer for Williams’ LLC said in court documents that the goal of “filling up the units with voucher holders,”  had been hampered by market conditions.

But DOB records show that none of the buildings in the Alabama Avenue SE complex have current certificates of occupancy, meaning tenants cannot legally live there. And a 2024 inspection for one of the buildings, 2429 Alabama Ave. SE, was disapproved, citing basement storage rooms converted into units without approved plans or permits; unauthorized plumbing, electrical, and mechanical work; and multiple fire and safety compliance issues.

Units in the Congress Heights complex are now advertised by a new entity, DaDukes Developments. The company lists a renovated three-bedroom unit at the complex for $2,498, calling it “a steal of a deal.” 

One tenant who currently lives in a three-bedroom unit describes it as a “two-bedroom with a pantry.”

The suits file in

Practices that exclude low- and moderate-income renters without vouchers from affordable units have prompted intervention from the D.C. Office of the Attorney General.

Last January, the OAG sued Petra Management Group, alleging that the company exploited a rent-control loophole that allowed Petra to charge higher, subsidy-backed rents instead of the lower rent-controlled rates.

The District’s Human Rights Act prohibits discrimination based on a person’s source of income. The law is meant to protect voucher holders from discrimination, which remains rampant. But it can also apply to the exclusion of tenants without vouchers.

The OAG alleged that Petra engaged in this type of exclusion at three complexes with more than 100 units—the Adams, the Madison, and the Keystone. Petra allegedly leased only to tenants with vouchers and misled prospective tenants by advertising apartments at inflated, voucher-based rates.

In October 2025, Petra entered into a settlement with D.C., agreeing to pay $700,000 in penalties, advertise all available rent-controlled apartments at lawful rates, end discriminatory leasing and advertising practices, provide fair housing training to staff, and undergo three years of compliance monitoring.

More recently, the OAG has pursued lenders who financed or appraised properties planned to house only tenants with vouchers.

In February, the OAG sued Red Oak Capital Holdings, alleging its lending and appraisal practices discriminate based on a tenant’s source of income, violating the District’s Human Rights Act. According to the OAG, the real estate lender structured loans and appraisals for more than 300 rent-controlled units with the expectation that developers would rent primarily to voucher holders for higher subsidized rents. This strategy, the OAG claims, effectively undermines rent control and reduces access to affordable housing.

Red Oak previously appraised or approved almost $55 million in loans to slumlord Ali “Sam”Razjooyan or his associates for properties that would be rented exclusively to voucher holders. 

The lawsuit names several properties, including buildings owned or managed by Jamaal Claggion, Razjooyan associate Richard Cunningham, and Ernst and his partner, Cameron Webb. 

Ernst says his company has never applied for or received a loan from Red Oak. And though Webb says he has never received a Red Oak loan, he would not say whether he has ever applied for one. But an internal Red Oak underwriting document obtained by City Paper contradicts those claims. 

The ‘secret sauce’

The voluntary agreements that are at the heart of Ernst’s strategy provide a legal loophole that permanently jeopardizes access to affordable housing in D.C.

A voluntary agreement allows tenants in rent-controlled buildings to negotiate significant rent increases with their landlord, typically in exchange for improvements, repairs, or buyouts. The law requires that at least 70 percent of a building’s tenants agree to the terms.

Ernst tells City Paper that he used voluntary agreements in two or three buildings that were in such disrepair that they needed full gut renovations.

He explained the risk and rationale behind voluntary agreements on the podcast: “Anita Bonds and the councilmembers are trying to get rid of it, because they’re saying that it’s destroying the affordable housing stock in the city, which is a valid point,” he said. “At the same time, the buildings are in total disrepair, and these tenants are eventually going to pass away, and it’s locking down the rents.”

Mel Zahnd, supervising attorney with Legal Aid, describes voluntary agreements as a “pressure tactic” that landlords often use after issuing threats to raise rents beyond what the rent control law will allow.

Tenants are given an “unfair choice to either agree to a voluntary agreement that gets passed on to future tenants, or face those very significant rent increases themselves, Zahnd says. “That’s just an unfair position to put the tenant in and overall undermines affordability for the city.”

Petra, for instance, was able to legally raise rents at its 67-unit Brightwood property to levels similar to those challenged by the OAG simply by using a voluntary agreement that increased rents by 139 percent to 810 percent—ranging from $1,813 to $3,622. 

Tenants were offered $30,000 to sign the voluntary agreement and move out, according to a copy of a move-out agreement. 

Petra CEO Rashid Salem told City Paper in a 2023 email “in negotiating the Voluntary agreement, we would accommodate any tenant that wants to stay. It is economically unfeasible to renovate a unit or building and not receive rents to offset the cost of construction and modernization. Without this, rent control buildings put owners in a position where they cannot make the capital improvements necessary to keep the buildings up to par.”

Ernst has used voluntary agreements, or purchased buildings where a previous owner’s voluntary agreement already raised rents, several times over. An 11-unit building on Kenyon Street NW saw rent increases ranging from 132 percent to 325 percent after Ernst entered into a voluntary agreement with the tenants in 2018. Every unit experienced an increase of at least $1,500 per month. 

At 3538 6th St. NW, Ernst used a voluntary agreement in 2017, increasing rents between 69 percent and 214 percent. The rent for one unit, which went from $1,152 to $1,950 under the agreement, was later increased to $4,069 in 2019 using another rent control loophole for reconfigured units.

In 2025, Ernst Equities sued DCHA for nearly $50,000 in unpaid rent for a single unit at 3538 6th St. NW. The agency responded in court records by quoting the voucher contract, which says “DCHA shall not make any housing assistance payment if the contract unit does not meet the housing quality standards,” and adding that Ernst “failed to meet these standards as of December 2023.”

Signing these agreements can create perverse incentives for landlords, Zahnd says. 

“What we have seen very often in buildings with voluntary agreements is after the tenants sign voluntary agreements the landlords then will neglect the building, allow conditions to get worse until tenants feel that they have to move, and then the landlord will take those larger rent increases,” he says.

Zahnd notes that while there was political momentum to abolish voluntary agreements, there has been little public explanation for the decision to maintain them. 

“I’m concerned that the current procedures do not sufficiently protect against the predatory nature of voluntary agreements,” he says. “I think these have been used to undermine affordability for many years, and I don’t see much justification for maintaining them.”

As the District reauthorized a tool that erodes affordability, neighboring Montgomery County is using its 2024 rent stabilization law, which applies to more than half of the county’s approximately 114,000 rental units, to address the affordability crisis. 

According to a recent report by the Montgomery County Department of Housing and Community Affairs, rent stabilization has contributed to stronger housing code enforcement and reduced displacement and housing instability, which disproportionately affect Black, Latino, immigrant, and low- and fixed-income households.

Even as the study from a neighboring jurisdiction points to the positive outcomes for at-risk populations, civil rights advocates raise concerns about the local concentration of voucher holders.

“Voucher holders are essentially being exploited for really high rents and in buildings that have very poor conditions,” says McClannahan of the Equal Rights Center. “This speaks to the larger issue of rampant source of income discrimination in the city, which makes it extremely difficult for voucher holders to find units.

“It creates a predatory submarket in which less scrupulous landlords can try to exploit the rents from the voucher program to make a large profit on units that are not being maintained or would be considered habitable,” McClannahan says.

When cold weather arrives, most people expect to see a bump in their utilities. But many D.C. residents were shocked to see their electricity bills had doubled and even tripled this winter — in some cases, climbing over $1,000 in a single month.

“Your first thought is that it's something you're doing wrong,” said Rawan Abhari, whose February Pepco bill topped out at $303 and whose next bill is projected to be at least $400. But after reading stories about other residents going through the same thing, she realized the problem was bigger than just her household.

Dozens of 51st readers reached out with similar experiences: a $600 bill for a two bedroom apartment; over $400 for a one bedroom. 

It’s hitting home for D.C. lawmakers, too. Ward 4 Councilmember Janeese Lewis George said she received a Pepco bill for $899. For At-Large Councilmember Robert White, it was $1,100.

Pepco customers say that these bill increases are unsustainable, and that they’re at a loss about what to do about them.

“My bill quadrupled the past two months and I don’t know what to do to fix it,” emailed Alexander, a D.C. resident who asked to go by his first name to maintain his privacy. He lives in a 750 square foot one-bedroom apartment, and says his Pepco bill climbed to $400.

The 51st dug deep into why your electricity bills are rising, and what’s being done about it.

What does Pepco have to say? 

The utility has pointed to the region’s historically cold winter as a cause of rising heating demand and costs. “December 2025 was the coldest December in ten years, followed by a January that also ranked the coldest January of the past decade,” read a February press release.

But in an email to The 51st, Pepco’s own data show that their D.C. customers actually used more energy in January 2025 than January 2026.

A Pepco spokesperson said that because of the way the company’s billing cycle works, it still doesn’t have the full picture for January 2026 energy usage and numbers may shift.  

Some D.C. residents are unconvinced that the cold weather explains the extent of their rising bills, however, and have noted to The 51st that their energy usage isn’t drastically different from months or years past. 

Harrison Pyros, communications coordinator for the public utility advocacy group We Power DC, said that newer buildings, which should be more energy efficient than older homes, were also facing high electricity bills. “They shouldn't be seeing these types of doubling,” Pyros said.

Extreme cold and excessive heat can have an influence on electricity bills — but weather alone doesn’t tell the full story of why residents are seeing drastic changes.

Pepco hikes rates while data centers surge

For about five years, Pepco has been using a new method to raise their rates. Instead of using historic data to propose updated rates — as it has previously done — the utility has used forecasted budgets and projected expenditures to set rates. In other words, Pepco had estimated how much it will spend on new projects and infrastructure in future years, and sought to raise rates to pay for it ahead of time. 

Using this “multiyear rate plan” framework, Pepco has gotten permission to raise rates twice in the last five years: once in 2021 and again in 2024. Each plan calls for rate hikes to take place over the course of multiple years. Both of these plans — the first for $108 million and the second for $123 million — were approved by the D.C. Public Service Commission (DCPSC), which oversees the city’s utility companies. 

Thanks to these plans, Pepco’s rates have gone up almost every year since 2021. In turn, so have electricity bills for D.C. customers. 

The rate hikes aren’t the only part of the electricity bill equation, however. Another variable is the cost of electricity, which Pepco does not control. 

Due to the recent rapid proliferation of data centers — particularly in Northern Virginia, which houses 35% of the world’s data centers — there has been around an $8 to $10 billion cost increase in the regional energy supply since 2024, said Mike Jacobs, who leads the Union of Concerned Scientists’ work on electricity markets and regulatory reform. 

Tough questions for the utility 

When Pepco proposed the multiyear rate hikes to the DCPSC, the company said the projected funds were necessary to cover the costs of grid maintenance and infrastructure upgrades. 

But consumer advocates have questioned the accuracy of Pepco’s budget forecasting. They’ve also said there is too little transparency and accountability around how Pepco actually ends up using the money, as Washington City Paper reported last year. One piece of testimony to the DCPSC found that the utility did not spend the $94 million it collected after its first rate hike.

Last spring, the D.C. Office of the People’s Counsel (which advocates on behalf of utility customers) filed an appeal over the 2024 hike, arguing that the DCPSC ignored required due process for evaluating the initial rate hike.

“We don't know really where the money [from multiyear rate plans] gets shifted oftentimes,” said OPC’s Assistant People's Counsel Ankush Nayar. 

In an email to The 51st, Pepco spokesperson Addie Kauzlarich says the $94 million number is “misunderstood.”

“This was not unused money or funding that went somewhere else. It simply reflects the difference between the projects Pepco planned to complete and put into service during those years and what was actually completed,” Kauzlarich said, citing COVID-related challenges and supply chain issues as reasons for the delay. The utility also earned less than its approved return during this time, she said. 

Pyros is skeptical of this justification. “We as ratepayers are fronting the money and then hoping that a for-profit utility is going to act in good faith and spend that money responsibly,” Pyros said.

As a condition of the second approved rate hike, Pepco agreed to undergo a management audit. The audit was meant to evaluate the accuracy of the company’s forecasted spending — a critical part for understanding how effective Pepco’s multiyear rate plan actually is. Two versions of that audit, a public version and confidential version, were filed to the DCPSC in December. 

In public comments from the U.S. General Services Administration (GSA), which represents federal facilities serviced by Pepco, the agency wrote that the audit affirmed “serious concerns” about the multiyear rate hikes, and that there was a “fundamental disconnect” between Pepco’s planning, actual costs, and customer benefits.

“Pepco has done a poor job at accurately forecasting costs and billing determinants under the [Multiyear Rate Plan] framework,” reads one line in the 13-page file by the GSA. 

Is the D.C. government doing anything about rising Pepco bills?

There are a handful of bills that D.C. councilmembers are working on to address D.C.’s growing utility affordability crisis. Ward 1 Councilmember Brianne Nadeau introduced a bill last February that would prohibit electric and gas utility companies from disconnecting services in the winter and summer months for households with vulnerable individuals, including children under 18, seniors aged 65 and older, individuals with disabilities, those who are pregnant or 12 weeks postpartum, and recipients of public assistance programs such as TANF and SNAP.

Another bill introduced last year, by Ward 6 Councilmember Charles Allen, would require the Department of Energy and Environment to automatically enroll income-qualifying households into utility assistance programs. “Because the programs make you jump through hoop after hoop after hoop, a lot of people who need it can't even navigate their way through all the different application processes,” said Allen about D.C.’s utility assistance programs.

Last week, Councilmember Robert White introduced a bill titled “Utility Rates and Ratemaking Amendment Act of 2026,” which aims to add guardrails for multiyear rate plans that would “shift the financial burden off of customers.” One major change includes mandating that future rate hikes are proposed on the basis of historic costs, not forecasted budgets.

Allen’s office also just introduced a bill this week that would make it quicker and less costly for residents to get their rooftop solar panels connected into the grid. In a press release, the councilmember’s office said that plug-in technology could save residents 10% to 30% on their electricity bills.“I think that can make a meaningful difference for people who want to be able to put solar on their homes and reduce their costs,” Allen told The 51st.

How can I make my voice heard?

While the D.C. Council doesn’t have direct control over Pepco, they do have oversight power over the DCPSC. The commission has faced immense criticism for voting to approve the multiyear rate hikes that have helped raise prices. On Feb. 27, the D.C. Council is holding a performance oversight hearing for the Public Service Commission, as well as for the Office of the People’s Counsel. 

Any person or organization can register to testify in-person, over Zoom, or submit their testimony online. Pyros says people who are struggling with high electricity bills should show up and share their experience.

We Power DC is also teaming up with the Chesapeake Climate Action Network to call for new leadership at the DCPSC. Two commissioners, Chair Emile Thompson and Commissioner Ted Trabue, are currently up for reappointment. 

“With affordability top of mind for D.C. residents this election season, voters deserve a say in choosing a leader who will hold utilities accountable and help bring costs down. That means no reappointments before the November election,” said Claire Mills, D.C. Campaigns Manager at CCAN, in a press release.

The DCPSC also opened an investigation into energy affordability in the District after the OPC filed a petition last November. While the initial comment deadline has passed, a spokesperson for the PSC said that the commission is “always open to additional comments from residents.” Comments can be submitted on the DCPSC’s website.

Terrance Laney serves as the administrator for the Department of Housing and Community Development’s Rental Conversion and Sale Division. In that role, which he’s held since 2019, he is tasked with enforcing tenant rights.

As CASD administrator, Laney has taken a hands-off approach, forcing some tenants to pursue long and costly legal battles to enforce their rights, according to City Paper’s review of Tenant Opportunity to Purchase (TOPA) Act complaints and lawsuits. 

But Laney also works a side gig through his private law firm where he advertises compliance services for landlords. An Instagram ad for his firm announces: “This year is going to be a huge turnaround year for DC landlords. Contact me ASAP for a consultation,” adding, “Several new exemptions from TOPA and other changes to the law provide landlords seeking to sell their properties with more clarity and certainty.”

“It’s pretty shocking. … You’re not supposed to be doing stuff that relates to your government job,” attorney and Shadow Senator Paul Strauss says of Laney’s dual roles. “If it’s not an actual conflict, it certainly creates the appearance of one, which, in and of itself, is problematic.”

In response to questions about the potential conflict, Laney says that his private legal work primarily focuses on trusts, wills, and estates. He’s only handled a few landlord-tenant eviction cases, he says, where he has represented both tenants and landlords. He emphasizes that none of his firm’s cases have to do with TOPA.

“I’ve taken every D.C. government ethics course about outside employment, and I’m very well aware of what the rules are,” Laney tells City Paper over the phone. “I’m not prohibited from having an additional job. I’m not prohibited in any way by working for myself outside of what I do at DHCD, so long as I’m not doing it on company time with company equipment and also marketing myself outside or trading on my position in D.C. government.”

Laney adds that he checks for conflicts before taking on any private client and would recuse himself from cases related to his agency responsibilities. He says he informed DHCD and the Board of Ethics and Government Accountability about his outside employment, but he would not confirm that either agency gave him official approval.

“You can scour my website,” Laney says. “If you take the time, you won’t even see any reference to the D.C. government.” 

But when City Paper checked the site following the interview, it appeared to have been scrubbed. It now displays only a photo of Laney with the text “Coming Soon.”

One of the deleted pages was saved on the Internet Archive’s Wayback Machine. It says: “I help landlords comply with Washington, DC housing laws by guiding them through complex regulations, lease requirements, tenant rights, and local compliance standards. From drafting enforceable leases to advising on rent control, housing code obligations, and lawful eviction procedures, I help landlords avoid costly mistakes while protecting their property interests.” 

Another deleted page from Laney’s website says: “Legal help for landlords shouldn’t be expensive or complicated. I provide affordable, straightforward legal services for small property managers and landlords – so you can protect your property and focus on managing it with confidence.” “Compliance” and “enforcement” are listed among the firm’s core services. 

While D.C. government employees are not banned from outside employment, D.C.’s Ethics Manual prohibits them from activities or jobs that “conflict with government duties or interfere with their ability to perform their job,” that “allow others to capitalize on the employee’s official title or position,” or where the employee serves “as an agent or attorney for any outside entity in matters before the District.” The DC Department of Human Resources further advises that jobs creating, or even giving the appearance of, a conflict of interest should be avoided.

Employees designated as public officials are required to disclose all outside employment or business activities that generate income or involve a formal role. The most recent filing for Laney is for 2024—before he established his law practice. 

After City Paper contacted DHCD about Laney’s outside employment, agency spokesperson Tim Wilson says in an email that the matter has been referred to the Board of Ethics and Government Accountability for review and Laney has been put on leave.

Director of Government Ethics Ashley Cooks says the advice they provide to employees is confidential, “so I can’t disclose that information. But “in general, the ethics rules prohibit employees from engaging in outside employment that conflicts with District employment,” she says.

***

Shortly before Laney’s appointment in 2019, former Legal Aid DC Supervising Attorney Beth Mellen raised concerns during testimony before the D.C. Council about lax enforcement of TOPA and housing laws on behalf of tenants.

TOPA is designed to preserve affordable housing for low-income tenants and prevent displacement and “CASD plays a critical role in achieving the purposes of TOPA,” Mellen said in February of that year. She urged councilmembers to fill the job with someone who had expertise in TOPA.  

One of CASD’s main responsibilities is overseeing the implementation and enforcement of TOPA. The law grants tenants the right to match an offer and potentially purchase their building when an owner decides to sell. CASD receives and processes TOPA filings, tracks tenants’ exercise of their rights, provides technical assistance to tenants and landlords, and oversees tenant complaints about noncompliance by property owners. 

“In my role at DHCD, I’m a neutral regulator,” says Laney, who became a licensed attorney in 2024, and started his law firm last October, according to his LinkedIn profile. In 2015, Mayor Muriel Bowser appointed Laney as the deputy director of the Office of Lesbian, Gay, Bisexual, and Transgender Affairs.

But few, if any, tenants who turn to his department for help find relief. According to Wilson, out of the 60 TOPA complaints received by DHCD between May 2020 and May 2025, none have been resolved in the tenants’ favor, primarily due to incomplete or unproven appeals. 

The tenants at the five-unit building at 4021 Third St. SE thought they did everything right after they received notice from their landlord in September 2023 that the property was up for sale. 

They organized a tenant association (the first step in exercising TOPA rights), and in October of that year submitted the registration and letter of interest to the landlord requesting documents required by TOPA, including the sale contract, building floor plan, itemized operating expenses, and the rent roll, which the seller was obligated to provide within seven calendar days. But the landlord’s agent, Dan Crosby, never responded as he’s legally required to do.

One month later, the owner, 1146 17th Street NE LLC, sold the property in violation of TOPA, prompting the tenant association to file a complaint with CASD, according to court records. (Crosby is listed as the LLC’s registered agent; Stephanie Kohan and James Strasbourger are listed as the beneficial owners.)

Laney rejected the tenant association’s petition, writing: “At this juncture, because the Property has already been sold, the Division does not have legal authority to remedy the potential violation of your rights. The Division is tasked with regulatory enforcement which occurs before a violation occurs. Because the tenant association’s rights appear to have been violated, your situation is now a legal matter for which you will require an attorney’s representation.”

The tenants appealed Laney’s decision to the D.C. Court of Appeals, arguing that the agency’s refusal to act was arbitrary and legally flawed and that DHCD has broad enforcement powers, including the ability to issue orders, impose fines, and seek court enforcement—even after a violation has taken place. The appeals court sent the case back to DHCD in June of last year, and Laney issued a new decision—this time granting the petition and finding that the landlord failed to negotiate in good faith with the tenants. 

After a lengthy fight to get DHCD to confirm that their TOPA rights were violated, the tenants filed suit in D.C. Superior Court this week against the landlord and the new owner, Bapky LLC. 

Another Court of Appeals ruling, in February 2024, sharply criticized DHCD for mishandling tenants’ TOPA petitions. 

That case started in 2021, when landlord Vaughan McLean LLC sought to sell hundreds of units it owned in the McLean Gardens condominium complex. (Beneficial owners of the LLC include Michael Albert, Christie Heberle, and Richard Cohen; all of them list an address in New York City.)

The landlord claimed each of the units were single-family homes and were therefore exempt from TOPA. (The D.C. Council exempted most single-family accommodations from TOPA in 2018.)

But a group of tenants objected in petitions to DHCD in September 2021, arguing that because the buildings contained multiple rental units—and had previously been classified as multifamily housing—the sale should trigger TOPA’s stronger protections, including the right to purchase.

Laney rejected the tenants’ petitions in July 2022, concluding that the units were single condominium units and therefore covered by the exemption. 

The tenants, upon discovering that their landlord communicated with Laney in private, asked for the decision to be reviewed again about a week later, which Laney again denied. In their request, the tenants highlighted the private communication as a “shocking violation of one of the most basic norms of the legal practice.”

Tenants appealed Laney’s decisions, and again the Court of Appeals found significant problems with his analysis.

“Because DHCD’s rulings contain factual findings not supported by substantial evidence and legal conclusions for which we cannot discern a basis, we reverse DHCD’s denial of these petitions and remand to allow DHCD to provide more complete and accurate grounds for its decision,” the court ruled in February 2024. 

***

Last October, the Council passed the Rebalancing Expectations for Neighbors, Tenants, and Landlords (RENTAL) Act, which eliminated TOPA rights for large swaths of tenants. 

In a Zoom meeting earlier this month hosted by the trade group called the Small Multifamily Owners Association, Laney spoke directly to the landlords in attendance on the law’s implementation.

Laney explained that property owners seeking to claim the new construction exemption to TOPA—which, he said, could also apply to renovated buildings—must notify tenants before March 31 that the property is no longer subject to TOPA. But, he added, there is no penalty for failing to send this notice.

Laney said the new rules now require DHCD to issue written certifications of TOPA compliance, which can be filed with the Recorder of Deeds, within five days of receiving notice from an owner. According to Strauss, this change will make it more difficult for tenants to bring successful TOPA complaints.

Strauss adds that the previous CASD administrator, Lauren Pair, “was very personally motivated to find the right answer and make what she considered to be good law. Terrance has been more procedurally oriented. … You couldn’t really have a lengthy phone call with him on the merits of anything. So they had very different styles.”

In response to a question from a landlord about TOPA transactions, Laney advised, “I would push that person to talk to a lawyer, because when you’re talking about specific actions I can take that are favorable or disfavorable to me in this process, that’s bordering on legal advice.”