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.
