The has filed a lawsuit against , and its affiliated property owners, accusing them of operating an unlawful scheme to exploit housing subsidies while systematically excluding non-voucher tenants from rent-controlled apartments.
The lawsuit, filed in D.C. Superior Court, targets three apartment complexes — The Adams at 4825-4829 North Capitol St NE, The Madison at 5616 13th St NW, and The Keystone at 743 Fairmont St NW — totaling more than 100 units.
According to the complaint, Petra’s business model hinges on an illegal practice of leasing exclusively to tenants with government-funded housing vouchers, effectively shutting out lower-wage workers, senior citizens, and individuals with disabilities who do not qualify for subsidies. By doing so, Petra maximizes rental income by circumventing D.C.’s rent control laws, which cap rental rates for units built before 1976 unless specific exemptions apply.
The lawsuit alleges that Petra’s scheme violates the District’s Human Rights Act and the Consumer Protection Procedures Act by discriminating against prospective tenants based on their source of income. D.C. law prohibits landlords from refusing to rent to individuals simply because they do not receive government assistance.
“Petra is exploiting the District’s affordable housing crisis for profit—lining its pockets by limiting housing options for tenants who don’t have subsidies but still struggle to afford a home,†said Beth Mellen, assistant deputy attorney general and senior counsel for Housing Protection and Affordability. “It is illegal in the District for landlords to discriminate against tenants based on their income. Petra’s elaborate scheme further distorts a market that already puts rents out of reach for many. Our lawsuit seeks to put an end to Petra’s illegal conduct and help ensure that every º¬Ð߲ݴ«Ã½ian has equal access to an affordable place to live.â€
D.C.’s rent stabilization laws safeguard tenants with limited incomes, keeping rent-controlled units affordable amid rising housing costs. The median rent for non-rent-controlled units in 2020 was $2,554 monthly, while rent-controlled units averaged $1,442 monthly. However, landlords can charge higher rates if a tenant with a government-subsidized housing voucher rents a unit, as the government covers the difference.
Petra is accused of abusing the exemption. The company reportedly told lenders it would lease all units at government-subsidized rates, far exceeding what the law allows for rent-controlled properties. The Office of the Attorney General’s investigation found that Petra advertised vacant units only at these inflated subsidized rates, even though landlords are prohibited from charging the higher rates until a voucher-holding tenant applies and receives an exemption.
At The Adams, for example, a three-bedroom unit that should be rented at a rent-controlled rate of $1,000.25 per month was advertised and rented for $3,131.00. This practice effectively locks out prospective tenants who do not have vouchers, shrinking the already limited pool of affordable housing options.
The lawsuit states that Petra’s policies and practices constitute a refusal to rent based on income source in violation of the Human Rights Act. The Office of the Attorney General argues that Petra has created and enforced leasing policies that exclude non-voucher tenants from The Adams, The Keystone, and The Madison, violating legal protections against income-based housing discrimination.
The lawsuit further alleges Petra engaged in deceptive advertising by listing only the higher subsidized rents, misleading prospective tenants, and discouraging non-voucher renters from applying. The complaint states that Petra’s advertising tactics indicate a preference for voucher-holding tenants while falsely implying that lower, rent-controlled rates are unavailable.
The Office of the Attorney General also charges Petra with consumer fraud, arguing that the company misrepresented its rental rates and failed to disclose required rent-control exemptions. According to the complaint, Petra’s actions violate the Consumer Protection Procedures Act, which prohibits landlords from engaging in deceptive trade practices affecting District residents.
In its lawsuit, the District seeks declaratory and injunctive relief, restitution and damages for affected tenants, civil penalties, and attorneys’ fees.
“As a result of their illegal rent-maximization scheme, the Petra Defendants prevent unsubsidized tenants who need affordable housing from renting over 100 units at The Adams, The Keystone, and The Madison, even while they pocket public dollars intended to create more affordable housing options, not less,†the lawsuit states. “The Petra Defendants’ actions establish a pattern or practice of refusing to rent to unsubsidized tenants based on their source of income.â€