Loney v. Dist. of D.C. Rental Hous. Com'n

• Citation: 11 A.3d 753
• Decision Date: 23 September 2010
• Docket Number: Nos. 08-AA-1203, 08-AA-1603.,s. 08-AA-1203, 08-AA-1603.
• Parties: Steve LONEY, Petitioner, and Tenants of 710 Jefferson Street, N.W., Intervenors/Cross-Petitioners, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent.
• Court: Court of Appeals of Columbia District

11 A.3d 753 Steve LONEY, Petitioner, and Tenants of 710 Jefferson Street, N.W., Intervenors/Cross-Petitioners, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent. Nos. 08-AA-1203, 08-AA-1603. District of Columbia Court of Appeals. Argued May 11, 2010. Decided Sept. 23, 2010.

Roger D. Luchs with whom Richard W. Luchs, Washington, DC, was on the brief, for petitioner Loney.

Julie H. Becker and Eric R. Haren with whom Peter G. Wilson, Bonnie I. Robin-Vergeer, Paul M. Smith, Washington, DC, and Melissa A. Cox, were on the brief, for intervenors/cross-petitioners.

Richard S. Love, Senior Assistant Attorney General, with whom Peter J. Nickles, Attorney General for the District of Columbia, Todd S. Kim, Solicitor General, Donna M. Murasky, Deputy Attorney General, and Mary T. Connelly, Assistant Attorney General, were on the brief, for the District of Columbia Rental Housing Commission.

Before RUIZ and OBERLY, Associate Judges, and KING, Senior Judge.

KING, Senior Judge:

Steve Loney filed a petition for substantial rehabilitation of his property at 710 Jefferson Street, Northwest. After several administrative hearings, the hearing examiner of the Housing Regulation Administration, Rental Accommodations and Conversion Division, granted the petition. The tenants appealed the decision of the hearing examiner to the District of Columbia Rental Housing Commission (hereinafter, the "Commission"). The Commission reversed and vacated the petition, finding, among other things, that there was not substantial evidence to support the decision of the hearing examiner. The Commission also awarded attorney's fees to the tenants for work performed before the Commission. Loney filed the instant petition for review, contending that the Commission made several errors in its decision to deny his rehabilitation petition, including its finding that there was not substantial evidence to support the petition. The tenants cross-petitioned, alleging that the Commission erred in its calculation of attorney's fees, first by finding that it lacked jurisdiction to determine fees for work performed before the hearing examiner and second by rejecting the hourly rate the tenants requested. We conclude that the Commission did not err in finding that there was not substantial evidence to support the decision of the Hearing Examiner granting Loney's petition for substantial rehabilitation. We, therefore, do not reach Loney's other challenges to the ruling of the Commission. We remand to the Commission on the issue of attorney's fees.

I.

On August 6, 2004, Loney filed a petition for substantial rehabilitation of his fourteen-unit apartment building pursuant to 14 DCMR § 4212 (2004), and D.C.Code § 42-3502.14 (2001). He proposed renovationsto the building with a projected cost of $141,800. His proposed renovations—detailed in a memorandum from an architect—included replacing the roof, updating the electrical system, refinishing the floors, painting, and replacing all fixtures and appliances in the kitchens and bathrooms of the units. He additionally submitted to the hearing examiner cost estimates for the work to be done and provided testimony from a roofing consultant and an electrical contractor.

On July 28, 2005, a hearing examiner with the Department of Consumer and Regulatory Affairs, Housing Regulation Administration, granted the petition for substantial rehabilitation. She found that Loney presented sufficient documentation of the rehabilitation, that it was in the interests of the tenants, and that it met the requirements of the D.C.Code and the D.C. Municipal Regulations for such petitions. The tenants then appealed to the Commission.

On September 3, 2008, the Commission reversed the decision of the hearing examiner and denied the petition. The Commission ruled that the hearing examiner erred in concluding that the petition met the definition of "substantial rehabilitation"; the Commission found that the petition lacked critical information regarding the proposed work.¹ The Commission determined that Loney's failure to submit necessary documentation and carry his burden of proof justified outright denial of the petition rather than reversing and remanding the hearing examiner's decision for further proceedings.

II.The Commission's Denial of the Petition

In the petition for review before us, Loney challenges the Commission's holding that "the hearing examiner's finding that [Loney] submitted a detailed list of renovation costs is inaccurate, incomplete, conclusory and not supported by substantial evidence in the record" and that "the Hearing Examiner erred in concluding that the renovation is in the interest of the tenants[.]" We sustain this determination by the Commission for the reasons stated below.

In reviewing a decision of an administrative agency, this court considers whether there is substantial evidence in the record to support each of the findings, and whether the decision is in any way arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. See D.C.Code § 2-510 (2001); Cohen v. Rental Hous. Comm'n, 496 A.2d 603, 605 (D.C.1985). This court gives great deference to the agency's interpretation of statutes and regulations which itadministers, and will reject the agency's interpretation only if it is plainly wrong or incompatible with the statutory purposes. See Tenants of 738 Longfellow St., N.W. v. District of Columbia Rental Hous. Comm'n, 575 A.2d 1205, 1213 (D.C.1990).

The statute that allows for substantial rehabilitation petitions provides, in part:

(a) If the Rent Administrator determines that (1) a rental unit is to be substantially rehabilitated, and (2) the rehabilitation is in the interest of the tenants of the unit and the housing accommodation in which the unit is located, the Rent Administrator may approve, contingent upon completion of the substantial rehabilitation, an increase in the rent charged for the rental unit, if the rent increase is no greater than the equivalent of 125% of the rent charged applicable to the rental unit prior to substantial rehabilitation.

D.C.Code § 42-3502.14(a). The D.C. Municipal Regulations detail what information a housing provider "shall include" with the petition:

(a) Detailed plans, specifications and projected cost of the proposed rehabilitation;

(b) Documentation of the assessed value of the housing accommodation as determined by the D.C. Department of Finance and Revenue for real estate taxation purposes for the tax year beginning no later than sixty (60) days after the date on which the petition is filed; and

(c) A schedule showing all rental units in the housing accommodation to be rehabilitated showing whether the rental unit is vacant or occupied and, if vacant, the date and cause of its vacation.

14 DCMR § 4212.2. The regulation details the supporting documentation a housing provider must provide and what standards must be met for a petition to be approved.² The purpose of requiring supporting documentation is to allow the hearing examiner to carefully consider whether the requirements of the statute are met: in particular that the proposed renovations amount to at least 50% of the assessed value of the housing accommodation and the rehabilitation is in the "interest" of the tenants. See 14 DCMR § 4212.8.

In support of his claim, Loney provided the hearing examiner with a memorandum from an architect, Mr. Jordan, that itemized the proposed rehabilitation as follows: replacing all existing electrical fixtures and replacing the electrical system in the building; replacing all bedroom, bathroom, and closet doors; replacing entrance doors to units as needed; replacing all door locks; repairing all walls and ceilings as needed; sanding and re-finishing all hardwood floors; installing ceramic tile floors in kitchen and bathroom; replacing all kitchen appliances (and specifying stoves and refrigerators); replacing all window air conditioner units; replacing all kitchen cabinets, sinks, and faucets; replacing bathroom vanity sinks and faucets; replacing bathroom medicine cabinets; painting the apartments; and replacing the roof of the building. Jordan's memorandum estimated that the work would cost: $18,000 for a new roof, $44,000 to upgrade the electrical system, and $5,700 to renovate each apartment. Jordan did not testify; however, Loney testified that he did not itemize renovation costs for each apartment unit, and the cost of$5,700 per apartment represented the average cost of materials and labor required by the scope of the work, and that his cost estimates were based on wholesale prices from different vendors and his professional experience as a construction and home improvement specialist. Loney submitted an exhibit similar to Jordan's memorandum that calculated the cost of construction would total $141,800, consisting of: $18,000 for a new roof, $44,000 to upgrade the electrical service, and $79,800 for renovation of the apartments ($5,700 for each of fourteen apartments). The total amount of $141,800 exceeded 50% of the 2004 tax assessment of $226,780.

Loney also introduced testimony from a roofing consultant and an electrical contractor. The roofing consultant testified that the roof, roof deck, and support framing of the building were in sufficiently poor condition that they required replacement rather than continuing repair. The electrician testified that the electrical system of the building was outdated and unsafe for the tenants and required upgrading, and also provided a written estimate of the cost of the work: $44,500 for installation of meters, switches, panels, lighting, wiring, outlets, and fixtures throughout the apartment building.

Ten tenants testified in opposition to the petition that the rental units shared varying degrees of the problems included in Loney's proposal. They disputed Loney's claims that all of the apartments contained the same types of physical deterioration and required the same comprehensive scope of...