DC Wins Largest-Ever Civil Penalty in US Housing Discrimination Suit

Three real estate companies operating in Washington, DC, will pay record-breaking penalties in a suit brought by the city for illegally discriminating against tenants who use Section 8 vouchers and other forms of housing assistance.

The attorney general for the District of Columbia, Karl Racine, announced on Thursday a settlement for $10 million. While fair housing cases involving lenders have resulted in larger compensation payouts, $10 million is the largest civil penalty ever levied in a housing discrimination case.

In 2020, the city sued several entities — DARO Management Services, DARO Realty and New York-based parent company Infinity Real Estate, as well as several executives — over housing practices in the District. DARO Management operates and rents some 1,200 residential units in more than a dozen apartment buildings spread across Wards 1, 2 and 3, which include DC’s more affluent areas. (DARO Realty owns the properties, DARO Management operates them, and Infinity owns both affiliates.)

According to the complaint, the companies charged extra fees to renters who used federal housing choice vouchers, better known as Section 8, and posted listings that discriminated against people using assistance. Over the course of litigation, the city uncovered documents that pointed to purposeful intent to discriminate. In an email, for example, Infinity investment director Jared Engel gave specific instructions to DARO Management president Carissa Barry — both defendants in the case — to “find ways to reject” voucher holders.

The companies refused entirely to let to applicants with other forms of assistance, including the city’s Rapid Rehousing for Individuals program as well as Community Partnership and Pathways to Housing — all initiatives to help people who are experiencing or facing homelessness.

The case further showed that DARO set stricter standards for applicants with subsidies in order to prevent them from qualifying for apartments. Barry wrote in an email to Infinity managing partner and founder Steven Kassin that “off the record I am doing everything I can to reduce if not eliminate the section 8 program from our communities. We have tightened our screening criteria as much as humanly possible.”

In addition to paying $10 million, DARO will dissolve its rental management division, and all companies and named executives are permanently banned from owning any interest in a property management company in DC. Barry will forfeit her DC real estate licenses for 15 years.

DARO did not immediately respond to a request for comment.

“This case demonstrates the rampant discrimination that tenants who use vouchers and other assistance face, and that this discrimination is destructive to families and communities,” said Deborah Thrope, deputy director for the nonprofit National Housing Law Project, in an email. “We hope that the settlement sends a message to landlords in the District that source of income won’t be tolerated, and to states and localities across the country that they can and must do more to enforce their own laws.”

A 2019 Washington Post report detailed how one DARO property fared after a change in policy by the DC Housing Authority, which administers the city’s allocation of federal housing vouchers. A hike in the local maximum value for vouchers to 175% of fair market rents enabled voucher holders to access apartments in more well-to-do communities such as Sedgwick Gardens, a 1931 Art Deco complex listed on the National Register of Historic Places. While some tenants — including voucher holders themselves — complained about the results, the property owners benefited. At the time, units rented to tenants with public assistance did not revert to rent-controlled units when those voucher households left. The city has since closed the loophole, and DARO told the Post at the time that it would be illegal for the managers to turn away tenants with housing assistance.

The District is one of 19 states and dozens of cities that prohibits discrimination based on source of income. All told, about 30,000 residents of DC use some form of housing assistance; some 11,500 households use federal vouchers. In DC, 95% of voucher holders are Black, and 79% of voucher households are headed by women.

Source: Bloomberg

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