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Illegal, Short-Term Apartment Rentals Still Available Online, InTowner Investigation Finds; DC Attorney General Files Suit

Accompanying images can be viewed on page 1 of the September issue 2017 issue pdf

By William G. Schulz*

An InTowner investigation reveals that defendants in a lawsuit to curb the operation of illegal hotels in the city continue to offer these so-called Apartels on a short-term rental basis, via booking on a website, and followed up with local concierge services provided by the buildings’ managers and owners.

The suit was filed in late April by the Office of DC Attorney General Karl A. Racine (OAG). The government’s contention is that these are illegal rentals which violate the District’s Rental Housing Act and the licensing requirements put in place by the city to regulate hotels. What’s more, it is claimed that long-term renters who lawfully lease apartments in the buildings are seemingly not informed that large portions of their buildings will be operated like hotels. Accordingly, OAG has petitioned the court for a permanent injunction of defendants’ short term apartment activities.

When contacted about The InTowner of this ongoing, illegal short-term rental of apartments in buildings cited in the lawsuit, an OAG spokeswoman said attorneys there had no knowledge of continuing violations following the date of the OAG’s filing, but this would be investigated. She declined further comment on the pending suit, which is scheduled for a jury trial as early as January 2018.

At the time of filing, OAG stated a prime motivator for its suit is the city’s crisis of affordable housing. Short-term rentals remove affordable housing from the city’s rental stock, especially in rent-controlled buildings. Short-term rentals typically are priced far higher than the monthly rent charged for a typical year-long rental lease agreement, according to OAG.

The buildings cited in the OAG lawsuit are the Rodney at 1911 R Street, NW; the Phoenix at 1421 Massachusetts Avenue, NW; the Mass Court at 300 Massachusetts Avenue, NW; and the View at Waterfront at 1100 6th Street, SW.

The named defendants include Ginosi USA Corporation and its principal, Eric Ginosian, along with the owners and managers of four apartment complexes in the District: Daro Management Services, LLC; Daro Realty, LLC; Greystar Real Estate Partners, LLC; T-C Mass Court, LLC; Mill Creek Residential Trust LLC; and John Hancock Life Insurance Company USA.

In addition to the illegal rentals, OAG alleges that Ginosi Apartels collects sales taxes from guests but fails to remit them to the District.

The InTowner’s requests for comment from each of the defendants have all gone unanswered, including attempts to reach company officials by phone, email, and through company websites.

The InTowner has also learned that Ginosi USA now bills itself as Ginosi International and that the company has moved its Los Angeles headquarter offices out of the country — to Armenia.

This reporter spoke by telephone with a Genosi representative in Armenia who confirmed that it is the same company, and that it has indeed relocated. The representative further indicated that owner Eric Genosian is also in Armenia, but a message left requesting to speak with him has gone unanswered.

Meanwhile, “My office is using all of the tools available to us to preserve affordable housing for District residents,” says Attorney General Racine. “We will aggressively pursue individuals and companies that seek to circumvent the District’s rent-control laws, and we are actively investigating other instances where apartment managers or owners are treating rent-controlled apartments like hotel rooms and renting them out on sharing-economy platforms.”

Copyright © 2017 InTowner Publishing Corp. & William G. Schulz. All rights reserved.