Brookfield Properties, which manages Foundry Lofts in Navy Yard, has been over charging tenants for utilities, according to internal emails.
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At the end of last week, Brookfield Properties employees at luxury Navy Yard buildings jointly referred to as the Yards Collection were trying to get to the bottom of a discrepancy in their utility billing system.
Some occupied units at one of the buildings, the Foundry Lofts, were not showing up in a list used by the Brookfield’s third-party utility billing servicer, Conservice. And as employees at both companies emailed back and forth to resolve the issue, a tenant was, apparently inadvertently, added to the email chain in which a Conservice manager admitted they were overbilling some tenants for utilities.
“The issue on our end is we are overbilling the units that are billable,” Conservice billing manager Shelly Elliott says in the April 18 email to Brookfield management and operations employees. Elliott goes on to explain that some of the units are marked “occupied” in the property management company’s system, but are marked as vacant in Conservice’s list.
“Not having them in our system is making the units that are billable to cover the charges for the units that are not included in our system,” Elliott says in the email, which was shared with City Paper. “Whether or not a unit is billable, the units should be accounted for if occupied to bill the residents properly.”
In an emailed response to City Paper, a spokesperson at Foundry Lofts says, “upon being notified by our utility provider on Friday afternoon about a potential coding error in utility billing, our team immediately initiated a comprehensive audit. If any billing issue is verified, we will rectify it right away.” A representative for Conservice did not provide a comment by press time.
“This exchange is direct evidence that private equity puts profit over people,” says Noelle Porter, an organizer of the Brookfield tenants’ group and director of government affairs for the National Housing Law Project. “People and families across the U.S. are significantly rent burdened and do not have disposable income to waste to pad pensioners’ accounts.
“It’s clear that Brookfield is unconcerned with the stability of its tenants’ housing,” she adds.
For the past year, tenants at the 843-unit Yards Collection have been battling their landlord over what they say are unfair and deceptive application, utility, and service fees billed through third-party billing providers such as Conservice.
Last December, Brookfield tenant Norman Propst filed a proposed class action lawsuit in D.C. Superior Court alleging that not only were the fees misleading, but Brookfield’s third-party billing scheme unfairly stripped tenants of “regulatory protections that would otherwise apply were they billed directly by a publicly regulated utility, such as protections bearing on notice, billing, and the right to appeal a utility bill.” (The case has since been removed to U.S. District Court.)
Ward 6 Councilmember Charles Allen re-introduced a bill in February to ban the pervasive practice of deceptive utility billing, saying in a press release, “District residents in large residential buildings are getting bilked by large, national corporations looking to squeeze profits without providing any extra value. These hidden and exorbitant fees on tenants can add hundreds more to their monthly bills and are often a surprise.”
Joel Cohn, legislative director for the Office of the Tenant Advocate, says the agency is working with the Council and community members to develop legislation to address utility billing. D.C. law currently does not prohibit landlords from charging tenants for utility consumption in vacant units, Cohn says.
Brookfield denied liability in Propst’s lawsuit and claimed “there is nothing misleading about charging fees that were prominently disclosed” in a lease. But the incriminating email chain between Brookfield and Conservice managers suggests that tenants’ concerns may be justified.
The sequence of emails sheds light on Brookfield’s utility billing methods and the hidden inaccuracies that enable the company to charge a disproportionate share of utility fees to market-rate tenants, including costs for vacant units as well as those reserved for tenants who receive assistance through low-income housing tax credits, according a review of the email thread and court records.
Brookfield excludes vacant units and some affordable housing units, which the company considers “non-billable,” from utility fee allocations, according to the email chain. But without transparency into Brookfield’s utility billing methods, many of their tenants are in the dark about the excessive costs that have been dumped on them.
“I was hoping to see if you could assist me with the rent roll for Foundry Lofts,” Elliott asks in the email to Lesby Rodriguez, general manager of the Yards. “The units below are still showing as vacant but the provider has stated they are in tenant’s [sic] names,” she adds, listing 28 units in the 170-unit luxury building on Tingey Street SE.
The property received significant government investment to produce affordable housing units, including $47.7 million from Federal Housing Administration-insured multifamily housing revenue bonds issued by the DC Housing Finance Agency and $5.3 million in low-income housing tax credits from the Department of Housing and Community Development.
Twenty percent of the Foundry Loft’s apartments are required to be rented as affordable units due to the government assistance, a total of 34 units, according to DHD’s Low-Income Housing Tax Credit Database.
“If we were to update our billing to bill only total units this would make it split between units that are technically vacant as well which would lower your recovery,” Elliott continues in her email.
Rodriguez replies: “The below is a bit concerning that residents are being over billed as a result.” She copied Mark Delisi, Brookfield’s senior vice president of Operations, and Daniel Kane, a utilities manager based in Cleveland, according to his LinkedIn.
City Paper’s review of 20 eviction cases Brookfield filed against its tenants illustrates the inconsistency between the company’s utility billing for market-rate and affordable housing tenants. Market-rate tenants and tenants with vouchers pay variable monthly fees for common area fees, gas, and stormwater, while tenants in affordable housing units under the LIHTC program are not charged at all. (To maintain affordability, the LIHTC program limits the total rent and the utility allowance for tenants.)
Inconsistencies in charges exist even among market-rate units. While some tenants pay variable fees for trash, others pay a fixed $10 per month.
Brookfield’s fee transparency explanation provides little clarity to prospective tenants on how utility fees are apportioned. Charges for gas, stormwater, and trash are “allocated,” the page says, with no description of the process Brookfield uses to calculate the fees or disclosure that market tenants may bear the brunt of shared utility fees.