Attorney: Was Ensign’s rent really below-market?

In a column Tuesday in Roll Call, Washington attorney C. Simon Davidson examines the ethics complaint that was filed against Nevada Sen. John Ensign and other members of Congress who lived in a church-affiliated house on Capitol Hill.

The complaint filed by Citizens For Responsibility and Ethics in Washington alleges that, at a reported $950 monthly, the lawmakers were paying below-market rents, which could constitute a "gift" in violation of House and Senate ethics rules.

The question, Davidson writes, is whether the rooms and housekeeping services provided by the C Street Center really could be considered below-market.

The Roll Call website is restricted to subscribers so Political Eye cannot provide a link to the entire piece. But Davidson’s analysis includes the following:

"In support of the claim that the Members have received a gift, the complaints say that $950 is a below-market rate for the rooms and cite much higher monthly rates at nearby hotels and corporate housing suites. For example, they say, a month at the Capitol Hill Liaison Hotel would cost $6,000, and a month at Marriott ExecuStay would cost $4,000 to $5,000. They also cite the rates for furnished efficiencies and one bedroom apartments in the Capitol Hill area, stating that rents are upward of $1,700.

"I am no expert in real estate, but I wondered whether these were apt comparisons. So I contacted a real estate agent who specializes in D.C. rentals. He says that the comparisons drawn in the complaints are apples to oranges. The big distinction in his mind is that, unlike the examples in the ethics complaints, the C Street House sounds like a “rooming house,” meaning that residents share common space with one another, including bathrooms. The most analogous rentals to this type of living arrangement, he said, would be furnished “rooms and shares.” Unfortunately, he said, it is difficult to assess the market value of rooms and shares because their landlords typically do not use formal real estate listings but rather seek tenants via word-of-mouth or by posting ads on forums such as Craigslist. The absence of formal listings means there is not an extensive record of recent rentals for comparison.

"So, I did my own Craigslist search for listed “rooms and shares” on Capitol Hill. I discovered that most furnished rooms and shares on Capitol Hill are listed for $600 to $1,000 per month, though none appeared to include housekeeping services.

"The agent and I also discussed the total rental revenue that the owner of a 5,700-square-foot Capitol Hill house might expect. The agent said that it would be highly dependent on the condition of the house and that the small rental market for such large homes again makes it difficult to assess. If the C Street House were to operate at full occupancy of its 12 bedrooms, and all of the residents paid $950 per month, the monthly rental revenue for the house would be $11,400. At 75 percent occupancy, the revenue would be $8,550. In either case, the agent said, the owners of a 5,700-square-foot Capitol Hill house would likely be very pleased with monthly revenue that large.

"Ultimately, then, the complaints against the Members may turn on the issue of whether they received a “gift.” If the agent I spoke to is right, it appears that they did not. In any event, the ethics complaints are now in the hands of the Senate Ethics Committee and the Office of Congressional Ethics. Perhaps they will be contacting real estate experts as well."

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