Developer Chris Donatelli has agreed to refund $450,000 in utility payments that his company illegally charged residents of the Park 7 Apartments in Northeast, according a settlement announced today by the D.C. Office of the Attorney General.

The announcement comes two days after the D.C. Council awarded Donatelli Development a $47 million subsidy to build permanent supportive housing in Hill East for residents leaving homeless shelters.

Donatelli’s company at issue in the OAG settlement, Park 7 Residential, L.P., improperly charged more than 470 current and former residents for water despite lease agreements stating the cost of water was included in their rent. Since at least 2017, Donatelli’s company offered tenants renewed leases that shifted the responsibility for the cost of water to them without explaining the change. “Their representatives allegedly told tenants that the new leases would not be different from the old ones,” according to the OAG’s news release.

D.C. law says that expired leases automatically become month-to-month, so there is generally little incentive for tenants to renew lease agreements.

“Park 7 denies that is has violated any law, engaged in deceptive practices, or failed to provide its tenants with proper disclosure,” the settlement says.

Along with the $450,000 he will refund tenants, Donatelli will pay the District about $200,000 to cover the cost of the OAG investigation. His company is also required to audit its water metering system, and submit a report to the AG’s office, along with annual audits for the next two years.

“It’s unfortunate that it took our office to launch an investigation in order for the company to pay back tenants’ water bills that their leases explicitly said would be paid by the landlord,” says Ben Wiseman, director of the OAG’s consumer protection office.

In an emailed statement to City Paper, Donatelli writes that Park 7 tenants’ leases mistakenly included a provision requiring the landlord to pay for utilities.

“A mistake was made, in good faith, by our prior management company regarding responsibility for water bills,” he writes. “Under the rental program put in place at the apartment building, Tenants are responsible for their own utilities, however, some of the leases indicated that the Landlord is responsible. When this error was discovered, we worked diligently with the OAG and the management company to resolve the discrepancy. The resulting agreement is a great outcome for our tenants. We look forward to a continuing good relationship with our tenants and the City.”

In February, Donatelli took over management of the building after removing the previous company, Edgewood Management. Tenants in the 377-unit building, almost all of which are designated as affordable housing, have raised issues with its conditions at least as far back as October 2018, when they threatened to withhold rent if their demands for repairs and maintenance were not met.

Tenants have described mouse and roach infestations, stained carpets, leaks, and water damage, and housing advocates have joined some tenants in brining attention to the demands on social media. Advocates with Stomp Out Slumlords (the housing advocacy arm of the Democratic Socialists of America), for example, have called attention to an unusually high number of eviction lawsuits filed against tenants at Park 7, though Donatelli has contested their data.

Going forward, Wiseman says, Park 7 tenants whose leases originally required the landlord to pay their water bills will continue to enjoy that perk. Additionally, renewed leases that shifted the cost of water usage from the landlord to the tenant are not valid, according to the agreement. But the settlement has no bearing on future leases.

Wiseman says he cannot comment on any previous or ongoing OAG investigations involving Park 7 or any other Donatelli properties. However, referring to Park 7 tenants’ active social media campaign, he says the OAG is “aware there have been complaints about other issues.”