The Washington PostDemocracy Dies in Darkness

Rental to Rep. Kevin McCarthy violated condo bylaws

Analysis by
The Fact Checker
May 11, 2021 at 3:00 a.m. EDT
(Jacquelyn Martin/AP)

“Frank [Luntz] has been a friend of mine for more than 30 years. … I’ve rented a room from Frank for a couple of months, but don’t worry, I’m back to — going back to where I normally am, on my couch in my office. But, yes, we pay fair market rate.”

— House Minority Leader Kevin McCarthy (R-Calif.), in an interview on “Fox & Friends,” May 4

Last week, The Fact Checker revealed that the “room” that McCarthy rented from prominent pollster Frank Luntz for at least two months was in a 7,000-square-foot space — a combination of four penthouse apartments. It turns out that the bylaws of the condo building, Clara Barton at Penn Quarter, specifically prohibit condo owners from renting anything less than the entire space — and for not less than six months.

“No portion of any Unit (other than the entire Unit) shall be leased for any period,” the bylaws say. “No Unit within the Buildings shall be rented for transient or hotel purposes … No lease shall be for a term of less than six months.” The bylaws also specify that “all leases shall be in writing” and say that all leases must be promptly forwarded to the building’s board of directors.

The bylaws are referenced in the deed of sale for one of the units purchased by Luntz, which notes that it is “delivered and accepted subject to all the provisions of … the Condominium Bylaws.”

Luntz did not respond to requests for comment via email, text or Twitter direct message. A spokesman for McCarthy also did not respond a request for comment.

Asked whether the building was investigating whether Luntz violated the bylaws, Quiana Bennett, assistant community manager, declined to comment. “It is the policy of the Clara Barton and its management to respect the privacy of our unit owners, residents, guests, and staff,” she added. “We ask that The Washington Post extend the same courtesy to the members of our community.”

The District of Columbia regulates short-term and room rentals, saying it “considers renting out a spare bedroom a business” and requires landlords who rent out a bedroom to fill out Form FR-500 with the D.C. Office of Tax Revenue, which provides the city with the location and ownership of the business. Hotel and “transient accommodations” under 90 days are subject to a 14.95 percent tax on the listing price.

People who rent their apartments also need to apply for a Basic Business License with the Department of Consumer and Regulatory Affairs, said DCRA spokesman Jameel Harris. Those failing to register their spare bedroom rental as a business can be fined up to $2,000.

About 90 residents at Clara Barton are listed on the DCRA website as having obtained such licenses, but Luntz is not among them. (A previous owner of one of the Luntz apartments is listed as having an expired license.) The website warns that the list may not be entirely up to date, but licenses obtained in 2021 are listed.

In August and September of 2018, Luntz purchased four adjoining penthouse units in the Clara Barton building in Penn Quarter for a total of almost $4.3 million. Combined, the units totaled 6,960 square feet and had 12 bedrooms, 12 full bathrooms and four half-baths. Luntz began merging the units in November 2019, and the renovation received a final building inspection on Oct. 20.

Besides the “room” he rented, McCarthy would have had access to a 24/7 concierge, a rooftop pool, a fitness center, a media room, a business center and a party room with a bar and pool table. The homeownership association fees alone on the units are $4,976 per month, according to Redfin.com.

When McCarthy stayed in Luntz’s place is unclear, but it appears to have been after the renovation was completed, possibly early in 2021.

On May 4, McCarthy told “Fox & Friends” that he rented the room “as the Democrats took over; they started changing the House around.” Democrats took control of the House in January 2019, and Biden assumed the presidency in January of this year. But an unnamed McCarthy spokesman had told Fox News’s Tucker Carlson, who first reported on the living arrangement, that “because of the pandemic, McCarthy has rented a room in Washington at a fair market price from Frank.”

In a November 2020 interview, Luntz noted that he happened to be in Washington at the time but that he lived in Los Angeles.

McCarthy has often highlighted how he lives sparsely in Washington, sleeping on a couch in his office.

“Don’t worry, I’m back to — I’m going back to where I normally are, on my couch in my office,” he added during the Fox interview. At one point in the interview, he described the rental period as a “few months.”

An unnamed McCarthy spokesman told the Daily Wire: “McCarthy rented a room of approximately 400 square feet, and under House Ethics guidelines, calculated the fair market amount at $1,500/month by comparing what other members of Congress were also paying to live in the building and additional comparables for the space in the building and neighborhood.”

Zillow currently lists studios and one-bedrooms in the Clara Barton building as between $1,675 and $2,300 a month.

The Campaign for Accountability, a nonpartisan watchdog organization, has asked the Office of Congressional Ethics to investigate the McCarthy-Luntz arrangement. The group noted that members of Congress generally are prohibited from accepting gifts, including lodging, and that the rent appeared to be below market rate. The group said that would qualify as a gift. Although allowances are made for gifts based on personal friendship, accepting a gift valued above $250 requires permission from the House Ethics Committee.

If McCarthy was required to pay 14.95 percent tax on two month’s rent ($3,000) and Luntz did not collect it, that might be considered a gift of $448.50. But Natalie Wilson of the DC Office of Tax and Revenue said that “because the statute specifically limits taxable transactions to those involving hotels or other ‘accommodations [that] are regularly furnished to transients for a consideration’, a short term lease would likely not be subject to sales tax.”

She added that if a landlord collected more than $12,000 in rent for a lease in a calendar year, she/he would be required to file and pay the unincorporated business tax on the rental income.

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