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At Each Hurdle, Stronger Resolve
To Win Over Lenders, Tenants Had to Compromise. They Had a Tougher Time With Neighbors Across W Street.

By Debbi Wilgoren
Washington Post Staff Writer
Thursday, December 15, 2005

The message D.C. housing officials delivered to developer Jair K. Lynch was clear. His plan to keep Capital Manor Apartments affordable by selling one of its three buildings was a no-go. Mayor Anthony A. Williams would not fund a project that would eliminate some low-cost apartments, even in the interest of saving others.

The time was September 2002, the mayor was running for reelection and real estate prices were exploding. Critics were blasting Williams for doing too little to prevent the displacement of the poor from newly posh neighborhoods. The city had set $25 million aside for housing assistance, and Lynch was applying for $2 million to help the tenants of Capital Manor buy their complex, 102 crumbling apartments just off the trendy U Street corridor in Northwest.

The proposal relied on selling one building at market rate and using the profits to help renovate the others, which would become a low-income cooperative. Now that plan would have to change, Lynch told the five officers of the tenants association board. To improve their chances of winning city funds, all three buildings had to go co-op and remain affordable. Nobody would be able to cash in at market rates for at least a decade.

Worse, Lynch made it clear that even with these changes, the District could still turn Capital Manor down. Competition for city money was fierce, and because of the high-priced neighborhood, their project required a higher city subsidy per apartment than other proposals. The decision would not come until December -- and an outside buyer was waiting to snap up the complex if the tenants did not close on their purchase by Jan. 15.

The news brought treasurer Kim Mitchell to her feet. "We're chasing and grabbing at something that we have no chance of getting," she snapped, her arms folded tight across her chest. "We keep meeting and we keep meeting, and we're not getting anywhere."

Resident manager Osmin Rodriguez was shaking his head, too. Revising the plan "doesn't work for me," he said flatly. He said he'd rather save for a home in an inexpensive suburb than continue fighting a losing battle, and he suspected other young Latinos in the complex might feel the same.

But the three others at the table were not willing to give up their dream. Association President Deborah Thomas, Treasurer Peggy Fitzgerald and Secretary Milagro Posada were older women, with deep roots in the neighborhood and few illusions about upward mobility. Their lives had been mostly scraping and struggling. They had never been comfortable with the idea of replacing one-third of their neighbors with rich newcomers, and they intended to leave their apartments to their children, not to sell them.

"I don't know about you, but I'm fighting for something," Thomas said. "When we started this, we had not one penny. And guess what -- we've been into this almost one year, and we're not outdoors yet. So that's enough for me to keep going. If we do nothing, we're going to end up with nothing."

Ultimately, the decision was up to the entire tenants association, which gathered in the basement community room a week later. Thomas, a former welfare recipient who now worked getting other women off the dole, stood in front.

"I thought we started this struggle to make sure we had a place to live," she thundered. "I've lived on this block for 30 years, and I'm not interested in being anywhere else."

Most of the tenants, including Mitchell's mother, were on limited or fixed incomes. They all knew of nearby apartment buildings that had been emptied and turned into condos none of them could afford. Changing the proposal was fine, one tenant after another said, if that would help keep their corner of the 1400 block of W Street populated by working-class families.

"A lot of people have worked really hard for this," tenant Danilo Nuez said in Spanish. "Let's get behind them."

In the end, the yes vote was unanimous.

"My mom wants to stay," Mitchell said afterward, by way of explanation. Rodriguez said he was committed to helping fellow tenants pursue their dreams.

"Don't group me with drugs. The faces they see here aren't the faces selling drugs on the street. And we were here first. And I'm not leaving."

MICHELLE CRAIG

Capital Manor tenant

While they waited for the city's decision, the tenants association worked on recruiting more residents to the project. Having more participants would bolster the application to the National Cooperative Bank, which had tentatively promised a $3.5 million acquisition loan and an $8.1 million construction loan. Nerissa Phillips and Solomon Moreno spent three hours one night preaching the gospel of collective home ownership door-to-door, offering tips in English and Spanish on how to save money for the down payments they hoped they would need. Give up chips and soda from the corner store, they suggested. Turn off your cell phone for a couple of months. Ask for cash for Christmas.

"We're all in the same boat. We all lose or we all win," Phillips said. "If someone is embarrassed because they're broke, well, we're all broke."

She and Moreno barely knew each other, although they'd lived three floors apart in the same building for years. Their joint effort was one of many small interactions unfolding across a cultural divide in the complex, which was about two-thirds Latino immigrants and one-third black residents. Until the tenant purchase effort, the two populations rarely mixed.

But the tenant board was chosen to include both. Meetings and documents were always translated. At a fundraising dinner, the $5 buffet featured chimichangas as well as chicken wings. Stereo speakers boomed hip-hop, then salsa, then hip-hop again. As the project moved forward, people who for years had passed each other in the dim hallways or concrete courtyards without speaking began exchanging polite greetings.

Arriving home one day loaded down with grocery bags, Fitzgerald noticed a Latino youth holding the door open for her -- for the first time in her memory.

Little such camaraderie, however, developed with the mostly white residents of the 19 rowhouses across the street. Built early in the 20th century for well-off families, the houses had transformed over the decades along with the fortunes of W Street. When drugs and crime overtook the block in the early 1980s, only the poorest families remained. But with the U Street Metro station set to open in 1991, white-collar professionals started buying and upgrading the rowhouses. By the time Capital Manor went on the market in 2001, all but two had changed hands.

The northsiders said they liked the idea of living on a street that was racially and economically mixed. But some owners worried that Capital Manor's run-down appearance detracted from their property values. They complained about noise -- Capital Manor's intercom system had stopped working years ago, so visitors often announced their arrival by blaring car horns. When Thomas proposed that the city build a playground on an empty lot between two rowhouses, the northsiders objected, saying it would become a magnet for thugs. The lot remains empty and has been put up for sale.

Kurt Ehrman, a government lawyer, said he was told when he bought his home in 2000 that the apartments across the street would soon be emptied and turned into condos. Instead, two years later, he saw fliers seeking community support for the tenant purchase.

"I'm all for diversity," he said. "I don't want anybody across the street -- except for those selling and buying drugs -- moved elsewhere. But coming up with enough money to make sure those buildings are truly renovated, so that those of us who have a lot invested are satisfied, is going to be very difficult."

Council member Jim Graham (D-Ward 1) was hearing from constituents on both sides of the street. Thomas, a political ally who had campaigned for him, sought and received his strong support for funding the tenant purchase. The northsiders, many of whom had also backed Graham's 1998 council bid, kept asking if he could stop the project.

In November 2002, Graham and Williams were elected to second terms. The next month, Graham called a meeting at the Reeves Municipal Center for his constituents on W Street. The topic quickly turned to crime. Rowhouse owners asked how the cooperative board would keep out drugs and violence.

"There was a shooting there. It didn't have anything to do with anyone in the building?" one man asked skeptically.

"Absolutely not," snapped Thomas. "Look around you." She gestured at Fitzgerald and several others. "We all have a lifetime of investment on this block. These are the people that are going to make the co-op what it is."

Graham ended the session after more than an hour, promising another soon. The tenants walked out to 14th Street, seething. The northsiders looked at them, they said, as if they were the drug dealers who sometimes loitered on W street.

"Don't group me with drugs," fumed Michelle Craig, a conventions concierge at a downtown Marriott. "The faces they see here aren't the faces selling drugs on the street. And we were here first. And I'm not leaving."

"We're trying to move the city forward. But we've got to bring everyone along, right?"

MAYOR ANTHONY A. WILLIAMS

The stress was getting to Thomas. She remembers sniffling through a Dec. 21 doctor's appointment, sagging with anxiety about all that would be lost if financing did not come through. Then her cell phone rang. It was a co-worker. A fax had come in from the D.C. government. The tenants' application for $2 million had been approved. Thomas burst into tears.

Her doctor asked if she was okay.

"Now I am," she said.

The mayor announced the award the next day at a news conference at Plymouth Congregational United Church of Christ. In all, he said, the city would help fund 27 projects to create or protect about 1,850 low- and moderately priced apartments. "A safe, affordable home is a cornerstone of our community . . . a cornerstone of everything we're trying to do as a city," Williams said. "We're trying to move the city forward. But we've got to bring everyone along, right?"

Sitting shoulder to shoulder in the wooden pews, Thomas and Fitzgerald fervently nodded their heads.

Winning city money was supposed to help the loan application with the National Cooperative Bank, which specializes in affordable housing projects. The D.C.-based institution was considering financing the tenant purchase through its nonprofit affiliate and for-profit subsidiary. It, like most lenders, looked favorably on projects that had won support elsewhere.

But Alexandra Johns, a vice president at the bank's development corporation, called with some questions just before Christmas. She asked Lynch, the developer, why he hadn't conducted the usual engineering and architectural studies for a project of this nature. He explained that the previous summer, the tenants association had reduced the initial deposits to enable more people to join; the decision meant no money was available to pay for predevelopment work. Johns balked.

You've got to meet these tenants, Lynch told her. You've got to see the neighborhood, to understand what they're trying to do. The two set up a visit for Jan. 6, nine days before the purchase deadline. The president of the development corporation came, as did the bank's chief credit officer. They peppered the tenants and the project team with questions and toured one of the buildings.

But it wasn't enough. When members of the development corporation's loan committee met the next day, they decided that the deal was too risky. Unanticipated construction needs could send costs soaring. What's more, the funding letter from the city seemed tentatively worded. Committee members feared the $2 million in financing could fall through.

Lynch listened calmly to all the objections, Johns recalled. He quickly secured a new letter from the D.C. government, stressing the city's strong commitment. And he said that if costs climbed during the project, he would persuade the tenants to seek outside investors to preserve the complex as an affordable rental building.

On Jan. 14, loan-committee members reassembled.

They considered the U Street corridor, prices rising every month.

They considered the tenants, working toward the purchase for well over a year.

They considered the project team -- attorney Aaron O'Toole, from Georgetown University Law School's Harrison Institute; Manna Inc., the affordable housing specialists who were playing a supporting role; and Lynch, the former Olympic gymnast whose office was just a few blocks away from Capital Manor, whose portfolio was dominated by projects that guaranteed poor people a place to live. Because the budget was so tight, Lynch had cut his fee by 20 percent.

"I found myself saying to people, 'silver medalist,' " Johns recalled later. "This is somebody with a history of focus and successful leadership, who's from this neighborhood and is committed to this project."

The committee approved the $3.5 million loan to buy the building and said details of the construction loan could be worked out later. The closing date was pushed to Jan. 24. Loan officer Renee Jakobs processed the paperwork faster than she had ever done before .

"Is there a piece of paper I can have that says we own?. . . . I just want

to walk away with something

that says it."

DEBORAH THOMAS

tenants association president

Jakobs took a taxi to a Thomas Circle law office for the closing, a foot-high stack of papers in her arms. She didn't normally go to closings, she said, but she wanted to be there for this one. The room was crowded with people -- among them Thomas, the tenants association president, in a bright-red wool coat; Treasurer Mitchell, equally vivid in a salmon-colored sweater; Lynch; O'Toole and his boss, Michael Diamond.

Rodriguez was there as well. He had quit his job as resident manager a few days earlier after a clash with the soon-to-be-former owners of the complex. He planned to move back into Capital Manor as soon as the tenants association assumed control and eventually launch his own small construction business.

Shyly, he unveiled a bottle of Moet & Chandon champagne and glass flutes. O'Toole then opened his own bag to reveal another bottle of bubbly and plastic cups. The attorneys reviewed the papers. Thomas began to sign. An hour later, the deal was done.

"Is there a piece of paper I can have that says we own?" Thomas asked. "I know they're going to send us a big package, but I just want to walk away with something that says it."

The deed and the settlement statement were photocopied, the champagne was uncorked. The attorneys insisted that Thomas, Mitchell and Rodriguez drink from the glass flutes.

"Tenants get the real deal?" Thomas joked.

"Not tenants -- owners," Diamond corrected her. "Owners get the real deal."

Tomorrow

Funds are delayed, the buildings deteriorate, some residents drop out. But finally, Capital Manor is reborn.

Online

Marian Siegel, executive director of Housing Counseling Services Inc., will be online at noon today to field questions and comments about affordable housing and tenant-purchase efforts. To see additional photos in this series, visithttp://www.washingtonpost.com/metro

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