In Bethesda, Putting a Price on a Neighborhood
Developer Desires Land for High-Rise

By Miranda S. Spivack
Washington Post Staff Writer
Friday, October 19, 2007

Homeowners in a neighborhood steps from downtown Bethesda face a tantalizing possibility: A developer wants to buy all 60 houses in their community, potentially turning many residents into millionaires.

The rectangular, tree-lined neighborhood west of Wisconsin Avenue, known as Sacks, is within walking distance of a bustling downtown that is slated for more high-rises, retail businesses and a hotel, and developer Jeffrey Neal says adding Sacks to that mix is a logical next step.

The possible sale could be more lucrative than what the residents, some of them elderly and thinking about selling anyway, could get on their own. Many were excited by an offer of more than $3 million a home. That was taken off the table and replaced by lower offers, but they're still higher than what many homes would bring on the open market.

But the sale also poses a dilemma: How do you assess the value of a rare cluster of single-family houses so close to high-quality shops, restaurants and condominiums? How best to calculate the less tangible sense of a community that could be flattened in days by a bulldozer?

Although Neal does not have a firm proposal, he has been contemplating a development that could include a high-rise, stores and restaurants. It could make the neighborhood look more like Rosslyn or Friendship Heights, where similar battles took place when high-rises replaced small-scale neighborhoods.

So far, Montgomery County officials don't agree with Neal, saying his plans run counter to a long-standing policy that calls for leaving the Sacks neighborhood as is, with single-family residences.

That would be fine with Karen Diamond, who said she had moved to the neighborhood several years ago, hoping "to die here."

"This is my last house," said the energetic 68-year-old, who revels in her flower garden and the easy walk downtown. She is leaning against a sale.

Bob Smythe, a resident for 30 years and head of the local neighborhood association, said he has remained neutral in the four-year-old debate. He said he understands exactly why the neighborhood is in play: "It is the most convenient place in Bethesda and perhaps all of Montgomery County. It is a thriving business area now, and we are in good part the beneficiaries of that."

For Neal of Monument Realty, a major player in the Washington area real estate market, the neighborhood is an obvious spot for more "smart growth," near the Bethesda Metro and the Capital Crescent Trail.

"We told county officials there is probably not another chance that a substantial majority of 60 homeowners will be coming to you with a request for rezoning. That 12 acres won't be available for you to replan for another 50 years," he said.

Neal said he hopes to get a substantial number of the lots but could be deterred if they aren't contiguous. "I can't go to a high-rise with every other lot," he said.

The neighborhood dates to the 1930s, when sleepy Bethesda was awakening to the possibility of becoming a Washington suburb. Surrounded by Bradley Boulevard, Woodmont Avenue and the Capital Crescent Trail -- near townhouses and low-rise apartments to the south and high-rises and retail establishments to the north -- the single-family neighborhood is an anomaly, but one that was planned. Bethesda's 1994 master plan singled out the neighborhood to remain a low-density green buffer as it promoted denser, taller development near a planned southern Metro entrance.

Changing that plan could take years and would involve extensive negotiations with planners and local politicians, said Council member Nancy Floreen (D-At large), one of several officials Neal approached to float his ideas. She said she was concerned that a change "would send a signal to every community that you can't trust the definition of a central business district."

After vetting ideas with county officials that include a high-rise, Neal withdrew what neighbors say was his most attractive offer: more than $3 million a lot. He told residents in a letter he had found his discussions with county officials "surprising."

Rick Siegel of West, Lane & Schlager, one of the brokers hired by a neighborhood group to market the neighborhood, said such discussions are typical as suburbs become more urban.

"It is a clash that already exists between suburban areas changing their complexion, which comes up against the vision of a neighborhood that maybe time and events have passed by," he said.

The location, the quality of the well-kept houses and gardens, and the sense of neighborliness are why Diamond and Alicia Wattenberg started a letter-writing campaign to gin up opposition.

John Schreiber, who moved in a year ago, wants to stay and has begun to attend meetings Wattenberg has organized. He and his wife, about to have a baby, are troubled by the continued uncertainty and what they say has been a secretive approach by those interested in selling.

"There is a lot of stuff we would like to do to the house, but you really feel like you have to sit on your hands," Schreiber said.

In response to some neighbors' complaints that the process has been secretive, Marie Dray and Cristina Echavarren, leaders of the effort to market the neighborhood and former leaders of the local civic group, said they felt compelled to hold some information close to respect developers' and neighbors' privacy.

Dray said the group initially shared everything they knew, but as the process became more complex -- the neighbors hired a lawyer and the brokers -- they were advised to "have rules of operation and some confidentiality."

Neal entered discussions with neighbors last year in response to a detailed solicitation sent by the neighborhood group to 100 development firms after residents unanimously rejected an unsolicited offer from developer Conrad Cafritz to buy the neighborhood.

The Cafritz offer had prompted some homeowners, led by Dray, a former FDA official, and Echavarren, a former budget analyst for the Inter-American Development Bank, to see what else was out there.

They organized the Sacks Neighborhood Council and sought $500 per household to test possibilities and market themselves to a higher bidder. They wouldn't say how many neighbors had signed up but pointed to a survey that showed at least 49 homeowners were interested in pursuing discussions. Diamond disputed that number, saying that she was among those who showed interest, in part, "because I wanted to know what was going on. You can't have too much information."

The solicitation was worked up by Siegel and partner Paul Hanafin, who said they don't make money unless a deal is completed. It attracted what they said were several viable offers. Working with Dray and Echavarren and a few others on an executive committee, they chose Monument as the most attractive suitor.

For now, Monument is pressing ahead, conducting appraisals of the lots and offering free financial advice to residents. Once the appraisals are determined, residents say they will be in a better position to assess their options.

Neal said he's prepared, deal or no deal.

"If there is not a game to be played, we will take our marbles and go someplace else. Some people think that is a threat, but it is just a statement. We were invited in. We didn't crash the party."