A Towering Disappointment

In February, Richard Goldberg, a doctor at Georgetown University Hospital, put a $47,000 deposit on a two-bedroom apartment on the top floor, expecting to move in May. By mid-September, he and other buyers learned that the building's broker, McWilliams Ballard, had quit and was suing Broadway for breach of contract.

All the while, Goldberg said, he has been left to speculate about the Dumont's future. "I'm a physician. I'm used to dealing with bad news all the time and delivering it," he said. "The first thing is, I wanted somebody to talk to me. If someone told me, 'We ran out of money; we can't complete the project,' then I would know and I would feel better."

The building boom left the region awash in condominium units, several thousand of which remain unsold. Average sales prices have fallen 3.6 percent in the past year, according to one study. At the current pace, the study found it would take 8.2 years to sell existing and nearly complete units on the market.

Nationally, the percentage of delinquent construction loans rose to nearly 10 percent during the third quarter of 2008, with condominium projects among the worst offenders, according to Foresight Analytics, a California-based firm that analyzes the real estate market. About 20 percent of condominium construction loans were delinquent during the same period, compared with 6 percent in the third quarter of 2007.

Kenneth Wenhold, mid-Atlantic region director for the research firm Metrostudy, said that securing construction loans for condominium projects is challenging even in prosperous times. The credit crisis has made it more challenging. "Banks are reluctant to renew loans when you already have a soft market," Wenhold said.

Broadway Management has been a player in New York City real estate since the 1970s, at one point amassing a portfolio of commercial properties worth several billion dollars. Like many builders, Broadway set its sights on Washington in recent years, forming a partnership with developer Jim Abdo in 2005 to propose a residential community on 16 acres along New York Avenue NE. The developers won District approval for the project in 2007 and are seeking financing.

In 2006, Broadway paid a plumbing supply company $41 million for several parcels in the Shaw neighborhood in Northwest, and planned three residential towers. The land has remained untouched because of the tightened credit markets, according to the developer. "I don't think there's a real estate model that works in this environment, not just in Washington but everywhere," Weldler said. "We're holding the land, and we're hoping the world economy rebounds."

In the case of the Dumont, the terms of Broadway's construction loan required that it sell half of the building's 550 units before the end of last year, "when the loan was due," Weldler said. "We didn't get there. The sales petered out," he added, estimating that Broadway had sold at least 130 apartments.

Referring to complaints that Broadway has been less than communicative, Weldler said the developer has been in contact with "plenty of buyers."

"If we haven't been perfect on the communications, I apologize," he said. "We don't have all the answers yet. It's our intent that everyone have their unit or their money back pretty soon."

Some prefer the latter.

Scott Stewart, 48, a procurement officer for the U.S. Army, said he and his wife could never live at the Dumont after what they have endured. "Why would I want to be in a long-term relationship with someone who has been deceptive?" he asked.