The District of Columbia's first "tenant capitalists" have purchased the Ordway-Porter apartments in Northwest Washington, snatching their 166-unit complex from a developer who planned to turn it into condominiums.
The apartments will still become condos, but will be converted by the tenants themselves, who are expected to be able to buy one-bedroom apartments for under $30,000, barely half the market price.
The developer who initially proposed the condominium conversion will profit as well, by taking over most of the untis whose occupants don't want to buy them, renovating them and selling them to the general public.
With a $5 million loan from Riggs National Bank, the Ordway-Porter Tenants Assn (OPTA) Wednesday signed an agreement to purchase the apartments from real estate man B. F. Saul, Jr.
The tenants paid $2.6 million for the property and will spend another $2 million putting in new wiring, plumbing, roofs and other improvement. The remainder of the loan will cover the "soft costs" of the complicated deal - attorney fees, appraisals, insurance, interest and the like.
Although other Washington apartment renters have successfully co-oped their buildings or cooperated with condominium developers, the Ordway-Porter residents "are the first tenants to become capitalists," said Benny Kass, the Washington attorney who represents the group.
The tenant group successfully utilized provisions of a District of Columbia law that gives renters "the right of first refusal" when someone else offers to buy their building. Under the law tenants have 90 days to match any offer made for their building.
The 90-day deadline "is increadibly tight," said Gene Heller, president of OPTA. The tenant group had not even been formed last fall when residents of the complex received letters notifying them of the proposed sale.
The offer to buy the complex came from John Trask, a southern banker who moved into Ordway-Porter when he came to Washington to take a temporary post in the Carter administration. He liked the place so much he approached the Saul companies about buying it.
Prospective purchasers usually do their best to discourage tenant efforts to exercise their rights, but Trask wound up becoming a partner of the tenants assocation, Heller explained.
When the tenants association had trouble obtaining financing under the deadline, Trask came up with cash and in effect agreed to take 25 percent interest in the property. The first 40 apartments that are not purchased by their occupants will belong to Trask, Heller explained.
Financing the tenant take-over was difficult, he said, because no group had ever successfully completed such a transaction and lenders were cautious about breaking new ground.
Riggs ultimately agreed to provide the $5 million interim loan for the project. With the city's biggest bank establishing the precedent, future financing for tenant buy-outs should be easier, said kass.
Heller estimated it will take 18 months to two years to rewire the apartments and make other necessary repairs. To keep the cost of the apartments within reach of the occupants - many of them on fixed incomes - renovations will be kept to a minimum.
Trask's 40 units will be modernized and other tenants who decide to buy their apartments wil be offered the option of new kitchens, bathrooms and other improvements.
The unrenovated one-bedroom units, now renting for $217 a month under rent control, should sell for less than $30,000, Heller said, but that is more than some residents can afford.
About 100 tenants are members of the association and have indicated they plan to buy their apartments. Despite the tenant takeover, however, some Ordway-Porter residents will still have to move. CAPTION: Picture, The Ordway-Porter apartments, which have been purchased by the tenants for condomium conversion. By Vanessa R. Barnes - The Washington Post