There are accusations of abuse of power, vote tampering and document shredding. People are trying to involve a Supreme Court justice, a U.S. senator and a top White House official. The League of Women Voters has been called in to restore confidence in the process.
The only thing missing in this latest Watergate scandal is a break-in.
The Watergate has been in an uproar for months over plans to turn the Watergate Hotel into cooperative apartments. Three of the six buildings in the complex are already co-ops, whose residents include national security adviser Condoleezza Rice, Supreme Court Justice Ruth Bader Ginsburg, opera star Placido Domingo and Sen. Elizabeth Dole (R-N.C.) and her husband, Bob. Leading the opposition is lawyer Jack H. Olender, who says the Watergate's way of life is at stake. "It's another Watergate coverup," he said. He started a group called Watergate East Committee Against the Hotel Conversion to Co-ops.
Audrey R. Wolf, a literary agent, leads the proponents. "This issue has been so emotional for some of these people," Wolf said. "You see people in the lobbies and you don't want to get in the same elevator with them. . . . They give the cold shoulder. They won't speak."
Wolf and her husband, William B. Wolf Jr., a lawyer, have formed their own group, the Committee of Concerned Owners, to drum up residents' support for the conversion.
Although the Watergate Hotel is an also-ran in a city with many luxury hotels, it's a gem to some residents of the complex, where two-bedroom apartments can go for $950,000 and a penthouse for about $1.5 million. They frequently visit the restaurant and bar, and use the health club. They also fear that their older units might pale in comparison to the luxury suites that are planned.
Michael J. Darby, the developer with rights to convert the hotel into co-ops, said he is sick of the whole thing. He has tried to accommodate the co-op owners by promising the new building will have a gym -- although a smaller one -- and a restaurant, although different from the existing one.
Darby, a principal of Monument Realty LLC, said that although opponents can make things difficult for him, he will proceed with the project once he gets final zoning approval. He expects that soon. "All these guys who think they're clever lawyers," Darby said, "they don't understand the zoning process."
The Watergate, which consists of the hotel, three residential buildings with 644 co-op units and two office buildings, was designed in the 1960s by Italian architect Luigi Moretti and sits next to the Kennedy Center. The 1972 break-in at Democratic National Committee headquarters in the Watergate led to President Richard M. Nixon's resignation.
Blackstone Real Estate Advisors LP, a New York-based investment group, bought the hotel in 1998 for $39 million from Japan's Nikko Securities. A year ago, Monument Realty made an offer to buy the hotel, contingent on zoning approval. But Monument backed out of the deal, saying the age of the hotel would make its conversion more costly than it had thought.
Last fall, Monument was back. It struck a new agreement with Blackstone for an undisclosed price. Darby said Lehman Brothers is a major investor in the deal, which is supposed to close in August.
The D.C. Zoning Commission gave tentative approval to the conversion on May 10. It is expected to vote on final approval next Monday. New luxury co-op units would range in price from $700,000 for a studio to $2.5 million for a penthouse with views of the Potomac River.
There is, however, a glitch.
Space under the hotel -- 46,000 square feet now used for parking, meeting rooms and administrative offices -- is owned by Watergate East, the co-op building closest to the hotel. The co-op agreed in 1990 to lease that space to the hotel's owner for $12 a year for 75 years.
Because they own that space under the hotel, opponents of the conversion believe they can stop it. Darby has tried to buy it; he would like to use it to expand the parking garage so he can offer buyers of his fancy new co-ops two parking spaces per unit. He also wants to avoid Watergate East co-op approval for any other renovation he wants to make to the parking garage.
Monument offered Watergate East $4.25 million for the underground space.
Those who support the sale say the proceeds could be an important buffer against increases in co-op fees. Daniel F. Sheehan, the president of the Watergate East co-op board of directors, supports the sale. "A sale of this magnitude would guard against future increases of fees to the members," said Sheehan, who is retired from the U.S. Coast Guard and works as a consultant.
Opponents are holding firm. They say selling the space would speed the closing of the hotel.
"If you take the hotel, it will make the place dormant," said William S. Diedrich a retired U.S. diplomat. "It's a decent place to go [and] have a $15 hamburger," he said of the bar lounge.
"There's no living like the Watergate living and you need the hotel here," said Evelyn Y. Davis, an investor activist who has lived at the complex for two decades and opposes the sale. "It's part of the Watergate mystique."
Residents of Watergate West and South technically have no say in Monument's deal, but they have weighed in with opinions in support of co-op neighbors. Neil C. Livingstone, president of Watergate South, where Domingo, Rice and the Doles live, said his building was initially against Monument's plan. But opinions changed after a hired consultant said it was unlikely that a high-end hotel could thrive in that location, said Livingstone, head of a crisis-management consulting firm.
On Jan. 22, a majority of the Watergate East co-op shares voted to approve the sale. But the co-op's 11-member board declared that Monument needed 75 percent of the votes to win.
The group supporting the sale, led by Wolf, filed a lawsuit in the Court of Chancery in Delaware. Monument paid the legal fees. In February, judge William B. Chandler III ruled that the January vote was invalid because the co-op bylaws required only a simple majority for a resolution to pass. Another election was scheduled for April 12.
Both sides began campaigning, distributing fliers to residents.
One, in favor of the sale and written by William Wolf, listed the names and phone numbers of the "six antidemocratic and recalcitrant Directors" who opposed the Monument proposal. "Call them and insist on democracy. This is America, under the rule of law. It is not Afghanistan, under the rule of the Taliban."
Opponents countered with a flier headed "THE CHOICE IS SIMPLE." It claimed that accepting the Monument deal would mean "accepting 155 new luxury hi-rise co-ops next door directly competing with our own apartments, depressing our market values, and turning us into the 'has-been' 'Old Watergate.' "
Domingo, general director of the Washington National Opera, wrote a letter to city zoning officials opposing the conversion. "The elimination of the Hotel would not only diminish the lifestyle of the residents, but would adversely affect the position of the Watergate Complex in the District as an acclaimed example of urban living," he wrote.
Opponents of the sale claimed that Rice was on their side. (In response to questions, her spokesman, Sean McCormack, left a message, saying with a laugh: "I don't think we're going to have anything on this one.") Both sides said they tried to lobby Ginsburg but couldn't pin her down. (A Supreme Court spokesman, Ed Turner, said, "The justice has decided to decline the request to comment.")
Leading up to the April election for the co-op's board of directors, Monument's supporters successfully backed two incumbents and a third, new candidate, tilting the board's majority in their favor.
On April 12, people swarmed into the hotel's Monticello Room. An estimated 94 percent of the eligible members voted.
The pro-Monument slate won by a slim majority. In addition, according to documents from residents, 35,040 shares, or 50.3 percent, voted in favor of selling the underground property to Monument, while 34,548 shares, or 49.7 percent, were opposed.
Bruce B. Drury, a partner at the Bethesda-based accounting firm Watkins, Meegan, Drury & Co., audited the vote. According to a memo written by Kioumars Aghazadeh, the general manager of Watergate East, Drury was soon bombarded with phone calls from residents, wanting to know how their neighbors had voted. The auditor told Aghazadeh that "as we speak, the paper proxies and votes are being shredded," according to the memo. Both sides agree that the ballots were shredded, but Wolf and Sheehan said they did not order it.
Drury declined to comment on the shredding.
"It's a mess," said Olender, who lives in a co-op once owned by Nixon fundraiser Maurice H. Stans. "People are disgusted with it."
Diedrich and his supporters immediately began collecting signatures from residents to get the board to hold another vote. He got a receptionist to put letters he wrote into residents' mailboxes. He hung out in the lobby to corner people as they returned from work. He got enough signatures to schedule a new vote for tomorrow. Sheehan said that the vote is only advisory and that the ultimate decision will rest with the board, while opponents of the deal dispute that.
To make sure there are no accusations of ballot fraud this time, the board is paying the League of Women Voters $1,500 to $2,000 to monitor the elections, according to Sheehan.
Darby said he expects to start construction early next year and complete the conversion by 2006.
It's "a done deal," he said.
Not so fast, Diedrich said. "This June 9th vote counts. We want to stop this."