Tenants are attempting to buy a Silver Spring apartment complex from the present owners in an effort to avoid rent increases they fear are inevitable with the ending rent control in Montgomery County.
The residents of Rosemary Village apartment and townhouse complex off East-West Highway have submitted a $4.7 million bid for the 416-unit development. The purchase price would be funded by state or federally guaranteed loans, according to a tenants' association spokeswoman.
Owners of the complex are aparently in favor of the tenants' proposal but are also considering a similar $4.7 million bid by a private purchaser, according to the Philadelphia real estate investor who heads the present ownership group.
"We are deeply concerned with cooping," said the investor, Morris Milgram, and I think there's a good chance this will go through."
Under the tenants' proposals, the complex would become a cooperative venture owned, managed and maintained by the people who currently rent there. The tenants say their cooperative would be the first one of substantial size in Montgomery County and would be geared - as it now, is - to the low and moderate income groups.
If the owners accept the tenants' bid, the tenants will have four months in which to try to arrange financing.
When tenants began talking with the owners about purchasing the property seven or eight months ago, "we knew rent control was on its way out," said Barbara Davidson, spokeswoman for the Rosemary Village Tenants Association. Rent control ended in the country Dec. 31.
Besides, she said, "everyone talks about the shortage of moderate and low income housing. It gave us the idea that maybe we should own our own place."
According to Davidson, the idea for the tenant purchase was born during a fight over an April, 1976, rent increase.
"We realized how much effort it took us to fight that one little increase," she said, "and that we'd likely be having that every six months or a year. So it seemed we should be putting our efforts into a more longrange solution. And we thought if we owned the property, the rents wouldn't go up for profit or unnecessary costs, but only for actual maintenance needs."
With end of rent control in sight and with the first Metro stop in the county about to open just two blocks away, the tenants began to worry that their rents would further skyrocket, she added. Since most of them are in the low or moderate income groups, and low-cost housing in the Washington area is increasingly scare, they feared there would be no place for them to live in the area, Davidson said.
Davidson said the tenants association will make the cooperative membership fee - the equivalent to a down payment on purchase of a unit - be about the same as the security deposit each tenant has already made. That usually amounts to about a month's rent.
In addition, Davidson said. Monthly payments (the equivalent of a monthly mortgate payment) would be about what the present rents are. Finally, she said the 30 to so families in the complex now receiving federal housing subsidies could continue to so. The subsidies would thus enable them to become cooperative owners in the venture.
A representative of Multi-Family Housing Services, Inc., which the tenants consulted to help plan the conversion, said new programs of both the federal government and the state of Maryland make such conversions practical. The programs provide 100 per cent insurance for the mortgages of such properties. The insurance makes it more likely that financial institutions will approve loans. Some programs also provide insurance for loans to rehabilitate the properties.
Milgram said several years ago his organization proposed to tenants then living there that the complex be turned into a cooperative. But "the federal programs (for financing) were not right at the time. Now state and federal programs are available, and we believe the time is right for this," he said.
Milgra's group bought the complex in 1964 and turned it into the first planned desegregated housing complex in the area. About two-thirds of the residents are now black or members of other minority groups.
Tenant spokesman Davidson says most residents are looking forward to the change.
"They'll be getting a tax break on the interst they're paying," she explained. "The'll be building equity. And I think we're going to be able to do much better job of managing - because we live here and we know how things work.
"There may even be a psychological change - from the lack of security you have as a renter to the feeling of greater security that comes with ownership," she said.