Tenants of Rosemary Village Apartments in Silver Spring have secured a $9.5 million state loan to purchase their 416-unit complex and turn it into a cooperative.

Under the arrangement, believed to be the first of its kind in the area, the Rosemary Village Tenants Association received a state Community Development Administration loan that is fully insured by the U.S. Department of Housing and Urban Development.

"This closing is a triumph for the organization, which conceived the idea of the cooperative several years ago as a means to provide low and moderate income housing in Montgomery County -- which has limited housing units in this range," said Virginia R. Mahoney, president of the cooperative.

Backed by the county's Housing Opportunities Commission, the tenants began discussing the cooperative plan with owner Morris Milgram three years ago. Milgram, who bought the project 12 years ago and turned it into the first planned desegregated housing complex in the lower Montgomery area was immediately sympathetic with the tenants' idea, according to HOC development planner Tad Baldwin.

The tenants' efforts intensified last year when Milgram received a bid from a private purchaser who wanted to convert the project into condominiums.

"As fast as moderate income units are being produced in the county, they are being lost," Baldwin said. The average price for a two-bedroom apartment in the county is $350 a month -- about 30 percent more than the average for a similar unit at Rosemary Village.

Although the wave of condominium conversions has slowed in the tightening money market, housing experts in the county foresee a new wave if interest rates go down again. In the past few years, about 3,000 apartments in the county have been converted to condominiums.

"With the coming of Metro and the rising housing prices, I expect the conversions will be considerable," Baldwin said.

Trying to combat the same problem, tenants in two District of Columbia projects -- McLean Gardens above Georgetown and the Kenesaw apartments at 16th and Irving streets NW -- are attempting to purchase their buildings to preserve their lower-cost housing.

The conversion at Rosemary Village will stretch over approximately 18 months, beginning with the physical rehabilitation of the apartments and town houses and marketing programs for tenants.

"The hope is that all current members will be able to stay," Baldwin said.