The battle over who gets the right to buy and develop the McLean Gardens apartments has escalated to the point where a millionaire California builder yesterday offered the last remaining tenants $10,000 each to move out of their apartments and out of the way of his plans to turn the complex into condominiums.
Builder Dwight W. Mize sent letters to the residents of the 164 occupied apartments offering them cash in exchange for their rights to the complex, which Mize wants to buy for about $30 million.
Meanwhile, the tenants, who linked up with various financial backers to buy the project themselves for $25 million, have offered Mize $1.5 million to give up his claim to the property.
Mize's total offer is for $2.3 million, which includes $200,000 for the tenants attorneys and $500,000 for financial backers. Mize told a reporter, however, that he intends to notify the tenants that he will give them the total $2.3 million-increasing their individual shares to $14,000-if they will back out of competition for the property.
The high-level bargaining between the builder and the tenants over one of Washington's choicest pieces of land is the latest episode in a decade-long effort by McLean Gardens tenants to fight off owners and developers who want to take over their apartments.
Some tenants interviewed yesterday were clearly enticed by Mize's offer, but others were suspicious.
"Hell, just give me the 14 grand and I'm gone," said postal worker Joe Hollendursky, 28, who has lived at McLean Gardens for five years.
To another tenant with a wife and a child, the $14,000 was "just a drop in the bucket."
"Just what in heaven's name would we do with that?We couldn't even use if for a down payment," said the tenant, who added the thought Mize was trying "to pull one over on us."
His wife, however, found the money more tempting.
"It would be a year's salary. We don't even have $1,000 in the bank, not even a tenth of that. It would make me start looking in the newspaper ads [for houses] again," she said.
For years McLean Gardens, located just northwest of Washington Cathedral on 43 acres of grassy, gently sloping land, has been the largest moderately priced rental housing complex in affluent upper Northwest Washington, with 723 apartments.
And for years the complex has been a favorite target of developers who devised plans for multimillion-dollar apartment and commercial projects, condominiums and at one point proposed demolishing the complex for a diplomatic enclave complete with apartments, international boutiques and embassies.
Each time, however, the tenants scrambled vigorously to oppose the changes and each time they won.
In March 1978, however, CBI Fairmac, the owners of the complex,sent tenants notices to vacate, saying it intended to end the complex's rental use. But in May, the company signed a contract with Mize, who was to buy the project for about $30 million and convert it into condominiums ranging in price from $45,000 to $75,000.
Some residents and their board of directors fought the sale, however. They contended the under a city law that went into effect shortly before Mize signed his contract, they had the first right to buy the complex. Last September, Fairmac indeed offered tenants a chance to sign a contract to buy the project for $25 million, and in December, to the surprise of many observers, they did so and placed a $500,000 deposit.
That contract clouded the issue over whether the tenants or Mize could buy McLean Gardens. The residents association filed suit in U.S. District Court in Washington last December, asking that Mize be removed from the purchase picture because they had a valid contract.
The tenant's own plan calls for the development of moderately priced and luxury town houses and duplex apartments, with new housing constructed on the acres of vacant land at the site.
Since then, the tenants and Mize have been negotiating to reach an out-of-court settlement. A trial is scheduled for June 1.
William P. McCulloch III, a World Bank lawyer who is an investor in the tenants' development plan, said the board of directors of the residents association was informed of Mize's offer earlier this week and unanimously rejected it.
"He's looking for some sort of highway robbery," McCulloch said. "that offer verged on bribery. . . It's a disgrace. The tenants are not going to seriously consider it. He's looking for some way of dividing the tenants."
McCulloch said the tenants already have $33 million in financing lined up through two banks. "We're ready to build the project, and these guys are sticking a gun to our heads."
Mize said in a telephone interview, however, that he feels the board of directors do not represent the general feeling of the tenants. "Anything I've tried to do has never gotten back to the tenants at large.Things have been distorted and confused by a small corps."
Therefore, he said, he is offering a settlement directly to individual tenants. The letters delivered yesterday offer $10,000 to each tenant, plus $200,000 to their attorneys and $500,000 to their financial backers. But Mize said he is revising that offer in another letter sent out yesterday by offering all the $2.3 million to the tenants alone.
"I don't care about the attorneys and the interlopers," Mize said. "I care about the people and I'd rather they get it (the money) than someone else."
The new letter states that tenants would get the money when they leave the apartment if it is no more than 60 days following Mize's acquisition of the property. He also agrees to keep 25 apartments available as rentals for five years for elderly tenants. Another condition of the offer is that the residents association must dismiss its suit against him.
The letter notes that the offer is contingent upon acceptance by a majority of the tenants. An election to accept or reject the offer would be supervised by the nationally known accounting firm of Coopers and Lybrand, the letter says.
Phil Mendelson, a spokesman for the McLean Gardens resident board of directors said not all the 26 members of the board were present at Thursday's meeting, when Mize's offer was rejected. He said he feels however, that the board's vote will get the support of the general tenant population whether they are offered $10,000 or $14,000 each.
"It's obvious Mr. Mize does not realize the depth and sincerity of our commitment to keep our homes," Mendelson continued, "We were shocked at the effort to buy off our attorneys. This is an effort to buy off the tenants."
Mize said, however, that by his offer he is trying to find out, "the true interest of all the tenants, not just the board."
With respect to buying off the tenants, Mize said, "I'm trying to settle differences by paying people to move and relinquish their rights. It's done every day."
Last week, the D.C. City Council passed a 90-day moratorium on condominium conversions. Mize said he feels it does not apply to him because he signed the contract with Fairmac last year and because he already has made "subtantial financial investment" in the project.
He said because of his delay in purchasing the properly, the sales of the condominium units he plans to develop will increase by about $3,000 each over the original prices.
In recent months, more and more tenant groups have been exercising their right to buy their properties. And Mize is not the only developer forced to make settlement offers to stubborn Washington tenants who refuse to move.
Other delevopers, anxious, to proceed with their condominium conversion loans without the delays court fights entail, have offered generous settlements. Tenants at Stanton Manor on Capitol Hill accepted several thousand dollars to move. At the Farnsboro building near Dupont Circle, developers paid tenants $3,200 each plus $4,000 in legal expenses. Tenants at some other projects have refused such offers, however.
Also contributing to this story was Washington Post staff writer Margaret Shaprio. CAPTION: Picture 1, Tenants of McLean Gardens have fought for years to keep the complex as it is. By john McDonell-The Washington Post; Picture 2, DWIGHT W. MIZE . . . plans condominium conversion