The wave of condominium conversions and evictions that has swept across the city has sent scores of newly formed tenant groups scrambling to raise funds to buy their own buildings.
Instead of quietly moving out when threatened by condo conversion, a growing number of tenants are organizing, incorporating, hiring lawyers and seeking money to match the multimillion dollar prices offered by developers.
Despite enormous financial and legal hurdles, tenants in five apartment complexes with a total of 527 units succeeded recently in taking control of their buildings.
Three became cooperatives, while the others went condo with residents playing the role of developer. In several instances, tenants bought their buildings with the cooperation of developers.
Currently, tenants at eight other apartment buildings involving 2,540 units are negotiating with owners in the hopes of purchasing their buildings. The most expensive of these in Columbia Plaza in Foggy Bottom. It has 800 units and an asking price of $49.5 million. Whether tenants will be able to complete the purchase is uncertain.
One of the major attractions for tenants in acquiring their buildings is the opportunity to buy apartments at cost. While owners must give tenants first chances to buy their own apartments, tenants generally pay less when they convert to condos themselves.
At Webster House, 17th and P streets NW, which was converted to condos in a partnership between the tenants and the development firm of Brenneman Associates, tenants purchased efficiency units for $25,000. Comparable units vacated by tenants went on the open market for about $40,000.
With condo conversion rapidly eroding rental housing in the city, the number of tenant associations has been growing rapidly -- along with tenant interest in trying to buy their buildings.
Neal Sacharrow, president of the 2800 Wisconsin Avenue Association, said, "I moved to this building a year and a half ago after being evicted from another building which was sold for a conversion. When we received our eviction notices here last March, I relized I had to do something or just keep moving."
Tenants in Sacharow7s building recently put down a $100.000 deposit toward a $2.2 million purchase price.
The rapid rate at which tenents are organizing has surprised Marie Nahikian, a member of the city's Rental Accommodations Commission.
"ten years ago when I first began to work in housing, tenant associations were unheard of," says Nahikian.
"In the past years they have sprung up everywhere. Tenant groups are even forming now in Southeast, among lower income renters. These groups have traditionally been nomadic. When conditions got bad or they couldn't pay the rent, the poor moved out. Suddenly these people are fighting because there is no place left for them to move. The poor can't even afford Prince George's County anymore."
An informal network of tenant groups exists throughout the city, giving moral and technical support to associations having problems. Tenant leaders in the early stages of organizing their buildings find they spend nearly every evening in meetings with established tenant leaders where they learn the ropes of tenant warfare.
"we run into each other at hearings on any housing issue. These meetings have provided us with a chance for visibility as a group," said Despina Kaneles, president of the Swarthmore Tenants Association.
Tenants who choose to fight for their buildings learn to think like developers and talk like lawyers. Many pride themselves on understanding the District condominium conversion regulations better than the City Council members who wrote them.
"renters have traditionally been the dummies," says Jeff Smith, president of the tenant association for the Letterman House at 2030 F. St. NW. "Suddenly we have to become experts, turn overselves into little lawyers. We're at a complete disadvantage when working as developers."
Substantial obstacles confront tenants trying to aquire their own buildings.
Once the tenants of an apartment building learn that a developer has made an offer to acquire their building for conversion purposes, they have 180 days in which to match the developer's offering price and complete the purchase.
This is the sequence:
The tenants' group has 30 days in which to incorporate and draft a letter of intent to purchase.
During the next 90 days, the tenants must match the developer's offer, raise the 5 percent deposite on the building and sign a contract.
The tenants then have another 60 days to secure financing and come to settlement.
Benny L. Kass, an attorney who specializes in real estate law, says the sooner tenants hire a lawyer, the better.
"the first 60 days are usually a disaster," says Kaas. "You have in-house problems and all of the tenants want to talk to the lawyer. I don't, and no lawyer does, want to deal with 100 tenants, although some groups I've worked with have been quite well prepared."
During the early period, tenants usually need funds for "soft Costs," lawyers fees, feasibility studies and professional inspections. Many tenants groups organize fundraisers to help defray these costs and to encourage a spirit of comaraderie.
Methods used recently have included a Clark Gable movie (not very successful), bake sales, street fairs, and one thing most tenant groups would like to have in residence, a fortune teller.
At The Bader, 2515 K St. NW., the tenants are starting to eat their way to ownership by staging dinners, while the tenants at the Beverly Court complex raised nearly $9,000 from T-shirt sales and disco dances.
Five buildings that have successfully been converted by tenants to cooperatives or condominiums during the past several years are Beecher Low-Rise on 40th Place NW, Beverly Court at 1736 Columbia Rd. NW, Ordway Porter at Ordway and Porter streets NW, Tel-Court on O Street NW and Webster House at 17th and P streets NW.
At least eight more buildings are on their way toward tenant ownership: the Bon Wit, at 2410 H St. NW; Columbia Plaza, at 2301 E St. Nw; the Dorchester, 2480 16th St. NW; Letterman House, 2030 F. St. NW; McLean gardens, Porter Street Nw; The Swarthmore, 1010 25th St. NW; Valley Vista, 2032 Belmont Ave. NW, and the building at 2800 Wisconsin Ave. NW.
In the area of financing, two of the biggest obstacles for any tenant group are raising the 5 percent down payment and finding permanent financing.
The tenants at 2800 Wisconsin Ave. NW raised their $100,00 down payment by assessing each prospective tenant-buyer $2,000 to $3,000, depending on the size of the unit they would purchase. The tenants surprised themselves by collecting the entire sum in two weeks.
"We figured we could have gone outside to help raise the $100,000 but that would have limited our options," said Mark Gordon, a board member, "If we couldn't raise that much money without a big problem, we figure why bother to try to buy the building at all?"
At the Ordway Porter complex, the tenants group was refused financing from several lending institutions on the basis that the bank did not have enough time to evaluate the situation. Eventually, a mortgage company guaranteed a loan from a bank.
"The amazing thing was, whenever, a deadline came due the money came in somehow," said tenant leader Gene Heller, shaking his head in disbelief.
The trend toward condo conversion in the city has grown rapidly. In 1975, the owners of eight rental buildings were granted certificates og eligibility to convert 468 units, accoring to D.C. Department of Housing records. By 1978, this had increased to 114 buildings with 10,353 units.
However, emergency legislation signed by Mayor Marion Barry in May placed a 90-day moratorium on conversions. At that time, the mayor said, about 18,000 rental units were in some stage of conversion. The Department of Housing estimates that to be about 20 percent of Washington's total rental housing stock.
Not all landlords who seek certificates of eligibility have immediate plans for conversion. Owners have discovered that merely having a certificate increases the value of the building by as much as 100 percent.
According to figures from the Rental Accomodations Commission, rental units averaged $9,400 per unit when sold as rental properties in 1978. On the other hand, when a building was certified for conversion, the average price per unit went up to $19,000.
Developers often affix the blame for the rash of conversions on rent control laws, while tenants have one word for the reason behind conversions- greed.
Mike Brenneman, of Brenneman Associates, has been a vocal opponent of the city rent control legislation.
"This rent control thing has got to be amended. The butcher, the grocery store owner, the shoes salesman -- they aren't forced to keep their prices artificially low. The climate created in this city by rent control has real estate people and construction firms scared stiff," he says emphatically.
"There is absolutely no new construction going on in the rental industry, and you can blame that on a capricious City Council and the climate they've created."
On the other side of the argument, Jenny Brake, president of the Bader Tenant Association said, "I don't blame rent control for the rush to conversions. If I had to put my finger on it, I would say we have greed here. It's simple matter of dollars and cents. Landlords are determined to make x amount of dollars and they make most of them by converting."
The issue on which tenants, landlords, developers and city officials all agree is that the number of rental units in the District is shrinking. Tenants are being squeezed out of their apartments because of conversions and they are running out of places to go.
"The city desperately needs rental housing, there's no doubt about it," says Phillip Carr, vice president for operations at Oliver T. Carr Co. "All of our units are 100 percent occupied. As soon as someone moves out it's rented the next day.
"The question is , would renters be willing to pay the real costs involved in building new units? In our opinion they wouldn't I'm guessing, but I think it would cost in the neighborwood of $600-to-$8000 a month for efficiencies with the cost of the new construction."
"Anyway you look at it, the whole economic situation in relation to housing is out of kilter. The whole damn thing has gone crazy," says an exasperated City Council, member, John Bottom, Cleveland Park and Dupont Circle, areas harest hit by conversions.
"I spend 12 to 18 hours a day working on this housing problem. I go to different tenant group meetings every night of the week," says Wilson.
"I have to help people who are displaced because of this madness find a new place to live. I've relocated so many people out of district pretty soon I won't have anyone left to vote for me," he says with a wry laugh. CAPTION: Picture 1, Webster House; Picture 2, Valley Vista; Picture 3, Bon Wit Plaza. By Craig Herndon -- The Washington Post