The champagne was already chilled when the planned celebration slumped into a wake.
After nine months of what appeared at first to be a hopeless effort, and just hours from what appeared at last to be a Cinderella success, a group of Arlington tenants last week watched in shock as their attempt to buy their apartment complex died under a sudden and unexpected crush of federal red tape. Bured with their hopes was $50,000 in federal funds.
"All systems were go until . . . the very end," said Anne Clark. "The whole thing reeks."
Clark, a tenant at Radnor Heights apartment complex in Rosslyn, was one of the prime movers of a group which convinced the Arlington County Board to help tenants purchase the four buildings at Radnor Heights as a tenant-owned cooperative.
If the plan had succeeded, it would have been the first time Arlington had helped tenants buy their complex. But the purchase of the 115 rental units in the four buildings, which stand beside Rte. 50 in Rosslyn overlooking two Iwo Jima Memorial, was killed when the U.S. Department of Housing and Urban Development refused to okay a low-interest loan.
The final decision to refuse financing was based on a HUD appraisal which set the value of the properties at $3.4 million, $200,000 less than what the tenants had agreed to pay Mr. and Mrs. Theodore Heitmuller, the elderly owners of the four buildings.
HUD announced its $3.4 million appraisal and the decision not to provide federal financing for more than that last Friday. That was just two days before time ran out on the tenants' six-month option to purchase the property. When the Heitmullers refused to extend the option-to-purchase deadline, the deal died.
The buildings now are expected to be sold to Shelton Zuckerman, a Washington developer who has announced plans to convert them in condominiums.Zuckerman refused to comment on the project.
"It's really tragic that a project like this could fail," said Edward B. Brandt, Arlington's housing supervisor, who viewed the cooperative as one small antidote to the continuing loss of low-and moderate-income rental housing in Arlington, a loss estimated at 20 percent since 1972. "I just think HUD got nervous . . . with a project where the costs were so high."
Brandt was one of five directors of a nonprofit corporation set up by the County Board to sell $6 million in tax-exempt notes to finance the project. That corporation may still be used to finance other tenant attempts to purchase buildings, such as Arlington Village. But the $50,000 which Arlington provided from its federal community development block grant already has been spent by the Radnor tenants on preacquisition costs.
"It's really a shame that this should happen after the literally thousands of hours the tenants put in on this project and the fact that virtually every hurdle HUD came up with the group got over," said Brandt.
In Brandt's professional opinion, the red brick apartment buildings are in one of the "top 10 locations in the Metro area." Just three blocks from a Metro stop, snug between the green borders of the Iwo Jima Memorial park and Fort Myer, the buildings have precipitated bitter friction.
The worst fighting has been between the leaders of the tenant group which sought the co-op and a smaller rival tenant group which favored a conversion to condominiums. The difference between the two plans was, not surprisingly, money.
In a co-op, tenants buy shares in the entire project rather than buying individual units. The monthly charges usually are lower in a co-op, but profits are likewise lower when shareholders decide to sell out. Co-op supporters, who claimed to represent 50 tenants, characterized the opposition as about 25 of the wealthier tenants who were more interested in future profits than long-term residency.
But condo supporters argued that because of the choice location, the costs of membership in the co-op were unreasonably high.
"We were led to believe the cooperative [fee] would be around $400 a month. But when I saw the figures, it looked like I'd be paying $637 a month. Something went haywire somewhere," said Charles Branzell, who switched allegiance from the co-op group to the condo forces.
Co-op supporters say Branzell's figures are inflated. The costs for a one-bedroom apartment in the co-op would have been about $440 a month, they say, and that would not include tax benefits and federal subsidies for about 20 percent of low-income shareholders.
The co-op leaders accused the rival group of pressuring HUD to kill the deal with a last-minute petition signed by 31 tenants. Some of the signatures, claim the co-op group, were obtained under false pretenses.
"We have gotten letters from some of the people whose names were on the counter-petition which said they were asked to sign a blank sheet of paper," said Ellen Bozman, an Arlington County Board member.
Condo supporters would not comment on the charges, but argue that the real deceit was practiced by co-op supporters who didn't publish accurate figures on the monthly costs in their plan.
Co-op leaders also accused the state's two U.S. senators, Republican John Warner and Independent Harry F. Byrd, of submitting letters to HUD's central office on behalf of the rival condo group.
A spokesman for Byrd said his office forwarded a copy of the petition to HUD, but did not endorse it. A spokesman for Warner could not confirm or deny the existence of a letter, saying, "We can't track it down."
"I am not aware of any such pressure and am not aware that any such pressure affected the decision," said Larry Dale, an assistant deputy at HUD who dealt with the co-op group. "If I were to sum up [the reason for the co-op failure], it would be that HUD was presented an extraordinarily difficult project on a very tight deadline."
Members of the co-op group, however, say HUD's excuse sounds like an alibi.
"It's awful suspicious," said Colette Collier last week, while she and a few neighbors alternately sighed and smiled over the battle lost. Among them was Katherine Gee, known to everyone in the complex as Aunt Kay.
"I don't know where I'll go from here. I'm 72-years-old, honey," said Gee, who has lived at the Radnor since it was built 27 years ago. "It's very difficult for me because I can't get out and look at a place. But I'm not quitting as long as I can walk."