Shelia Fallen moved out of her McLean Gardens apartment in Northwest Washington, her home for 10 years, last spring.The move was expensive, but Fallen and other tenants had been promised $12,000 each within two weeks if they moved out by last Arpil 15.
Fallen has yet to receive all her $12,000.
What happened, explained McLean Gardens Residents Association chairman Jack Koczela, is that his organization could not borrow enough money to pay off the more than 40 people who opted to take the $12,000 in exchange for moving.
Koczela said the development partnership, which bought McLean Gardens last year for $25 million, now will take over the vacated apartments and pay tenants their $12,000 within 60 days. The partnership includes the residents association, the Chicago-based development firm of Arthur Rubloff and Co., the Kornblatt Corp., David R. Marshall and Associates, and former World Bank lawyer William McCulloch III.
Last year, the 158 tenant families left at the 723-unit McLean Gardens complex joined with the developers and bought the project from the landlord, CBI Fairmac.
For years before the purchase, the residents association was a struggling, scappy little David, fighting off Goliath in the form of developers. McLean Gardens is located on some of the city's most valuable land, near the Washington Cathedral, and was the city's last bastion of moderately priced rental housing west of Rock Creek Park.
Tenants and their developers are transforming the World War II-vintage complex into a minitown of 1,300 condominiums, cooperatives and town houses. The residents association will get 27.5 per cent of the development profits to help current tenants buy apartments.
Tenants who could not or would not paticpate in the conversion were promised $12,000 if they left by the middle of April.
Koczela said the $500,000 the residents association borrowed from a city bank through McCulloch was not enough to pay all the tenants who moved and cover such fees as loan and closing costs. Attempts to borrow additional funds from lenders and investors were unsuccessful, he said.
The residents association had hoped to pay the $12,000 itself, thereby gaining the right to hold onto its block of apartments and share the profits from their sale, bringing costs for tenants' individual units down.
Foczela said that so far, about 35 people have been paid at least a portion of the money promised. Fallen finally received $9,000 in May, with the rest promised at the end of June. She has not recieved it yet, she said.