In developer Morton Sarubin's Baltimore office hangs a small abstract painting, one of Sarubin's own creations. In past years, Sarubin says, he has entered the painting in many art contests, changing the title to suit what he thought were the judges' preferences.
Often, he says, the painting took top honors.
"It's like anything else, you've got to play the angles," he says.
Sarubin, a major East Coast developer specializing in the rehabilitation of aging apartment complexes, stunned Northern Virginia officials recently by proposing to buy most of Alexandria's deteriorating public housing, build new housing projects at other locations in the city and make his profit by building lucrative commercial or residential developments on the sites of the old housing projects.
Whether he can play the angles of Alexandria politics and complete the deal, observers say, remains to be seen.
During his 20-year real estate career, Sarubin (pronounced SARE-uh-bin) has often tapped the largesse of the federal government to finance the rehabilitation of projects for low-and moderate-income renters. According to his own estimates, he has received $150 million in federal loan guarantees for two dozen apartment complexes, containing about 3,000 units. They include the Benning Road and Eastern Avenue projects, both in Washington, and the former Shirley Duke apartments in Alexandria's West End.
"In real estate you develop a smell, you get a nose for what properties will become valuable," Sarubin said recently during an interview in Baltimore. "In Alexandria there is the upcoming Metro line near 40-year-old (housing) projects, and $400,000 townhouses next to old public housing. In business you have to be daring, be an opportunist and have imagination. I'm sort of a Don Quixote."
What currently gives Sarubin considerable leverage with Alexandria officials is his success in renovating Shirley Duke, now known as Foxchase. To finance the renovation, Sarubin received a $72 million loan from the Virginia Housing Development Authority and a federal mortgage guarantee for the loan, (in addition to an independent $8 million bank loan).
The $72 million loan was the largest ever made by the Housing Development Authority, and the 2,100-unit Foxchase will be the largest moderately priced apartment complex in Northern Virginia. The rehabilitation currently is ahead of schedule, and city officials are openly thrilled at its progress.
They are thrilled for the same reason that Sarubin may succeed with his latest proposal: He is doing something that city wants done, but doesn't have the ability or money to do itself.
In its final days, Shirley Duke was described as Alexandria's, and possibly Northern Virginia's, largest slum. The companies that owned the sprawling complex had gone bankrupt, and no one wanted to touch the place.
When skeptical council members said they feared Sarubin might turn the rental units into expensive condominiums, Sarubin legally obligated himself to keeping the units on the rental market for 20 years -- 15 years more than federal law demands -- and to keeping 20 percent of the units for low-income families.
The rehabilitation, city officials say, is modern, tasteful and of good quality, and with it, the rough-hewn Sarubin has established himself as someone genteel Alexandrians say they feel comfortable doing business with.
But Sarubin has not always won praise for his work, and several of his successes have been surrounded by controversy.
In 1976, for $1.9 million, he purchased 25 acres of the Continental Can Co. complex in east Baltimore. Shortly afterward, the State of Maryland offered Sarubin $2.9 million for the property to build a new medium-security prison.
The deal called for the state to lease the site from him for $25,000 a month, and pay Sarubin's $5,000 a month tax bill until the purchase could be completed (eventually bringing Sarubin an estimated $100,000).
The arrangement, which caused a firestorm of controversy in the two neighborhoods next to the site, had been negotiated between Sarubin and then governor Marvin Mandel, bypassing the state office that normally negotiated such sales. Adding to the controversy was the fact that Sarubin's third cousin Irvin Kovens was Mandel's longtime political mentor and chief political fund-raiser.
"I swear on my mother's grave that the deal was legitimate and aboveboard," Sarubin said last week. "State prison officials approached me with the purchase offer; I never approached them in any way."
Although the sale was finally completed, after several months of wrangling, the prison was never built, and the state still owns the land.
That type of controversial performance is typical of the chain-smoking developer, whose father Edwin L. Sarubin, a Russian immigrant, founded the Regal Department Store in downtown Baltimore. The senior Sarubin also invested in Baltimore real estate, and when the department store was condemned under urban renewal, the family decided to plunge into the profitable real estate business full time rather than open another store.
Sarubin, who studied business at the University of Maryland and Georgetown University, worked with his family until, "as a compulsive workaholic," he soon was able to start out on his own. One of his earliest ventures was the Beethoven Apartments in Baltimore, which he bought in 1962. v
Sarubin combines a clubhouse charm with a willingness to play tough with people he disagrees with, attributes that came to the fore in a dispute over the Beethoven.
Three years ago, when a fire destroyed most of the Beethoven, Sarubin promised to restore the historic building to its original appearance but, for economic reasons, did not plan to use original materials.
However, Baltimore's Commission on Historical and Architectural Preservation, said a local civic association, objected to his plans. After considerable delay, including a court decision allowing him to proceed, Sarubin sold the complex.
During the fracas, Sarubin facetiously proposed using the land as a "relief park" for dogs. At a press conference, he produced a drawing showing fire hydrants standing next to parking meters. The facility, Sarubin said, would be known as the Scenic Haven for Itinerant Terriers, and the imaginary proceeds would go to the civic association opposed to his renovation plan. Sarubin keeps the drawing in his office.
But there also have been other, more serious, controversies surrounding Sarubin.
For instance, in 1974 some tenants at The Uplands Apartments, a federally subsized complex Sarubin owns in Baltimore, staged a brief rent strike, protesting Sarubin's Housing and Urban Development-approved rent hikes, and claiming that his maintenance of the buildings was poor. Sarubin denied the charges at the time, and last week contended the strike was caused by outside agitators.
In 1975 HUD fired a federal worker, after claiming that the man had lived rent-free for 15 months in The Uplands, during the time he helped approve several Sarubin requests for rent increases. Sarubin said last week the man had orginally been given the rent-free apartment after he left HUD and was working for Sarubin. Later, Sarubin said, the man returned to HUD and was required to pay rent.
That same year, records involving Sarubin's purchase to The Uplands were subpoenaed during a federal grand jury investigation of political corruption in Maryland. A real estate broker involved in that purchase was J. Walter Jones, who eventually pleaded guilty in an unrelated matter to soliciting an illegal corporate campaign contribution to the 1972 Republican presidential campaign.
Sarubin said last week he met Jones for the first time during the real estate transaction, and that Jones' commission was paid by check. He said federal prosecutors, who have not yet returned his records, never questioned him further about the incident.
Sarubin remains calm despite such controversies, and says such matters are a minor part of his business life. "In business you have to take the lumps," he said with a shrug.
It is Sarubin's stated willingness to "take the lumps" that has forced Alexandria officials to look with a hopeful, if cautious eye, on his latest proposal.
"The issue of public housing is incredibly sensitive," said one official. "No one wants to get burned by it. If he wants to stand there and absorb the heat, that would probably be okay with a lot of people."
City officials are now wrangling over what to do about deteriorating housing projects, many of which sit on increasingly valuable land. Last week the council unanimously voted to maintain at least 1,021 public housing units, but that would not preclude acceptance of a plan to move tenants to newly built projects on other sites, and Sarubin already is talking about offering the city some options.
"I'll present the council with 40 or so possible sites," Sarubin said last week, "which should relieve them of some of the problem of choosing which sites stay and which sites go. If I take them all, that avoids some controversy for them. I want to do this without taint, and avoid the controversy of the (Maryland) prison site. Replacing the public housing units is strictly a carrot for me. The money will be made with new construction."
The city owns nine public housing projects, and Sarubin has offered to buy eight of them, housing nearly 2,800 people in 1,158 units. The only project he has not offered to buy is the new high-rise for elderly people in Old Town.
Sarubin suggests the purchase price will be about $30 million. One Alexandria developer said Sarubin's profit on the Braddock Road site alone could be $4 million.
"The Braddock Road Metro site is a natural one for an office building," Sarubin said. "After all, why build hew housing next to railroad tracks where trains will be passing every 15 seconds or so?I'll make my profit from what they let me build. In Old Town, if they want 40 townhouse units, I'll build that, too."
Sarubin said his first step would be to spend $25,000 on a preliminary proposal to present to the council, sometime in the spring. "The timing is right for this. If they like my original plans, I'll go ahead and spend as much as $400,000 on detailed plans. If we put the right team together, the architects, developers, and so on, this could work very well."