A D.C. Court of Appeals decision restricting the ability of tenants to block the conversion of apartments to condominiums will have little long-term impact on the number of conversions that take place, real estate analysts said yesterday.
Those analysts said the number of apartment buildings suitable for conversions is dwindling. Still, tenant activists said they fear a rash of new condominium conversions that could displace elderly, poor and middle-income renters at a time when affordable rental apartments in the city are in short supply.
A three-judge panel of the D.C. Court of Appeals on Friday ruled that a provision of the District's 1980 condominium conversion law is "deficient" because it permits tenant groups to veto a proposed conversion without government review.
The ruling yesterday drew differing interpretations, virtually assuring that the D.C. Council will have to make changes in the controversial law if the panel's decision is allowed to stand.
Attorneys for the city said they plan to appeal the ruling.
The requirement that conversion of apartments to condominiums first be approved by tenants is viewed as a key element of the law, originally designed as a way to protect the city's rental housing stock while giving renters first option to buy their apartments.
The provision has been vigorously attacked by real estate developers, who challenged it in court as an infringement of their property-owner rights.
Industry officials yesterday hailed the ruling, but said they doubt it will substantially affect conversions.
"I don't think there is going to be any immediate impact. The condo market isn't all that strong anyway," said David Strachan, executive vice president of the Washington D.C. Association of Realtors.
According to Strachan and others, conversions are controlled more by interest rates and other market factors than the ability of tenants to block conversions. They suggest that the real issue involved is the money that developers have paid tenant groups since enactment of the law in order to win approval of proposed conversions under city-sponsored purchase agreements.
Those agreements frequently mean thousands of dollars for each tenant when the majority votes to move out, rather than resist a conversion.
"I call it legal blackmail," said developer G.V. (Mike) Brenneman, president of Brenneman Associates. "It's obviously been hundreds of thousands of dollars that's been paid out."
Analysts maintain that while conversions flourished in the 1970s, they took a nose dive when interest rates rose in the early 1980s and only within the last year or so have begun to pick up again as interest rates dipped.
City statistics show that almost half of the approximately 23,000 conversions since 1960 have taken place since the law was passed. In the last 27 years, conversions have represented about 12 percent of the city's stock of apartments. Meanwhile, the total number of rental apartments in the District has shrunk about 2 percent, according to city figures.
Mark Goodman, a member of the Tenant Organization Political Action Committee in Northwest, said many more conversions would have taken place had the law not been put on the books.
"Certainly, a lot of tenants have gotten control and ownership of these buildings as a result of this law," Goodman said.
Valerie Costello, chairwoman of the tenant organization, said she agreed with Brenneman that the majority of the city's most desirable buildings already have been converted to condominiums. But she said she fears many renters -- especially those in buildings with potential for renovation -- could be threatened if the appeals decision stands.
"Obviously, anything that is taken away from the law as it stands now is a threat to tenants," Costello said.