The complex of 73 garden apartments on Georgia Avenue in Silver Spring seemed an ideal acquisition for Montgomery County's Housing Opportunities Commission.
The location was good, just north of Forest Glen Road and the future Metro station. Few repairs were needed. With rents starting at $400, the apartments were just the type of moderately priced dwellings the county's public housing agency was interested in maintaining.
The commission huddled in private on price and strategy and a verbal offer of $2.5 million was made.
Eight days later, the apartments' owner accepted another bid. The new owners turned out to be a business partnership managed by one of the housing agency's own commissioners, Cathy S. Bernard.
It has been more than three years since the county's failed bid for the Forest Glen Apartments in the spring of 1987, but only in recent months -- in light of a request by the chairman of the commission that the county ethics board review the deal -- have the facts surrounding the sequence of events begun to emerge.
"The concern, of course, is the possibility of the appearance of impropriety or a real conflict of interest, which may have occurred at the time that the commission was considering purchase of the property as a result of participation by the commissioner," Robert Bell, chairman of the commission, wrote in April as he asked the county ethics board to review Bernard's actions.
The Ethics Commission responded that the six-month statute of limitations then in effect had lapsed. The attorney for the ethics board said that if the events occurred as related by Bell, it would "indicate an egregious violation of the conflict of interest provisions of the Montgomery County Public Ethics Law."
Bell's letter to the ethics board, a copy of which was obtained by The Washington Post, alleges that Bernard, vice chairman of the commission in 1987, was privy to confidential information on the county's interest in the property, that she participated in decisions on price and strategy and that she didn't disclose any private interest in acquiring the property.
Bernard is managing general partner of a joint venture partnership that purchased the apartments for $2.25 million on June 30, 1987.
Bernard, president of a Hyattsville real estate management and investment company and a member of the Housing Opportunities Commission since 1979, said Bell's letter to the Ethics Commission was one-sided and contains "not a shred of truth."
Bernard said she had no private interest in the apartments at the time the housing commission was considering them for purchase. David I. Cohn, a real estate broker and investor who put together the successful bid for the apartments, said Bernard did not provide him with any details of the Housing Opportunities Commission offer.
In hindsight, Bernard said she should have written a letter detailing her involvement the day the deal was closed. However, she said her interest in the apartments, which she placed in the range of 20 percent, is fully detailed in her confidential financial statement, filed annually with the ethics board, and that people at the housing commission knew, long before this year, of her interest in the building.
She said the matter is coming up now because she is the victim of a smear attack by commission officials and staff members who disagree with some of her views on housing and the rights of the private sector, and she said they want to drive her from the board.
"This is a personal vendetta and paybacks are tough. They don't like my philosophy . . . . If you can't get at them directly, you get them indirectly," said Bernard, an unpaid commissioner on the seven-member board.
Bernard acknowledged that the short span of time, eight days, between when she participated in a commission meeting on the property and when Forest Glen owners accepted the other contract, poses some problems of appearance.
On April 28, 1987, five members of the commission, including Bernard, participated in a conference call to consider the possible acquisition of the apartments, according to commission minutes.
The conference call was set up, Bell wrote the Ethics Commission, to speed up the process of making an offer. According to Bell, the commission knew that another potential purchaser was interested. Another factor that would work against the county was the seller's reluctance to accept a contingency contract. The county is required to have appraisals and engineering studies done.
A confidential memo had been distributed to all the commissioners and a recommendation to purchase the property for $2.5 million was proposed with certain contingencies, according to Bell's letter and the minutes.
According to Bell's letter, the day after the HOC call, Bernard called a staff member involved in the negotiations and asked that HOC obtain an engineering study that had been performed for another party that had made an earlier offer but then withdrew it. Several days later, Bell wrote, Bernard called the HOC staff again to determine if HOC had signed a contract to purchase the property.
Bernard, noting that the events took place three years ago, said she could not recall if she made those calls.
"During the negotiation process, and while the matter was under active consideration, the commissioner in question made no formal or written disclosure on the records of the commission of any possible interest in the entity that was contemplating or negotiating the purchase of the property," Bell wrote the ethics board.
Irving Hurwitz, manager of the agency's Housing Conservation Program, said he made a verbal offer to the sellers but was told they would not agree to a contract that contained any contingencies. He said he subsequently learned that the apartments had been sold to someone else.
On May 6, 1987, Cohn signed a purchase agreement for the properties, depositing $100,000. According to a copy of the agreement on file with the county's Office of Consumer Affairs, Cohn is identified as "trustee for a partnership to be formed." The purchase price was $2.25 million, with closing on the property to be scheduled within 45 days.
Land records show that the property was conveyed to Forest Glen Joint Venture, a Maryland general partnership by deed dated June 30, 1987. The address for the purchaser is listed at CSB Associates, Bernard's firm in Hyattsville. A Deed of Trust and Security agreement was recorded for $2.8 million and was signed by Bernard as managing general partner.
Cohn said he cannot remember exactly when he approached Bernard about becoming involved in the partnership, but said he had contacted her by the time the purchase agreement was signed on May 6. Cohn said he believes the $100,000 deposit was his own money but that he may have been reimbursed later.
Bernard said she thinks it was late May or June when Cohn talked to her about the property. She said that at the time of the April 28 meeting, she had no interest in the property.
"I did not have an economic interest in that building until it closed. I didn't put a penny in until the date of the closing," Bernard said. Cohn said he first became aware of the property's availability in late 1986, and that he was the leading force behind the partnership.
Cohn said that at no point did Bernard provide him with any details about the housing commission's negotations or strategy and that she was not involved in determining the purchase price.
Albert C. Schneider, one of the apartments' sellers, said he could not recall details of the negotiations. However, Schneider in May 1987 wrote a letter to county officials saying he decided to sell to purchasers who did not require engineering and other studies and who offered a better deal.
"I didn't do anything for HOC not to get the property," Bernard said. Cohn noted that the county could have had the apartments if it had agreed to the seller's terms.
Rents at the apartments have stayed low, according to county officials. An advantage of the apartments being privately owned is that they pay taxes.
Cohn said he was "flabbergasted" that the county says it didn't know until recently of Bernard's involvement with the property. "Her signs are plastered all over the front of it," he said.
According to Bell, the commission was told informally of Bernard's services as property manager after the contract was executed. Bernard's equity interest in the property, he wrote, was not learned until almost a year later when the commission received a request for a waiver from the conflict-of-interest provisions of the Section 8 Housing Assistance Plan.
This waiver, obtained from the Department of Housing and Urban Development, allowed the commission to provide a subsidy certificate for a tenant who was an occupant at the time of the purchase even though Bernard was an interested party. Bell said Bernard's status as managing general partner was learned "just recently."
Bernard said she has evidence showing that the commission knew of her involvement much earlier but she said it is not appropriate to air it in the media.
Bernard and another commissioner, Vickie Yorke, criticized Bell for bypassing the rest of the commission when he sent the letter to the Ethics Commission. Bell said he wrote the letter after consulting with the agency's staff and attorney.
He said the refusal of the Ethics Commission to act on the matter was the end of the issue. "We left it to lie," he said.
Researcher Bridget Roeber contributed to this report.