In many ways, the saga of Rosemary Village is a tale of how hard it is to keep housing affordable in Montgomery County.
The decision to keep a lid on the costs of living in the 416-unit apartment and townhouse cooperative for low- to moderate-income families in Silver Spring ironically thrust the complex into deterioration and ultimately may mean the loss of affordability for some residents.
"If you tried to increase the monthly charges here, people got upset because they wanted to keep the costs for low to moderate families," said Jesse Stevenson, a retired caterer who has lived at Rosemary since 1984 and pays $708 a month for his two-bedroom apartment. "The problem is that if you don't put money into the place, you look up from 1978 and its 2002 and you say, 'What happened?' "
Almost three years ago, as part of the county's attempt to improve aging developments, officials inspected Rosemary and found more housing code violations than in any other multifamily property in the county's history: 6,000 citations.
After failing to find a way to fix the apartments, residents voted in November to abolish the cooperative and sell the complex to a private developer, who plans to renovate it and turn it into rental units. The complex will remain a place for predominantly low- to moderate-income families who receive some form of government assistance. Ten percent of the apartments will rent for market rate.
"The reality is that Rosemary Village co-op had hundreds if not thousands of code violations and no viable scheme for making the necessary repairs," said County Council member Steven A. Silverman (D-At Large). "Selling it was a concept that made sense."
The low-story brick complex tucked off East West Highway between towering high-rise apartment buildings is one of the few affordable housing complexes in Montgomery, which has a waiting list for subsidized housing and what officials describe as a housing crisis for the working poor.
How Rosemary ended up as one of the least-inhabitable complexes in the county is a story of good intentions gone awry. The fate of the complex has become such a fractious issue that Rosemary residents say they fear one another. A few have filed a lawsuit to stop the sale. The county even brought in police officers to keep the peace when residents voted on the sale in November.
Rosemary was supposed to be a cooperative in which residents would own a piece of the corporation, similar to owning shares of stock. Such ownership was expected to ensure that the residents would keep up the property. But Rosemary never stabilized. Its board of directors changed every year and has gone through at least a half-dozen management companies in less than a decade.
In the past 20 years, the monthly charges have increased five times, going up an estimated 80 percent. A two-bedroom apartment at Rosemary that was $395 a month in 1984 now costs $708 a month -- still far less than surrounding apartment complexes where two-bedrooms rent for more than $1,100 a month.
The slow rise in Rosemary's rental rates was not enough to cover the costs of maintaining the property. Pipes rusted, and roofs and gutters were damaged. Now the complex needs at least $13 million worth of renovations.
As Rosemary has deteriorated, nearby downtown Silver Spring, less than five blocks away, has started to undergo a transformation. In the past year, the county has spent millions to redevelop the area, bringing in such businesses as a Fresh Fields grocery, Strosnider's hardware and other restaurants and retailers. Discovery Communications Inc. is moving its headquarters from Bethesda, and the American Film Institute is renovating a building there.
Housing costs in Silver Spring have skyrocketed, making it critical, politicians and housing experts say, not to destroy a place like Rosemary Village, where those who make less than the county's $71,550 median household income can live.
"Our goal is to make sure that no one will be involuntarily displaced from Rosemary," said Elizabeth B. Davison, director of the Department of Housing & Community Affairs for Montgomery County. "Our goal is to get the property in good shape and get a management structure that will keep the property in good shape.
"We want to deal with these reports of crime, and we will keep a mixed-income community," she said. "We want to keep some of the stock of low-income housing [in the county] but not turn it into a low-income kind of ghetto." Rosemary's buyer, Fairfield Residential Development LLC of San Diego, plans to pay $25.5 million for the complex and spend $17 million to renovate it.
Fairfield is seeking mortgage bonds from the state, which are backed by revenue from the property, as well as other federal and state tax incentives for developing low-income housing.
Members of the Rosemary board of directors say they expect at least half of the more than 300 residents to stay after Fairfield takes over next year. The rest of the residents said they plan to use the estimated $26,000 to $42,000 -- depending on how taxes affect the sale -- that will be given to each household to make down payments on houses elsewhere in the region.
Leaving Rosemary will be a joy for some who say they have become afraid to walk from their cars at night to their apartments.
"It was no Shangri-La," said Victoria L. Price, who moved from Rosemary last year after working for years to lead community groups to work with police to fight crime in Rosemary.
"When I moved here in 1984, it was a very nice, quiet, clean place to raise my daughter," said Stevenson, the retired caterer. "But it's become run-down." He stepped carefully over broken glass and piles of candy wrappings and trash in the parking lot. "It's time to move on from here and put this behind me."
Others said they will be sad to see the end of the cooperative, which in their minds allowed them to hold a piece of homeownership.
"We own this place, and we don't want to see it just taken from us," said Margaret Pomenya, a registered nurse who lives in Rosemary with her two daughters and has helped lead the fight to stop the sale.
The residents of Rosemary are a mix of people -- white and black Americans, Ghanians, Ethiopians, Haitians and Latinos. Many of the children who go to the popular after-school Homework Club are from single-parent households. Some adults in the complex work two jobs or bunk with relatives and friends.
The buildings went up in the 1950s as a rental apartment complex. A small group of residents there organized to buy them and turn the development into a limited equity cooperative in 1978 with financing help from the state's housing and community development division.
The state's housing agency holds the 40-year, $9 million mortgage on the property, and officials there said Rosemary had been inspected yearly by them. For the past seven years, the state has not enforced penalties on Rosemary Village because residents were working with the county to make improvements. In its most recent report from November, the agency described the conditions at Rosemary as "below average."
As a limited equity cooperative, Rosemary's residents own shares in a nonprofit corporation that owns the complex. Owners are restricted in the amount they profit when they sell the apartments. The monthly fees residents pay are used to pay the mortgage and such expenses as the utilities, taxes and repairs to the common areas.
But Rosemary has never had a major renovation. County officials became involved in fixing up the complex in 1994, when some residents came in search of a grant to help fix potholes in the parking lots. When county housing officials assessed the potholes, they found more problems.
"I realized that the last thing they needed to fix were the potholes," said Stephanie E. Killian, a multifamily housing manager at Montgomery's Department of Housing & Community Affairs. "They had 40-plus-year-old windows. Gutters were hanging off. You'd walk into a unit and underneath there was a crack in the window and under it was baseboard heating blasting at full speed.
"The water system has pinhole leaks throughout," she said. "There was water damage throughout the units, damaged ceilings, damaged walls, some lead paint, and steps and railings were crumbling."
In a move to save the low- to moderate-income housing, county officials invested in helping the residents fix up the property. It gave the board more than $1 million to do such things as fix sagging roofs and commission a study on needed improvements.
As part of the deal, Rosemary had to come up with a viable plan for renovation or the county would inspect its apartments for code violations, a move that could deem the complex uninhabitable and result in the eviction of the residents.
The county gave Rosemary the time its residents requested. When nothing was done by 2000, officials inspected the apartments and found thousands of violations.
Rosemary's board of directors sought bids for renovating the property and got six offers, including two from nonprofit groups that specialized in financing affordable housing projects, but the board didn't like those proposals.
One of the for-profit bidders, KSI of Virginia, dropped its price when the county housing officials and Rosemary's residents said they wanted to keep a large chunk of the units for low-income residents.
In November, the residents voted by a two-thirds majority to accept the deal with Fairfield. But a group of about 30 residents has filed a lawsuit seeking a temporary injunction. A hearing is set for today.
Opponents of the sale argue that it was "steamrolled" through by the county and the developers so that the buyer could meet the deadline for state-issued mortgage bonds. Residents have also questioned why no outside appraisal was ever done on the property, given that surrounding properties in Silver Spring are selling for much higher prices. But developers and county officials said Rosemary is not in good condition and therefore could not get a higher price.
Keeping It Affordable
Some residents who do not qualify for government assistance fear that they will have to move out of their homes after the two-year renovation project because they will not be able to afford the new market rates for the apartments.
A two-bedroom apartment that now goes for $708 a month will go for $1,200 to $1,300 a month at market rate after the renovations are complete. But for a family of three, making no more than $39,150 a year and getting government-assisted tax credits, the place will cost $878 a month after the renovations.
The county's housing officials said they will work with residents to make sure that no one who wants to stay is displaced because they cannot afford the new rents. That's not enough for some residents.
"It's all about the money [for the developers and the county]," said Caroline Pomenya, 25, a travel planner who lives in Rosemary with her mother, Margaret. "They don't care about the people."
At a recent meeting in the downstairs apartment where children normally do homework, some residents who oppose the Fairfield sale gathered to voice their concerns and try to come up with a plan of action. Few have money to pay for a lawyer, and the lawyers they have contacted are not interested in doing the case pro bono.
"They're squeezing out low- and moderate-income people," said Lil Arnette, a retired government worker who moved into Rosemary 30 years ago because it was affordable and convenient to hospitals and schools. "It makes you really sad because you know what it looked like and how it used to be. And now the people in charge are running over top of us. They just don't care."
One of the residents in the room asked someone to say a prayer. Quickly, Montrose Smith, began.
"We can see your hand in this, Lord," said Smith, who has lived in Rosemary for more than a decade. "Thank you, thank you, thank you. You're going to lead us through this thing and you will bring us through victorious. We give you thanks."