More than 3,700 apartment units in the District of Columbia were certified by the city government for conversion to condominiums last month as tenant associations and developers rushed to beat a new law designed to sharply curtail the conversions.
More conversion permits were granted in July than in all of last year because of the new law that includes a 4 percent tax on all condominium sales, the right of elderly tenants to remain as renters for three years when their buildings are converted and a requirement that only building owners can apply for conversion rights. The new law took effect last Sunday.
More of the conversion applications came from tenant associations who were buying their buildings and wanted to escape the 4 per cent tax and the guarantees for the elderly, since both would have added to the cost of their buying their individual units.
"My clients are tenant associations, and they did not want to deal with the provisions" of the new law, especially the sales tax, one attorney said. "It makes it almost impossible to convert if you are a tenant association."
"So many people were rushing in because if you have a contract to purchase a building that was negotiated under the old act, it could not go forward without substantial modifications" under the new act, because of the sales tax and guarantees for the elderly, attorney Marguerite Owen said.
Tenant associations in the midst of negotiating financial arrangements for the purchase of their buildings tried unsuccessfully to gain an exemption from the new law. But the City Council defeated that amendment before passing the law on July 29.
Tenant associations vigorously oppose the 4 percent tax because it must be paid to the city before any individual units are sold. Most tenant associations lack that kind of money, several attorneys said.
Tenant associations say guaranteed tenancies for those over 62 with incomes below $30,000 present another problem because elderly tenants often are unable to afford to buy their units. Ordinarily they move when their buildings are converted to condominiums.
The remaining tenants, if they decide to buy their units, can then charge themselves lower prices for their own units by selling the units vacated by the elderly at substantially higher prices.
A dissident group of mostly elderly tenants recently prevented the conversions of the Van Ness South apartments at 3003 Van Ness St. NW.
After the tenants association won the consent of more than half the tenants in the 625-unit building and filed a conversion request with the city government, the dissident group convinced some other tenants to withdraw their approval of the conversion.
Workers in the city's condominium control office were not able to verify that a majority of the Van Ness South tenants had consented to the conversion and the permit was not issued.
Tenant organizations and developers also object to the provision in the new law that only owners can apply for the right to convert buildings. That provision is especially onerous, tenant associations say, because they would have to buy their buildings, often for prices exceeding $1 million, before they could apply for permission to convert.
Under the new law, condo conversion permits granted in the past are no longer transferable to new building owners.
The City Council, which approved the measure on a 12-to-1 vote, stated that all these provisions and others were necessary to prevent the accelarating trend to conversions that are "threatening to squeeze out of the city low- and moderate-income people who cannot afford to buy apartments they now rent."
Among the 3,713 units that received permission to convert in July were the 433 at the Van Ness East Apartments, at 2939 Van Ness St. Nw.; the 800-unit Columbia Plaza, at 2400 Virginia Ave. NW.; the 391-unit Tiber Island, at 429 N St. SW.; the 113-unit Monroe House, at 522 21st St. NW., and the 129-unit Washington House, at 2120 16th St. NW.