Rental apartments are still being converted to condominiums at a rapid pace in the District of Columbia despite two years of efforts to stem the tide, and the city government is making money in the process.
The District will gain aoubt $3 million next year in added property tax revenue because of condominium conversions, according to the city's senior tax assessment official. A similar trend is evident in some suburbs, although figures there are less precise.
As an illustration, last September -- when a moratorium on conversions was replaced by a less restrictive law -- was the first month in which condominium sales in the District surpassed all other residential sales, 357 to 345. While each figure represented individual declines from September 1979, the drop in condominium sales was about one-third of that in private houses.
Beyond that, the cumulative cost of the 357 condominiums -- $23.9 million compared with $38.6 million for the 345 private houses -- is a fairly clear indication that for many purchasers, particularly those looking for starter homes, condominiums are the only housing within reach.
The city's senior tax assessor, George Altoft, said the conversion of rental apartments to condominiums raises the District's real estate tax income by as much as 900 percent on individual buildings.
For example, Ingleside Terrace, at 1810-1812 Ingleside Terr. NW, was assessed at a total of $75,000 last year as a two-building apartment house containing 10 apartments. Now that it is a condominium, its units are selling at between $56,000 and $85,000. The total increase in tax income will be about 800 percent, or about $600,000.
Other recent examples in the 600-900 percent range are the Farnsborough at 2199 Florida Ave. NW and the Northbrooke at 3420 16th St. NW.
The anticipated revenue illustrates the dilemma that every conversion helps create for local government: the temptation to increase sorely needed tax income at the expense of reducing rental housing in a city where the relatively poor and the elderly are already squeezed.
Mimi Jones, acting head of the conversion and sales regulatory office of the D.C. Department of Housing and Community Development, put it this way:
"The department recognizes that ownership is good for the community. That's why we insist ont he tenants [having the right to vote on whether their building can be converted]. But we also recognize that for every 51 percent that votes in favor [of conversion], that leaves 49 percent potentially out on the street."
The District does not keep records on the increases tax income from condominium conversions. But Altoft said his estimates showed that $220 million would be added to the city's real estate tax base for the 1981-82 financial year through increases in the assessments of apartments that were newly converted or newly built and reviews and reassessments of existing condominiums.
This addition to the base would translate into a minimum of $2.6 million, if all the new condominiums were owner-occupied, and a high of $3.3 million if they all were investor-owned, Altoft said.
By Altoft's estimate, more than 4,000 condominium units will have been added this year, making a total of 17,000 in the District. These units are taxed at the same rate as private houses, $1.22 for every $100 of valuation if they are owner-occupied and $1.54 if they are owned by investors.
Using his estimate of $220 million as the tax base for condominiums in the coming fiscal year and multiplying by these rates yields the high and los figures cited. The reality will lie somewhere between, as condominium ownership is a mixed bag of owner-occupancy and investment.
In addition, Altoft said, condominiums account for other tax revenues, by way of a 1 percent transfer tax and a 1 percent recordation tax when a building or an apartment is sold to a developer or tenant and a 4 percent fee when a building is sold for conversion.
A source in the D.C. assessor's office suggested that the city could channel the increased tax income to low-income tenants through subsidies so they could buy their own apartments. "Instead of killing the goose that lays the golden eggs," this source said, "the city should be joining the goose."
James Clay, deputy director of the housing department, said that such an idea was feasible, but that the city constantly faced difficult choices over how to use its income.
"Unfortunately," he said, "housing isn't always the first option."
Meanwhile, conversion activity throughout the region remains vigorous, if not at the "condomania" level of recent years, and the pace in some parts of suburban Maryland and Virginia is booming. The phenomenon, which transformed large sections of Northwest Washington and some close-in suburbs, is also starting to take root in lower-income, mainly black neighborhoods east of the Anacostia River.
The first condominium residences are beginning to bud on a few streets of Southeast Washington. But whether this presages another round of what became known as "condomania" along the tree-lined corridors of Connecticut Avenue and Wisconsin Avenue NW, is being debated by tenants and their advocates along less chic boulevards, like Benning Road and Wheeler Road SE.
Longtime residents of areas of the city across the Anacostia River, and some of the experts working with them, see a variety of factors as contributing to the coming of condominiums:
The anticipation that blue-collar whites, mainly from Prince George's County, will be attracted to some of the suburb-like, middle-class neighborhoods within the D.C. line, particularly if residency becomes required of District employes.
Black professionals, who missed out on the development of Capitol Hill, will not let the opportunity they believe to be taking shape east of the river slip through their fingers.
Metro, bringing with it convenience shops and fast-food restaurants to the areas surrounding stations, becomes a magnet, eventually attracting more affluent residents who would rather own than rent.
In some neighborhoods, such as Marshall Heights in Northeast, the process is off to a tentative start in the form of tenant associations buying their apartment buildings as cooperatives.
At Marshall Heights' Suburban Gardens, an attractive and nicely maintained garden apartment complex that 25 or so years ago was one of the most prstigious addresses for blacks in Northeast Washington, tenants are expected to vote at the end of this month on whether it will be a condominium or a cooperative. Many tenants have already begun the process of buying their homes from the bank.
"I'm certain we'll vote for a cooperative," said Zelma Gill, a 14-year resident of Suburban Gardens. "Most of us feel that condominiums are too expensive for us . . . ."
Gill, 40, who works nights as a distribution clerk in the main post office, would be $8,000 or $9,000 plus another $10,000 or so for rehabilitation. Her monthly fees will be about $325. She now pays $165 month rent.
Assuming the tenants vote in favor of a cooperative, Suburban Gardens will be a "low-yield" project, meaning that profits through resale would be limited by the D.C. government or the U.S. Department of Housing and Urban Development. In return, the city or HUD arranges subsidies for purchase and rehabilitation.
Generally, the move toward condominiums in the area is taking place in small bites: an abandoned apartment complex is being rehabilitated into condominiums; a former cooperative is being bought by residents as a condominium; owners are renovating four-family rental houses into semidetached houses and selling them; tenants in larger buildings are forming themselves into organizations and opting for so-called low-yield cooperatives.
For example, the Eastgate at 3415 5th St. SE, a block away from Ballou High School, is being completely rehabilitated by a private developer into condominiums after the 78-unit four-building complex was abandoned. And at 100 Chesapeake St. SE, an eight-unit building that had been a cooperative is being bought by the occupants at $10,000 each.
There are other examples of change: In the 4700 block of Jay St. NE, numbers 4701 to 4715 have been converted from small, four-apartment units into colonial-looking semidetached houses which, with their brick facades and cream or dark green shutters, would not look out of place in Georgetown or on Capitol Hill.
District law permits owners of buildings with more than four units to convert only if a majority of tenants vote in favor of the change. The law has slowed the pace of conversion in big apartment buildings, but not by much, and the conversion of small buildings is clipping right along.
In Montgomery County, according to Joe Douglas of the consumer affairs department, "1980 looks like it's going to be an all-time record since we started keeping records in '74" -- 3,511 units converted from rental apartments and 803 new condominums built.Last year, there were 2,374 conversions and only 45 new units were built.
In Arlington County, approval has been granted for the conversion of 1,202 units. Another 321 seem likely to undergo conversion and 1,864 new units are being built, according to county housing official Fran Lunney. These annual figures are slightly behind the 1979 totals.
Fairfax County figures, which will not be recorded by the county until the start of next year, show that 6,328 units were converted as of July 1, a whopping 61 percent increase over the same period in 1979, while 12,374 new condominiums were constructed, a slight increase over the previous year's period, according to the regionwide Council of Governments.
Alexandria, according to COG figures up to July 1, was holding steady with 3,947 conversions and 4,303 new units.
In the entire metropolitan area, an estimated 55,000 apartments -- about 12 percent of the total rental stock -- have been sold or are being marketed as condominiums.
Among the close-in suburbs, only Prince George's County is seen as being relatively immune from conversion fever, because many of the rental apartments do not meet building code standards and many tenants are too poor to purchase their apartments, according to Morton J. Schussheim, senior specialist in housing at the Congressional Research Service.