Don't discount the power of organized tenants in dealing with a condominium developer. Increasingly here, the residents have been able to name their own terms.
That fact was demonstrated recently in the conversion of the Towers in Westchester Park in Prince George's County. Unlike the District and Montgomery County, Prince George's does not have a law giving tenants first-refusal rights to convert buildings themselves.
"It goes a lot easier when you make peace with the tenants and give them a more attractive price structure than that available to outside buyers. We learned that the hard way," acknowledged Charles Coleman, one of three partners in a Los Angeles-based group that is converting the two-building complex off Kenilworth Avenue near Greenbelt.
Joseph LaPlaca, president of the tenant association, said that tenants reacted quickly last December when they learned that their 606-unit complex had been sold for $18.5 million.
"We just got a notice, as required by law, of the sale," LaPlaca said. "Everyone worried about being evicted although we knew that we had 180 days. That's when we formed a tenant association."
Coleman admitted his group's mistake in making the notice "too sterile, without any information about enabling tenants to stay or giving them buyer preference. We took care of it a few days later but a lot of damage had been done."
LaPlaca, an original Towers-Westchester tenant, said that the lobby was filled for the tenant organization meeting and more than a third of the tenants joined the association.
"We really showed the developer that tenants had to be considered," he said. "We had hired legal counsel and signified our desire to negotiate a better deal for tenant purchasers."
The tenant association president said that the high-rise residents were especially sensitive about condo conversion because they knew that the former owner, a partnership headed by B. Francis Saul II, had already converted the several hundred town houses and garden apartments that surround the two high rise buildings. The 14-acre site adjoins the 1,200-acre Greenbelt park.
LaPlaca also confirmed that the former adversary position of the tenants has been turned around since they obtained special discounts -- averaging 12 percent -- to buy their own apartments.
Special discounts for tenants are becoming increasingly common as a means of obtaining tenant consent to conversion. Towers units are currently priced from $40,000 to $103,000, and current financing terms are 12 1/2 percent for 30-year mortgages.
The tenants were also given a guarantee that sales prices to tenants would drop if the developer decided to lower the prices to outsiders -- in the event that sales did not fulfill expectations.
Coleman, however, said that he is disappointed that only 60 tenants bought their units since many were unable to qualify financially for ownership. Market conditions may have contributed substantially to the slow sale of units to tenants, he added. The original prices have been raised 5 percent, he added.
So far, 170 of the 303 units in the 6100 building on Westchester Park Drive have been sold. The building at 6200 Westchester Park Drive will not be converted until the first building is nearly sold out, Coleman said and added that he expects that to happen by next spring.
LaPlaca, a businessman who plans to buy the apartment that he and his working wife have rented for nine years, said that some of the tenants moved out after it became known that the building would go condo. Others have been permitted to stay as tenants until their units are sold.
Coleman said that older tenants are being allowed to stay for at least two years, with annual rental increases based on the rise in the consumer price index.
Meanwhile, sales at the Towers in Westchester Park are running into the same problems that now plague the residential sale market here. In addition to high mortgage rates, there is the general economic malaise -- plus the usual seasonal lethargy induced by a presidential election.
Both Coleman and LaPlaca recognize that some of the Westchester's selling problems involve its Prince George's location. People who buy units in the Westchester price range tend to prefer Montgomery or Fairfax counties, they acknowledged.