Only a third of the Washington-area's home sales are condominium or cooperative apartments, but this part of the housing market grabs more than its share of public attention.
This week, for instance:
Congressional hearings were held on tenant displacement when rental apartments are converted to condominium ownership, with special emphasis on problems of the elderly. Rep. Benjamin Rosenthal (D-N.Y.) said he would introduce legislation to change federal tax laws to benefit tenant group purchasers and discourage middleman redevelopers.
The 504-unit River Towers apartment complex in south Alexandria was sold for $17.2 million to developer Stephen Z. Laufer, who plans a condo conversion. Aware of the problems of the "elderly-tenants-being-condoed" issue, Laufer pledged to work with older residents individually. Laufer said that he completed the conversion of the Northbrook at 3426 16th St. NW by relocating tenants without any evictions.
Plans have been announced for conversion of the nine-building, 264-unit Saxony Square apartment complex in Alexandria to condominium ownership by a group headed by developer Giuseppe Cecchi. He told tenants this week that emphasis in the conversion will be to make tenants owners of their units.Also, 20 percent of the 15-year-old-brick garden apartments will be kept as rentals for three years, with elderly and handicapped residents getting five-year leasing options.
In the planned conversion of Saxony Square on 9 1/2 acres at Beauregard and Armistead streets, developer Cecchi assured existing residents that an affordable opportunity will be given to continue residence "either as owners or as tenants."
Prices to tenants, which are said to be $5,000 to $8,000 less than those for units sold later to the public, will range from about $39,000 to $55,000. Dwellings have one to three bedrooms. Current vacancies at Saxony Square were described as minimal.
Cecchi said his goal is to keep residents to a minimum and that no tenant will be forced to move before Oct. 1. Rents range from $375 to $483 a month for the units with one, two and three bedrooms.
A contract to purchase Saxony Square from Aries Investment Co. has been signed by a partnership that includes the Clover Development Corp., a real estate development firm, and Mercedes Realty Inc., an investment firm owned by Cecchi.
Cecchi is president of International Developers Inc., which earlier converted the 1,684-unit Park-Fairfax and the 283-unit Park East. Cecchi said that he has recently obtained FHA financing for Belle View purchasers -- a first for an apartment conversion in this area.
A Chicago development firm began its sales program at the high-rise Willoughby in Friendship Heights with a pledge not to displace elderly tenants for three years. In addition, special prices are being given to tenants, and the developer -- First Condominium Development Co. of Chicago -- is matching financial assistance given to older tenants under a Montgomery County housing program.
A Northern Virginia developer announced the purchase and planned conversion of the Woodburn Village I garden apartments near Arlington Blvd. and Gallows Road in Fairfax County. This developer has promised that 20 percent of the 196 modereately priced units will be available for continued leasing for a maximum of three years by tenants on a basis of length of residency.
The increase in the number of rental apartments turning condo in this area has gotten a mixed reception.
Some moderately affluent tenants with good jobs and some savings -- who might be on the verge of buying a home or condo anyway -- find they can get a good bargain, because of the special prices now almost universally offered to tenants.
But other tenants often react strongly against the prospect of moving or buying their apartments. The rent generally is far below what monthly mortgage payments would be, at least before computing federal tax adjustments for interest and property taxes.
And with all the conversions, rental apartments have become increasingly harder to find for those who choose not to buy. The amount of rental stock also has diminished because of a sharp downturn in new rental apartment construction. Private developer-investors say they have lost the incentive to own or develop rental apartments because of unrealistic rent ceilings, management difficulties and the high costs of maintenance, construction and utilities.
Developers and investors seek long-term capital gains, plus tax shelters. High financing and construction costs make it less appealing for developers to build and own rental units, and decreasing yields and management problems can cause owners to lose interest in holding rental apartments after depreciation runs out.
The most severely affected tenants in the conversion, the elderly and the handicapped, who generally do not like to have to change their habitat. In addition, many retired persons live on fixed incomes and have a difficult time meeting monthly bills.
Recognizing a responsibility to older tenants, First Condominium Development Co. held a meeting in February for all older tenants at the Willoughby. The developer offered handicapped persons and residents 62 or older an extension of their current leases on the same terms for three years. For income-eligible households (according to the county formula for tenants with incomes in a range from $28,860 for one person to $33,000 for households of six to eight persons), $1,500 plus county rental assistance up to $3,000 or matching down payment aid of $3,000 will be offered for a total of $6,000.
As is usual in condo conversions, Willoughby tenants have 60 days to take advantage of a special 20 percent discount to buy their apartments, plus a decorating allowance of $1,000 to $4,000 per household, depending on size of the unit. Aaron Michaelson, president of First Condominium, said that 16 tenants have signed sales contracts.
However, tenants George and Anne Brody said this week they regard the Willoughby conversion as a "calamity." The 11-year tenants said they pay $566 a month in rent for their two-bedroom unit but that it would cost them $1,200 a month to buy the apartment at its $110,000 price. Retiree George Brody, president of the tenant association, said they have decided to stay as long as possible as tenants.
Llya and Kate Talev also cited high prices, plus concerns about asbestos in the ceiling of Willoughby apartments, as reasons why they do not plan to buy. A Montgomery County environmental report on the safety of the ceiling does not satisfy Llya Talev, a writer at the Voice of America. He said he and his wife plan to move out as soon as possible and buy a house. The Talevs have two young children and live in a large three-bedroom apartment that rents for $797 a month.
Another tenant, Sid Levy, a property management executive with the Norman Bernstein firm, said he has been a Willoughby tenant for some years.
"I have mixed emotions," about the conversion, he said, because he respects ownership rights but believes they should be balanced against the inconveniences caused tenants. He said ahe has not made up his mind about buying his $550-a-month apartment, which would cost $110,000.
Levy also recalled an aborted attempt to convert the Willoughby six years ago by a previous owner. Tenants protested vigorously, and, because it was a housing recession, few sales contracts were signed. After the building was half vacated, the owners put it back on the rental market. It has been about 99 percent occupied in recent years.
Willoughby tenants were told recently that they will not have to go to settlement on apartment purchases before the spring of 1982. Entrepreneur Michaelson said he hopes long-term interest rates will be lower next year and that tenants in the meantime can get a full year of appreciation on units they have under contract. He said prices being quoted to residents range from $26,200 to $141,900, at an estimated average of $82 a square foot. That's in the upper-medium range in the Washington area.
Michaelson said First Condominium will invest more than $2 million in improvements to the 16-year-old, 24-story residential complex in a redeveloped section of Chevy Chase. The firm is committed to purchase from Phoenix Associates, headed by the original developer Milton Barlow. He lost the building to bank creditors who sold it to the Harry Helmsley group in New York City.
In January, the Barlow group paid the Helmsley group $35 million for the complex. Phoenix is expected to get considerably more than that from First Condominium in a sale that need not be finished until late 1983, according to a signed contract.
In addition to filing a required Willoughby property report -- which runs more than 400 pages -- the First Condominium group hired Chicagoan Thomas Stuckey to do a 30-page security report that Stuckey will implement at an estimated cost of $250,000. He said access control, exit monitors and electronic devices will be installed. Stuckey, a former Illinois policeman, did the security work at the 2,400-unit Sandbury apartments converted recently in north Chicago by First Condominium.
In south Alexandria, the three-building, 512-unit River Towers complex is being converted by a purchasing group headed by developer Laufer, a McLean resident. He confirmed that he has purchased River Towers from a partnership headed by Ralph D. Rocks, who developed the apartments. on 26 acres in the early 1960s, a time of booming rental apartment construction in this area.
Laufer said this week that he has filed condominium documents with the Virginia Real Estate Commission and that tenants have been notified of the ownership change and plans for conversion. Rents at the high-occupancy River Towers range from about $300 to $650 a month for a mix of efficiencies, one-, two- and three-bedroom apartments in nine-story buildings.
The European-born Laufer, who described himself as a developer "with a social conscience," said that he plans to offer tenants an opportunity to buy in a price range of $60 to $62.50 a square foot, including parking spaces. He said the prices to the general public will start at $70 a foot, plus an additional fee for parking.
Laufer said that no tennats will have to move before Sept. 1. Sales to tenants will begin in May and to others in July. A sales information office was opened this week.
He said the buildings will be brought up to par and that extensive landscaping is planned, partially to provide an attractive demarcation between River Towers and nearby garden apartments.
While declining to say specifically what he plans to do for elderly tenants, Laufer says he is considering one relatively new ownership option for the elderly. It is essentially a "life estate" plan that provides a much lower-than-average price to older tenants who agree that after the r death ownership will be deeded back to the developer or mortgage holder.
"Under no conditions will older or handicapped persons be put out on the street," the 52-year-old Laufer said.
Laufer also said that he would rather build new apartments than convert existing units. "The underlying reason for all conversions is rent control. If there were no controls, more apartments would be built, and it would be difficult to sell converted condo apartments."
Laufer is one of the signers of a recent memorandum of agreement concerning voluntary guildlines to minimize adverse impacts of condo and co-op conversions on low- and moderate-income tenants in Fairfax County. One stipulation is a cooperative effort by the county and developers to provide assistance to tenants who need it.
At woodburn Village I, where Myron Erkiletian and Ronald P. Kirby are the principals in the developer group, a meeting was held with residents to outline planned improvements and recreation facilities. The development group also pledged compliance with the voluntary Fairfax guildlines.
Kirby said the Woodburn goal is to enable tenants to purchase at prices $6,000 to $10,000 below public prices and to allow 20 percent of the tenants to continue renting for up to three years. Sale prices begin the range just above $40,000 and approcah $60,000 for three bedrooms.
Meanwhile, a recent report from Housing Data Reports Inc., which monitors residential sale activity in this area, showed that condo sales in February exceeded those in January by 44 percent and were 78 percent above the sales in February 1980.
There were 2,445 sales of new residences in February, up 42 percent from the January total of 1,716 and 16 percent above the total 2,100 residential units sold in February 1980.
Of the 2,445 units sold in February, the newsletter said that 1,006 were for new and newly converted condo units. However, newsletter executive Renay Regardie said the market hasn't been as strong for large, high-priced apartments and town houses in the District.