The controversial owner of the embattled Promenade apartment complex in BeT thesda appears to be having difficulty selling the units as cooperatives and plans to rent some of the apartments to new tenants on six-month and one-year leases.
Tenants who for the past year have vigorously protested the conversion of their apartments to cooperatives immediately claimed the renewed leasing a victory for their side and called it an indication that the entire conversion plan is in trouble.
The giant conversion company that owns The Promenade -- American Invsco of Chicago -- is losing so much money on unsold apartments that it also is asking current renters to stay, the tenants say.
A spokesman for American Invsco confirmed the rental plans but strongly denied the tenants' interpretation of them as a "retreat" from conversion.
The renewed renting is being done on only a small number of units and is part of an overall sales strategy, said project manager Robert Gould. It does not indicate that conversion plans for the apartments are in trouble, he insisted.
"They obviously are in trouble," countered Saundra Hardbower, vice president and treasurer of the Promenade Tenants Association Inc. The leasing plans, she added, "are definitely a retreat."
American Invsco, the country's largest converter of rental units, has been enmeshed in a long, bitter protest by the tenants ever since it announced its plans in July 1980 to convert The Promenade to cooperative ownership.
The project and the company's practices became the focus earlier this year of congressional hearings on the nationwide burst of conversions of rental units into condominiums and cooperatives. The hearings were held by the subcommittee of Rep. Benjamin Rosenthal (D-N.Y.), on commerce, consumer and monetary affairs, and a staff aide said the subcommittee continues to have an interest in the outcome of The Promenade fight.
After the conversion plans were announced last year, tenants organized into an association, began picketing on weekends and brought lawsuits against American Invsco. Recently, however, citing a technicality, the Maryland Court of Appeals threw out the group's court challenge to the conversion.
American Invsco so far has sold less than half the 1,071 units, project manager Gould said. But, he added, sales "are moving quite well. We are doing as well as any other comparable project in the area and better than many."
This assessment was disputed by a staff aide for the House subcommittee that held hearings on the conversion issue.
"The housing market is not good anywhere, but others are not having the problems of The Promenade," said subcommittee general counsel Theodore Jacobs.
"The name of the game in a conversion is a quick sellout," Jacobs said, and American Invsco particularly has a reputation for fast conversions -- completed in 1-to-11/2 years -- because it uses an intensive sales campaign with a large sales force.
"American Invsco has realized it cannot sell the apartments, so it is reverting to a rental status," something he believes the company has never had to do before, Jacobs said. "From the standpoint of the tenants, it definitely is a victory."
Project manager Gould said only a small percentage of the complex's 450 "deluxe one-bedroom" apartments are being offered for rent to new tenants, in classified ads beginning today. He declined to give an exact figure for the number of apartments or the amount they are to be rented for, but said the leases would be for six months or a year. While deluxe one-bedroom apartments rent for about $400 to current tenants, newcomers will be offered the units at $650 a month, tenant sources said.
Every unit in the building is still for sale, Gould said, adding that the leasing is merely "an adjunct to sales."
"We don't want to have an active leasing program. We're going to be renting to people who could be potential purchasers after they've lived here for six months," he said.
Last week 38 tenants on month-to-month leases who hadn't had rent increases in at least a year received notices of an increase on Oct. 1, but also were told they would be given 90-day notices to leave whenever their apartments were sold. The company plans to give the same notification each month to tenants who have gone a year without a rent hike, Gould said.
The extension of the leases will continue indefinitely, and many of the current tenants will be able to continue renting for six months to a year, he said.
One indication of financial problems American Invsco is having with the project is the amount of borrowing they have done, members of the tenant association claim. The corporation was forced to borrow $8 million in May from Chase Manhattan Bank to cover operating expenses, they said. This was in addition to the $29 million loan the converter got from Chase a year ago to buy The Promenade at a total cost of $49 million.