Tenants of the Falkland apartments in Silver Spring are hoping to talk a developer out of purchasing and rehabilitating their apartment complex because they would like to buy their units.
The fate of the Falkland, which has been bogged down in an unusually heated tenant-landlord fight over the last two years, appeared to be decided last week when Montgomery County Executive Charles W. Gilchrist gave final approval to a proposal from Crow, Terwilliger and Michaux Inc. to purchase the complex and renovate it with $26 million in tax-exempt bond funds.
The tenants fought the proposal, saying that, even though the developer would be required to set aside 20 percent of the units for low- and moderate-income tenants, many residents would be displaced once the developer raised rents to cover the costs of the rehabilitation.
Sharon Sherril, president of the Falkland Tenants Association, said this week, however, that the tenants have a plan for converting the project to a cooperative under which all existing tenants could purchase their units, and that they will be asking Crow to sell them its contract to purchase the 479-unit complex near the Silver Spring Metrorail stop.
Rents at the complex today range from $350 to $495 a month for a one-bedroom unit, from $434 to $690 for a two-bedroom unit and from $618 to $725 for a three-bedroom, according to a survey by the Montgomery County Housing Opportunities Commission.
Under the proposal from Crow, 90 units would be available for families at 50 percent of the Washington metropolitan area's median income of $36,600. In addition, 35 more units would be priced at levels affordable for families at 65 percent of the area's median income. The developer also has agreed to keep the entire complex as rental units for 15 years, as required by the Housing Opportunities Commission for any project financed with tax-exempt funds.
Crow said that rents for the 90 units set aside for families with incomes that are 50 percent of the area median would be $385 a month for a one-bedroom unit, $425 for a two-bedroom unit and $465 for a three-bedroom unit. Rents would be slightly higher for the 35 units priced for families at incomes that are 65 percent of the median income.
Under Crow's proposal, monthly rents for the 325 market-rate units would range from $460 to $550 for a one-bedroom unit, $560 to $610 for a two-bedroom unit and $670 to $840 for a three-bedroom unit.
In an attempt to keep their units affordable, the tenants have put together a plan that calls for converting the complex to a cooperative consisting of two sections, one that restricts appreciation so that the units could remain affordable for low-income people, and another that lets appreciation of units float with the market.
Limited-equity cooperatives, or cooperatives that artificially keep unit resale prices low for a certain period of time, have been developed before, but combining limited-equity units and market-rate units in the same complex is a relatively unusual proposal, housing analysts said.
Sherril said the goal of the tenants association was to devise a proposal that would allow existing tenants -- even those with fixed incomes -- to purchase their units.
The Falkland, which was developed in the 1940s, is considered a significant early example of garden-apartment design. It was the first FHA-insured multifamily project in Maryland. The project never has been rehabilitated significantly and, according to Crow, needs extensive renovations.
Sherril, however, said that the key to the tenants' conversion plan is limiting the extent of the rehab. While the tenants would replace the roof, they plan less extensive work and would leave interior renovation up to the individual purchaser.
While the tenants do not have a final financing plan in place, Sherril said they had a "letter of interest" from one lender and had developed a rate scale that would allow current residents to purchase units in the co-op for prices ranging from $27,000 to $31,000 for a one-bedroom unit, from $39,000 to $50,000 for a two-bedroom unit and $61,000 for a three-bedroom.
Prices for the 90 limited-equity units to be set aside for low-income people would range from $20,250 to $20,925 for a one-bedroom unit, from $25,350 to $30,000 for a two-bedroom and $35,075 for a three-bedroom. Units sold to the public would be more expensive, ranging from $32,400 to $73,200.
"Affordability is the key," Sherril said. "Monthly mortgage payments on most of the units would be lower than Crow's proposed rents, and the down payments would, in most cases, be about equal to security deposits residents have paid to rent these units."
Catherine B. Hare, development director for Crow, said that Crow's contract to purchase the property "is not for sale," but that the company would consider any offer the tenants presented. Hare said that Crow is going ahead with its plans to purchase the property with the tax-exempt funds on Aug. 9.