Many residents of 1421 Columbia Rd. NW are first-time homeowners who bought their condominium units four years ago with financial help the District of Columbia offers to low- and moderate-income families.
But instead of savoring the pleasures of their homes, they are struggling to cope with the complexities of condo ownership, often fighting with each other, the developer and the city. They have no experience in condominium or other types of ownership and say they have received little in the way of help or advice from District officials.
Although the city has millions of dollars invested in the building, beneficiaries of the program and some lawyers who have tried to help them say it is doing little to protect its interests while the owners struggle to hang on to the building.
The Columbia Road condominium is one of a number of low- and moderate-income homeownership ventures the District government has helped launch and then cut adrift, said residents, attorneys and others who work with the projects. Most of these owners do not know what to expect from, or how to deal with, developers who are doing the work on their projects.
Several District officials said they did everything they could for the Columbia Road project, as they do with others. Developer Joseph E. Pignataro got a $1.5 million, interest-free loan from the city to rehabilitate the Columbia Road building, and several residents received interest-free second mortgages from the District's Department of Housing and Community Development to help purchase their units.
The city sent inspectors "to see that the work was done in accordance with the plans and specifications" that were submitted by the developer and approved by the District, said Benjamin E. Carter Jr., chief of the Housing and Community Development Department's maintenance engineering branch.
Although residents complained that the developer did not honor warranties or complete all the work he was supposed to do, the city "could only hold him responsible for what was in the contract . . . . If he made any promises to buyers we have no control over that at all."
Others disagree. If warranties are not honored, "the city ought to be more aggressive" about coming to the aid of low-income buyers who "have spent all their money to buy their units" and don't have the resources to go to court, said Rick Eisen, an attorney who frequently works with low- and moderate-income owners and has advised the Columbia Road owners. "A lot of city money is involved in these situations, and they are not protecting it."
Problems at 1421 Columbia Rd. that should have been corrected by the developer and were not, according to a member of the condominium association board of directors who asked not to be named, include an uneven and potentially dangerous rear stairway, buckling floor tiles, lack of ventilation in hallways, weak floors, and faulty installation of air conditioners.
The condominium association is no longer trying to get repairs made, the board member said. "Our main gripe is that Pignataro is not paying his part," because he has not paid any condo fees for units he still owns. The condominium association estimates that the developer owes about $11,000 in condo fees, according to the board member.
Pignataro said what the unit owners "are saying is not true." His company and the city housing department "did everything we possibly could to make those people happy," said the builder, who is managing general partner of Columbia-Harvard Limited Partnership, which owned and rehabilitated the building. Pignataro said he believes the company has sold all the units it owned in the building. He agreed to check and call a reporter back but did not.
The developer denied being in arrears on condo fees.
"We the condo association and the developer have an agreement that every time sale of a unit is settled, the condo fees are brought up to date. I have that on tape," Pignataro said.
Under D.C. law, the developer must pay condominium fees on any unit he owns, according to Byron L. Hallsted, chief of the city's condominium and cooperative conversions office. "We wouldn't say one way or another" whether an agreement such as the one described by Pignataro complies with the law because the condo office does not have authority to interpret the law, he said.
Every first-time owner, "whether rich or poor, needs an educational background as to the responsibilities" of condo ownership but frequently does not get it, said attorney Benny L. Kass, whose law firm works on many condominium conversions.
Former tenants, accustomed to using rent strikes as a weapon against landlords, often withhold their fees as a way to protest condo association decisions or inaction. This starts a "cycle downward" in the financial fortunes of an association, Kass said.
There is widespread disagreement among condominium and cooperative owners, their attorneys, and District officials about what the city can and should do to aid and educate buyers. Kass believes the District's condominium and cooperative conversions office "has a limited responsibility" to educate first-time buyers. "If city money is involved maybe they should do something" to assure that developers honor warranties, he said.
In addition to loans for developers, the Department of Housing and Community Development provides loans to low- and moderate-income buyers through its Housing Purchase Assistance Program. Buyers must get a conventional first mortgage, and then can get an interest-free loan up to $16,000 for the purchase of a single-family homes or a cooperative or condominium units, according to William N. Hobbs, of the housing department. Most borrowers repay the loans at a rate of $45 a month, although some buyers can be exempt from making payments, he said.
At the heart of many disputes is use of bonds or letters of credit developers must post when they begin condominium conversions or construction of new condos. The letter of credit or bond must be equal to 10 percent of the cost of construction or converting a building, according to Hallsted.
In the case of 1421 Columbia, attorney Eisen asked city officials to collect on the developer's letter of credit so that the condominium association could use the money to make repairs and do other work. City officials refused, saying they needed a court order first.
Eisen interprets the law as giving the District authority to release funds from bonds or letters of credit. He said the city's action in not doing this for the 1421 Columbia condo association "was not illegal . . . but it was bad policy."
Although the city may not have the authority to call a bond, it could say to developers accused of not fulfilling their commitments, "let's have a meeting," said Kass. "There's poker playing that could be done."
Hallsted contended, however, that city officials had no authority to call Pignataro's letter of credit without a court order.
The law says bonds and letters of credit can be used only for work on structural defects but does not define structural defects, according to Hallsted. "The city won't pull down money from bonds and letters of credit because it feels a judge must rule on what is a structural defect."
Responsibility for the Columbia Road building lies with the housing department, which "structured the condominium" and selected the developer, said Hallsted, adding "all we do here is collect documents."
At the housing offices, however, Benjamin Carter said the department could do nothing more. "We have had some other complaints" that Pignataro had not done "certain things" in other projects. "In many cases we have gone back to the plans and specifications and found he had done what they called for," Carter said.
Another point of dispute is whether District officials should be required to educate new condominium and cooperative owners in the complexities of ownership, particularly low-income buyers.
The condo and coop office, which is part of the Department of Consumer and Regulatory Affairs, is not obligated to train owners, "but we are consumer educators," said Lucenia Dunn, a department spokeswoman. "If a situation like this comes to our attention, if at all possible we will let the public know what the law is.
"I think with this case being brought to our attention we will begin to do more [consumer education] . . . ," she said. "We will have to look very carefully" at needs of condo and coop buyers "and begin to develop programs to inform them better about what they are getting into."
The housing department gives technical assistance to tenant groups who buy their buildings.