Things are not always as they seem at the Park Place Condominiums in Alexandria.

For instance, the majority of the residents are not owners, as is true of most condominiums, but are tenants. Only seven of the 417 units are occupied by their owners.

The unit owners -- who are scattered across the United States -- call themselves investors rather than landlords, investors attracted to the development because of the tremendous tax benefits of the deals set up by the developer rather than because of the real estate itself.

But these tax benefits are becoming gradually less attractive, and nearly 90 of the unit owners have stopped paying on their mortgages, further confusing the question of who owns and runs the condominium.

And now the property manager says the condo isn't really a condo, challenging the 1985 tax assessment levied by the City of Alexandria by arguing that because most of the units are rented, the building should be assessed as rental property.

"There's a certain amount of confusion among the tenants," said Georgia Sacher, president of the recently organized Park Place Tenants Association. "They aren't exactly sure where to go if they want something fixed."

When the building was converted to a condominium in 1984 and the units were sold, most of the owners signed up with an independent property management firm to handle leasing, collecting rents and taking care of maintenance problems.

Recently, however, owners of 50 units -- most of whom are from the Washington area -- have decided to take over maintenance of their units themselves.

"We organized because we're concerned about the split ownership and responsibility and how it has or could affect maintenance," Sacher said. "We're doing an investigation of our own to try and figure out what is going on. It's been hard to know what is happening."

Mark Looney, coordinator of landlord-tenant relations for Alexandria, said that, although only a few condominiums in Alexandria are predominantly investor-owned, the trend is toward more investment ownership.

"We're concerned about the problems that could come up if there's a lot of confusion like this," said Looney. "What's happening at Park Place could be an early warning of possible future problems in other buildings."

Many of the present tenants at Park Place lived there when the triple-tower high-rise at 2500 N. Van Dorn St. was sold to a developer interested in converting it to a condominium.

According to the Alexandria tax records, Compson of Park Place Inc., a Virginia corporation, bought the building for $12.8 million in September 1983. Only six months later, Park Place Development Corp., a subsidiary of Consolidated Financial Services of Santa Ana, Calif., bought controlling interest in Compson for $5.5 million.

Park Place Development Corp. established the building as a condominium and quickly sold units to investors from across the United States. In a prospectus distributed to potential buyers, Park Place said investors could buy a condo with 10 percent of the purchase price as a down payment. The prospectus also said, however, that investors could get 9 percent of the down payment back as a second loan on the unit to cover operating expenses.

"What that meant was that investors went in for 1 percent," said local real estate agent Jack Horner. "It was designed to produce a negative cash flow for investors, and that's why people bought."

Condos at the complex sold for amounts from $44,000 for an efficiency to $110,000 for a three-bedroom unit, which the management company agrees were "at the top of fair market rates at the time."

In a typical deal, the investor could purchase a $70,000 unit by putting up $700 cash and getting a mortgage that had graduated payments starting at an interest rate of about 9 percent. The overall effective interest rate on those loans, however, was 12 1/2 percent, which meant that the amount of money owed on the unit would increase rather than decrease during the first few years of the loan as the unpaid portion of the interest was tacked on to the principal.

In addition to getting a low down payment, the investor could depreciate the unit as a rental property over the next 20 years, increasing the amount of tax deductions that the investment would yield. The depreciation also could be taken under an accelerated schedule, yielding higher depreciation in the early years of the investment.

With most of the tax and investment benefits front-loaded in the first few years, it is not surprising that many of the investors now are trying to walk away from their investments, Horner said.

According to Looney, more than 90 of the investors have become delinquent in their mortgage payments. Under the terms of the loans, given by Alliance Mortgage Co. of Jacksonville, Fla., monthly payments begin to increase after the first few years.

Representatives of Alliance Mortgage could not be reached for comment. However, Elmer Chaser, president of Progressive Management Co. of Dallas, which manages the condominium, said that Alliance has not started foreclosure proceedings against any of the delinquent investors.

Chaser said that he is challenging the 1985 tax assessment on the basis that other condominiums and rentals in the area are worth less per foot than what the city claims Park Place is worth.

"They've appealed their 1985 assessment on the basis that, because there are tenants paying rent, the property should be assessed as a rental building," said David Chitlik, tax assessor for Alexandria. "As far as we're concerned, though, the minute a single unit was sold they became a condominium, and that's how they should be assessed."

Chitlik said that the building was assessed according to the sales prices of the units sold as condos last year. The 1985 assessment is based on the fair market value, which totals $18.84 million. The building was assessed at $10.1 million in 1982 and 1983 and at $12.3 million in 1984.

"The way the deals were structured, the tax benefits were pretty fantastic, and the investors were willing to pay top-of-the-line prices," Chaser said. "But we say that does not establish market value. The market value should be closer to $60 a square foot similar to other properties in the area , not the $80 a square foot they say."

Chaser has requested that the assessment be dropped to $15.57 million. Alexandria's Board of Equalization will consider the appeal Thursday.