The Purchase of a Lifetime

The bank balked. Neighbors grumbled. But these poor tenants would not be swept away in the real estate boom.

The community room filled early that July night in 2002. The tenants of Capital Manor were about to learn how much it would cost to stay in their apartments. Their century-old complex-three 34-unit buildings-was a dilapidated eyesore in a gentrifying D.C. neighborhood.

The tenants knew they had to buy their complex or risk being displaced. They had chosen a developer to guide them through the process. His colored marker now squeaked across a whiteboard at the front of the room. $1,500, he wrote. That’s what each family would have to come up with in the next six weeks.

Looks of disbelief spread through the room. The 25 tenants gathered were dishwashers, janitors, people on public assistance. “How many people do you actually think have that kind of money just sitting somewhere?” demanded tenant association president Deborah Thomas.

Their developer explained that the money was needed to show potential lenders that the tenants were committed to the project, as well as to pay for engineering and architectural studies.

Thomas returned to her apartment with trepidation. Within the hour, her phone started to ring. In Spanish and English, the callers had the same message.

No puedo pagar. I can’t pay.

After a year of hard work, of carwashes and raffles, of meetings and late-night phone calls, the whole plan seemed to be disintegrating before her eyes.

We Won’t Go

Capital Manor’s rebirth as a tenant-owned cooperative started in spring 2001. It finished successfully in November 2005. On the 1400 block of W Street N.W., in a neighborhood that has become one of the most sought-after in the city, tenants whose average income hovered just under $20,000 a year accomplished a $12 million project.

It began when the previous owner, knowing that the building’s affordability subsidies were about to expire, signed a contract to sell it for $3.4 million.

Thomas knew that D.C. law allows tenants of an apartment building to match any purchase offer. She began to spread the word. The tenants formed an association and elected Thomas, who had lived on W Street for nearly 30 years, president. Thomas’s top lieutenants were Peggy Fitzgerald, who had lived at Capital Manor for 28 years, and Osmin Rodriguez, the resident manager who acted as a liaison to the Latino tenants.

The tenant leaders started by inviting a parade of speakers to educate them about the tenant purchase process. In fall 2001, they selected Georgetown’s public-interest law clinic to represent them. The clinic assigned them Aaron W. O’Toole, a 29-year-old lawyer who spoke passable Spanish and had guided three smaller tenant-purchase efforts.

Next, the association interviewed developers. Most offered a low-income tax-credit deal. But these tenants wanted to buy their buildings right away and form a cooperative. “This tenants association has already voted, and we want ownership,” resident Nerissa Phillips snapped at one developer.

Only Jair K. Lynch, 30, said he would find a way. Lynch grew up in D.C. and returned there after winning a silver medal in gymnastics at the 1996 Olympics to launch his own development firm in a restored U Street rowhouse.

Lynch and the tenants agreed on a plan: Refurbish and sell one of the three buildings as market-rate condos, then use the profits to repair the other buildings, which would become a low-income cooperative.

But when Lynch announced the $1,500 deposit figure, people started bailing out. Panicking, Thomas appealed to O’Toole, who said there was nothing sacred about $1,500-it was just Lynch’s estimate of what would cover costs and impress the banks.

“What’s the smallest amount that would impress them?” Thomas asked.

“What’s the most you think the tenants can give?” came the reply.

Together, they agreed to gamble on $500. Only $100 would be due at the July 23 tenants meeting. Tenants would have until September 15 to come up with the other $400.

The day of reckoning was a sweltering evening that felt even worse inside the community room. About 40 people showed up, many more than had been coming in recent weeks. Over the next seven weeks, 55 households put down deposits of $500, or as close to that as they could manage.

The last payment came 40 minutes after midnight September 15, when a woman knocked on Peggy Fitzgerald’s door, panicked that she might be too late. Fitzgerald assured her she was not.

All or Nothing

In September, D.C. housing officials told Lynch the plan was a no-go. Mayor Anthony Williams would not fund a project that would eliminate some low-cost apartments, even in the interest of saving others.

The mayor was running for reelection, and critics were blasting him for doing too little to prevent the displacement of the poor from newly posh neighborhoods. The city had set $25 million aside for housing assistance, and Lynch was applying for $2 million.

Lynch told the tenants association board three buildings would have to go co-op and remain affordable. Nobody would be able to cash in at market rates for at least a decade. Also, the funding decision would not come until December-and an outside buyer was waiting to snap up the complex if the tenants did not close on their purchase by January 15.

Though some members of the board initially found this revision to be unacceptable, ultimately, the decision was up to the entire tenants association, which gathered a week later. After many tenants recounted stories of nearby apartment buildings that had been emptied and turned into condos none of them could afford, the yes vote was unanimous.

The Color Divide

While they waited for the city’s decision, the tenants association worked on recruiting more residents to the project. Nerissa Phillips and Solomon Moreno spent three hours one night preaching the gospel of collective homeownership door-to-door. Phillips and Moreno barely knew each other, although they’d lived in the same building for years. Their joint effort was one of many small interactions unfolding in the complex, which was about two-thirds Latino immigrants and one-third black residents. Until the tenant purchase effort, the two populations rarely mixed.

The tenant board was chosen to include both. Meetings and documents were always translated. At a fundraising dinner, the $5 buffet featured chimichangas as well as chicken wings. Stereo speakers boomed hip-hop, then salsa, then hip-hop again. People who for years had passed each other in the hallways without speaking began exchanging polite greetings.

Little such camaraderie, however, developed with the mostly white residents of the 19 recently renovated upscale rowhouses across the street. The northsiders said they liked the idea of living on a street that was racially and economically mixed. But some owners worried that Capital Manor’s run-down appearance detracted from their property values. They complained about noise-Capital Manor’s intercom system stopped working years ago, so visitors often announced their arrival by blaring car horns. When Thomas proposed that the city build a playground on an empty lot between two rowhouses, the northsiders objected, saying it would become a magnet for thugs.

At a December 2002 neighborhood meeting, the topic quickly turned to crime. Rowhouse owners asked how the cooperative board would keep out drugs and violence.

“There was a shooting there. It didn’t have anything to do with anyone in the building?” one man asked skeptically.

“Absolutely not,” snapped Thomas. The tenants left the meeting seething. The northsiders looked at them, they said, as if they were the drug dealers who sometimes loitered on W Street.

“Don’t group me with drugs,” fumed Michelle Craig, a conventions concierge at a downtown Marriott. “We were here first. And I’m not leaving.”

Home Stretch

Thomas remembers sniffling through a December 21 doctor’s appointment, sagging with anxiety. Then her cell phone rang. The tenants’ application for $2 million had been approved. Thomas burst into tears.

Ownership would mean stability-for her family and her neighbors. “I don’t want my kids to have to grow up and struggle. I want them to have a place,” Thomas would say.

Winning city money was supposed to help the loan application with the National Cooperative Bank, which had tentatively promised a $3.5 million acquisition loan and an $8.1 million construction loan. But Alexandra Johns, a vice president at the bank’s development corporation, called just before Christmas to ask why Lynch hadn’t conducted the usual engineering and architectural studies. He explained that the reduced deposits had meant no money for predevelopment work. Johns balked.

You’ve got to meet these tenants, Lynch told her. You’ve got to see the neighborhood. The two set up a visit for January 6.

It wasn’t enough. The next day the development corporation’s loan committee decided the deal was too risky. Unanticipated construction needs could send costs soaring. What’s more, the funding letter from the city seemed tentatively worded.

Lynch quickly secured a new letter stressing the city’s strong commitment. And he said that if costs climbed, he would persuade the tenants to seek outside investors to preserve the complex as an affordable rental building.

On January 14, loan-committee members reassembled.

They considered the U Street corridor, where prices were rising every month.

They considered the tenants, who had been working toward the purchase for well over a year.

They considered the project team, including Lynch, the former Olympic gymnast, who had cut his fee by 20 percent because the budget was so tight.

“I found myself saying to people, ‘silver medalist,’ “ Johns recalled later. “This is somebody with a history of focus and successful leadership, who’s from this neighborhood and is committed to this project.”

The committee approved the loan to buy the building and said details of the construction loan could be worked out later.

At the closing, the room was crowded with people. Shyly, Rodriguez unveiled a bottle of champagne and glass flutes. O’Toole then opened his own bag to reveal another bottle of bubbly and plastic cups.

When everything was signed and the champagne uncorked, the attorneys insisted that Thomas, Mitchell and Rodriguez drink from the glass flutes.

“Tenants get the real deal?” Thomas joked.

“Not tenants-owners,” Michael Diamond, O’Toole’s boss, corrected her. “Owners get the real deal.”

Congratulations, Maybe

A few days later, a dozen residents gathered under a neon-green “Congratulations!!” banner to toast their achievement. But for a victory party, the mood was dismal. The complex they now owned was falling apart. As home-baked cakes sat untouched at the front of the room, Thomas lectured her neighbors about taking responsibility.

“If you see your neighbor’s kids hitting on the walls or breaking windows or dragging trash through the halls, don’t forget that money to fix those things is coming out of your pocket,” she said. “We can no longer call the owner to say, ‘This is broke, that’s broke…’ We are the owner.”

Hands flew up. Boys from down the block roamed the hallways, smoking marijuana, said one woman. They trailed residents into the building and slipped pennies into the doorframe, jamming the lock. Call the police, urged Thomas, prompting an older man to shake his head. He’d done that, he said, only to have the cops let slip to the youths the apartment number from which the call was made.

O’Toole reminded them to save for their down payments-$2,300 for a one-bedroom, $3,200 for a two-bedroom, cheap for the neighborhood but daunting for those in the room.

“I’m going to be eating a whole lot of hot dogs,” sighed Michelle Craig, a single mother.

The woman next to her nodded. “Peanut butter and jelly.”

The next 18 months were bleak. Renovations were put on indefinite hold because the construction loan was delayed. Basic repairs went undone. Drug dealing and loitering continued outside the complex. One resident was robbed at gunpoint on Christmas Eve.

As the bad news mounted, several families announced plans to move. Cash flow withered each time one of them turned in their keys.

Even committed residents found themselves frustrated by the project’s limitations. Construction funds would have to go toward the basics: sprinkler systems and new roofs, repairs to faulty wiring and worn-out heating and cooling systems.

“Amenities? What are we getting? Nothing,” Sylvia Griffis said during a meeting.

No dishwashers. No Internet connection. Not even a choice of paint color.

“What they’re offering us is a place to stay that is affordable,” countered Mitchell. “A two-bedroom, two-bath in this neighborhood-that’s a half-million dollars.”

Finally Home

Things began to improve in September 2004, after the construction loan finally came through. Renovations took longer than expected, but by mid-March 2005, 1436 W Street was reborn, with new windows, a working front-door intercom and fresh, brightly lit corridors. Every apartment had fresh off-white paint, new carpeting and a redone kitchen. Small sprinkler heads poked from the ceilings like sentries.

With the first building completed, the second was emptied. This time, construction progressed more quickly, but some were not satisfied. Rodriguez, now tenant association vice president, complained that the floor of his apartment sagged just as it had before the renovations. Contractors said the building’s foundation had sunk, but Rodriguez was not convinced.

“It hasn’t gone half the way I wanted it to go,” he said shortly before moving back into his old apartment in mid-July. “It’s still great, but it’s not as great as I thought it would be.”

Renovations of the last of Capital Manor’s buildings were completed Thanksgiving week 2005. But the transformation of the complex was still underway.

Thirty new households still had to be selected to fill empty apartments. Applicants could not earn more than 80 percent of the area’s median income. Their down payments had to be $12,000 or $20,000, depending on unit size-much more than what the original residents paid. Lynch calls the arrival of more moderate-income families “managed change.”

A mix of incomes is a good thing, he said-“the middle ground between stagnation and gentrification.” The next stage, he added, “is to really start building the bonds, the glue.”

Lynch was talking about the new and old members of the co-op. But on W Street, the challenge also extends to forging ties with the mostly white, mostly affluent homeowners across the street-many of whom still regard Capital Manor as a blight. They hate the bright new security lights, which shine into their bedrooms, and they don’t understand why there wasn’t enough money to spruce up the facades.

“Their renovation hasn’t been some great boon to the neighborhood,” said Kurt Ehrman, a government lawyer. “It hasn’t been a boon to my home equity.”

Residents of Capital Manor grouse that northsiders rarely come to their block parties or even greet them on the sidewalks. They find the Orange Hat patrols of the block, launched by the Meridian Hill Neighborhood Association, intrusive. The young men on the corner do not need to be shooed away, said Craig, 50. “They’re not all drug dealers, they’re not all going to rob you. They have jobs, but they get together and hang.”

Here for Good

One Sunday morning in late 2005, Thomas and her mother stopped in at an open house at their old apartment building down the block, now reborn as condominiums and called “The Hamilton on W Street.” The kitchen cabinets were cherry, the countertops granite. Appliances were shiny stainless steel. Prices started in the high $300,000s and topped out at $545,000.

Then they walked down the block to Capital Manor. Thomas, part-owner of a multi-million-dollar cooperative, unlocked the door and entered the apartment she will one day leave to her children.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.