- The Washington Times - Tuesday, May 15, 2007

In the middle of winter — with the elevator broken again — tenants at the Norwood apartment building in Northwest slowly trickled down the stairs to the lobby to hear a developer’s condo-conversion pitch.

Most knew before the meeting started that they weren’t interested. They instead wanted to know when the bedbugs would be gone, when the heat would function properly, when the black mold spreading on the walls of several apartments would disappear.

Most of all, they just wanted to be able to stay in their homes — as renters.

Tenants at the Norwood and other buildings in the District have pushed back against the Tenacity Group, a developer that specializes in converting apartment buildings to condominiums in the District and Maryland.

Tenants rights groups say the company is chipping away at an already diminished supply of affordable rentals by using aggressive tactics on uninformed residents. The city’s Office of the Tenant Advocate is looking into the company’s actions.

Norwood tenant Randy Green said that by pushing a condo conversion Tenacity was helping the landlord shirk responsibility for long-festering maintenance problems.

“When we started complaining about the conditions in the building, [the owners] said, ‘Oh, it’s time to go condo,’ ” Mr. Green said. “They decided to sell at a profit and make me pay for the maintenance that they had neglected to do for all those years.”

Tenacity officials say they provide a valuable service by creating homeownership and “wealth creation” opportunities for low-income people stuck in the rental rut. They deny their tactics are aggressive and say the meeting at the Norwood is proof of that: After the residents made it clear they didn’t want a conversion, Tenacity left them alone.

Tenants in the District have far-reaching rights. There are strict limitations on rent increases, and landlords who want to sell their buildings or convert them to condos first must contend with tenants. In response to a conversion boom in the late 1970s, the city passed strict controls on the process that includes giving tenants the first opportunity to purchase a building that is put up for sale. Condo conversion can take place without a sale, but only if the tenants approve the plan in an election.

Affordable-housing advocates say such controls are necessary to ensure low-income people are not excluded from the city’s central neighborhoods. As in many cities, condo conversions and soaring real estate prices have pushed out many poor and middle-class residents.

From 2000 to 2004, the District lost 7,500 rental units costing less than $500 a month and 15,000 costing $500 to $1,000, according to the D.C. Fiscal Policy Institute. Although some condominiums are being converted back to rentals after the peak of the condo market last year, the focus is on high-end rentals, not affordable ones, said Angie Rodgers, a researcher at the institute.

Housing rights advocates say the District’s tenant protections function well when tenants understand their rights. But they worry that some people may be getting steamrolled and might not know enough to ask for help.

Tenacity makes deals with residents in buildings about to be sold. If tenants want to take advantage of their purchase rights, Tenacity will handle the process for them, oversee renovations and provide financing from its own mortgage company. Tenants can buy their units for below-market prices or vacate the building for a negotiated payoff. Tenacity makes money by selling the vacated units.

However, at the Norwood, the situation was different because it was an owner-driven process. In that case, the owner did not have a buyer, so Tenacity was asked to go directly to the tenants. The idea was to circumvent the yearlong process that would have been triggered automatically had the landlord first found a buyer, said Erik Bolog, managing partner of Tenacity.

Karen Robinson, a spokeswoman for the D.C. Department of Consumer and Regulatory Affairs, which includes the Office of the Tenant Advocate, said the agency is aware of about 20 buildings whose tenants Tenacity has approached in that manner. The office is gathering information on the situation after protests by tenant rights activists, but Mrs. Robinson declined to comment further.

In its conversions, Tenacity guarantees financing for any tenant who wants to purchase a converted unit.

“The problem with that is that many of the residents wouldn’t qualify for a prime or even a legitimate subprime mortgage and would end up losing their units,” said Michael Diamond, who helped write the District’s conversion control and tenant purchase laws and directs a housing clinic at Georgetown University Law Center.

Mr. Bolog says Tenacity has converted more than 65 buildings in the District and has never had a foreclosure.

Critics also say companies such as Tenacity take advantage of naive tenants, particularly immigrants, who may be lured out of an apartment by easy cash without realizing how hard it will be to find another affordable rental in the city.

Mr. Bolog said intimidation has never been part of Tenacity’s approach. “There is no hard sell,” he said.

Tenacity wrote to the Norwood tenants in December about a conversion. At the same time, a new management company — one that Tenacity typically uses during conversions — took over.

The residents, who had organized a tenant association to protest conditions in the building, were alarmed. After consulting a lawyer, they decided to meet with the developer’s representatives to show they were united against the plan.

At the meeting, they rejected the conversion offer and demanded that the building’s widespread maintenance problems be addressed immediately. But Tenacity said that without a conversion deal, the company bears no responsibility for maintenance.

Mr. Bolog said in the deal Tenacity was offering Norwood residents, each tenant would have had a chance to purchase a unit, take a buyout or remain as a renter.

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