Condo Mania

More and more renters are being forced from homes and communities they never expected to leave.

Article Courtesy of AARO BULLETIN
ISSUE JULY- AUGUST 2006

By Barbara Basler

The notice was typed on plain white paper and slipped under each tenant's door last summer like a friendly announcement of a neighborhood party: The Cambridge at 3900 apartment building is for sale and might be converted to condominiums. We cannot accept phone calls from tenants. No cause for alarm.

"I felt sick when I saw that," says 87-year-old Ella Edemy, who has lived in the building on North Charles Street in Baltimore for 26 years. She and her late husband moved there when they retired and sold their home, "and we never expected to move again."

"When I picked up that piece of paper—it was such a blow," says Dena Grenell, 75, who has lived in the 229-unit high-rise for 19 years. "This building is like a small, friendly town where we all know each other. No one ever dreamed it would be turned into condos."

But months later, the Cambridge at 3900—where a number of tenants are age 60 or older—was sold, and in April it became the Halstead at Guilford condominiums, where what was a $1,300-a-month two-bedroom rental now sells for $355,000. In the process, the large, tight-knit community of older tenants is unraveling, leaving many people in their 70s, 80s and 90s facing the end of their known world.

Not only will they miss the good friends and helpful neighbors who live down the hall, but also all the amenities of the leafy neighborhood near Johns Hopkins University, where they can walk to shops, doctors' offices and restaurants.

"When I found this place, I thought good luck was shining down on me," says one tenant in her 90s, who asked not to be named. "But this? Can you imagine me taking out a mortgage at my age?"

In towns and cities across the country, developers have been buying up buildings with tens of thousands of rental apartments, fueling the biggest wave of condo conversions in two decades. The wave began in 2004, and by the end of 2005 more than 260,000 apartments had been taken out of the rental market to be sold as condos, according to the National Association of Realtors.

While the condo market is cooling in many places, "trends don't change instantly," says Walter Molony, a spokesman for the Realtors association. Numerous conversions are already in the pipeline, and a cooldown doesn't mean conversions won't continue in some areas.

In Manhattan alone, some 60 conversions are now pending that would "condo" 7,000 rental apartments. In Minneapolis, the annual number of converted rental buildings soared from four in 2000 to 86 last year—and 42 more were converted by mid-June this year. "We are losing affordable housing at an alarming rate, here and across the country," says Christine R. Goepfert, an attorney with the local Housing Preservation Project.

Housing experts say that no matter how stable a rental building appears—whether in Miami or San Diego or Seattle—tenants are always vulnerable to a sale or conversion. It's simple economics: Healthy urban economies create pressure for close-in, convenient housing. Where undeveloped land is scarce, developers look for older buildings to convert to condominiums, and many of these are buildings where renters have put down roots and stayed and aged.

Converting rental properties to condos can allow some buyers priced out of single-family housing to own their own homes. Many older tenants living on fixed incomes, however, cannot afford to buy their apartments, triggering wrenching moves.

"Moving was a nightmare," says Marion Sjodin, 75. She and her husband have already left the Cambridge for a smaller apartment in a suburb several miles away. "We miss our friends ... it's so sad."

"We know from studies that moving has a huge impact on physical and mental health," says William Apgar, a senior scholar at Harvard University's Joint Center for Housing Studies. "For seniors to face an unknown future, to have their lives disrupted this way, literally makes some ill. And where do they go—some marginal building? Move in with their kids or a relative? Go to a nursing home? This is incredibly stressful."

In Baltimore, the city's Commission on Aging and Retirement Education sent a social worker, a grief counselor and a housing advocate to the Cambridge to help its older tenants through the conversion trauma after one of them jumped to her death from the 11th floor.

"She was still not over the death of her husband several years ago," says one resident who knew her. "And when we got the news the building was going condo, she talked about it all the time and just seemed to come unraveled."

In fact, news of the conversion caused "real panic among some of the older residents," says Ann K. Murray, 58, a 22-year resident of the building. Some started looking for other places immediately and moved as soon as they found anything—forgoing their legal rights.

"It was the stress and uncertainty, they just didn't want to live with it," Murray says.

There are no federal laws governing the conversion of rental units to condos, and state and local laws vary widely. In a few cities—Baltimore is not among them—conversion laws give renters the right to buy at a lower, "insider's" price, and some tenants have made a healthy profit by selling their rights to outsiders. But "turning a 90-year-old into a financial wheeler-dealer is not the model" in most of the country, says Harvard's Apgar.

And for older tenants even the best laws fall short of what they really want—which is for their community to remain as it is.

Generally, condo conversion laws require owners to notify tenants, offer them the right to purchase their units and give them adequate time to relocate. Maryland law offers fairly extensive protections—from strict notification rules to some reimbursement for moving expenses.

Now, amid the dust and noise of the renovations in the building's lobby, the remaining tenants are mulling over their options. They have contacted their Baltimore City Council member, Mary Pat Clarke, who is helping them tap city experts to understand their rights. "I'm working with the ones who are hanging in, and trying to help others find new places," says Clarke. "This is horrible for them. It's a very, very sad ending for the community they had here."

"Mary Pat has held meetings, explained things to us, made sure we understand deadlines," Grenell says. "After all these months we are finally getting information we can use."

Arthur Solomon, chairman and CEO of the DSF Group, the Boston developer that now owns the Baltimore building, says, "I am 66 years old … I know as you get older it's tougher and tougher to make adjustments. This is an issue we are very sensitive to." DSF "went above and beyond what we have to do legally," Solomon says, including providing "nine or 10 pieces of communication" to the older tenants.

What was key for some residents is that Maryland law requires developers converting rentals to condos to set aside 20 percent of the units as rentals for tenants who are age 62 and older, or disabled, and of moderate means. Those residents can qualify for a six-year extension on their lease, and just months ago Baltimore passed emergency legislation increasing the household income cap for extended leases from $47,000 to $59,000.

Many older tenants have applied for the extensions, knowing they are competing against their friends: If too many qualify for the extended leases, those with the shortest tenure, even if it is 10 or 15 years, must move.

"We're all very emotional about this," says Dena Grenell.

Still, says a tenant in her 90s, "I'm hoping against hope I get to stay another six years. I have no family. Where else can I go?" And if she has to go, she will find herself paying more money for less space in a tighter rental market.

How can people avoid finding themselves in a situation like this? While still active, Apgar says, boomers need to create their own housing solutions. For instance, tenants could band together to buy, with financial help from a nonprofit group, their rental building with the agreement that any time residents decide to move, they will sell their rights to live there at a price that perpetuates affordable housing. Without such changes, Apgar says, the next huge wave of conversions "will hit aging boomers, and you'll see the Baltimore story repeated over and over again."

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