Housing Complex

American Dream Gone Awry: Tenants in Columbia Heights thought buying their apartments would be easy. They were wrong.

Claudia Moreno, the president of Randolph Towers' coop board, is fighting to keep the building out of foreclosure. (Darrow Montgomery)

Claudia Moreno, the president of Randolph Towers' coop board, is fighting to keep the building out of foreclosure. (Darrow Montgomery)

It was the kind of deal nobody in her right mind would refuse: It’s 2005, and the owner of an apartment building in Columbia Heights wants to sell. But instead of dealing with a new landlord, the District of Columbia government offers residents an alternative. Waiving its normal credit standards and contribution requirements, the city would issue low-interest loans for tenants to purchase and completely renovate the complex at a below-market price. All for only $500 down per unit, payable in installments.

The mostly low-income, Latino residents of Randolph Towers, a 146-unit complex on 14th Street NW, leapt at the chance for pain-free homeownership. The strategy: Get enough tenants to qualify for loans through the District’s Home Purchase Assistance Program (HPAP) to secure $2.3 million as a down payment to purchase the building as a cooperative, exempting them from property taxes for five years. After renovations, each tenant would obtain their own financing to buy their unit as a condominium, shepherded along by the Central American Resource Center (CARECEN).

“They thought it was an excellent opportunity,” says Sandy Land, who has been living there since 1973, and now serves on the co-op’s board. “It’s now four years later. And a lot of things have happened.”

They sure have. Four years later, about 30 households have moved out. Only three former tenants have bought their units. The rest have been stymied by the economy and red tape, while interest on a $19 million loan piles up and the bank threatens to foreclose, potentially displacing scores of people who thought they’d be homeowners by now.

“It’s a mess, it’s a mess,” says the coop board’s irrepressible president, Claudia Moreno. “We don’t know nothing. We are getting experience like babies. So we can say now that the first board made a lot of mistakes. But any board, we are gonna do the same thing.”

In 2010, it’s easy to write off Randolph Towers as just one more casualty of the Great Recession—and the insane housing market that brought it about. After all, if people needed an installment plan to scrape together a $500 deposit, why would anyone lend them money to buy a $200,000 condo? But it’s also a story of city mismanagement, infighting among a group of people who barely knew each other starting out, and perhaps too much faith in the gospel of homeownership. With the power of hindsight, here’s how things fell apart.

Snag No. 1: Part of the appeal of buying Randolph Towers was the promise of upgrading the moldy, rat-infested building into something livable. When the architects finished their assessment, though, the needs were more drastic than anticipated: Most of the pipes would have to be replaced, and asbestos removed from the walls. On top of all new kitchens, bathrooms, appliances, and floors, the bill came to about $11 million—more than the tenants had paid for the building itself.

Snag No. 2: When the Department of Housing and Community Development issued HPAP loans to the initial 46 tenants who qualified, it promised that those who hadn’t received the money could apply after the renovation, which finished in early 2009. By then, however, power had changed hands in the Wilson Building, and the Fenty administration decided to interpret the rules for the loan program more strictly: Because everyone in the building had bought into the co-op, they were technically no longer first-time buyers—one of the requirements for the loan—and therefore couldn’t qualify. And when residents with HPAP loans tried to get the rest of their financing, the co-op purchase showed up as a mortgage on their credit reports, which was enough of a reason for cash-strapped banks to turn them away.

“That threw a monkey wrench into the whole process of what we were doing,” says Charles Rinker, the group’s financial consultant through CARECEN, noting the mounting frustration among the tenants–turned–co-op members. “They thought the city was going back on their commitment to the project, which in some sense it was.” The city says that’s not true. “Once the building became a co-op, we couldn’t use that same funding,” says Angelita Colon-Francia, a DHCD spokeswoman. "It's just written that way."

After much back and forth, DHCD agreed to help the tenants with a different source of funding. But it would require everyone in the building who needed the loans to go through Housing Counseling Services yet again to re-qualify for their loans and be presented as a group. Organizing that in 2010—when many former tenants have lost their jobs, are tired of five years of jumping through bureaucratic hoops, and fear they won’t qualify anyway—looks to be virtually impossible.

“It’s been an exhausting journey for all of them,” explains Ruth Coppage, a realtor CARECEN brought on to coax people through the process. “They have choices, they just need to be proactive. You cannot force people, you cannot pull people all the way to the end.”

Snag No. 3: With interest on the renovation loan accruing at $5,000 per day, paying down the co-op’s principal became critical. The plan had been to do that by selling empty units to outside buyers, which started in the spring of 2009 after the building qualified under Federal Housing Administration guidelines and the co-op board found a realtor to take on the project. But with more and more real estate available around the city at bargain-basement prices, the condos sold at a rate of about one per month—to date, only enough to pay back about $1.25 million on the actual loan, with the rest going to interest. The deadline was extended twice, but Eagle Bank—under pressure from federal regulators to get bad loans off its books—refused a third extension, and could now foreclose any time with only 30 days notice. DHCD's Colon-Francia emphasizes that the co-op's failure to sell their units has been the biggest problem.

Snag No. 4: The moment the building became a co-op, what little the residents had been paying in “rent” went to pay for utilities and other operating expenses. But the original rents were too low to cover those costs—never mind a mortgage. Still, for the first three years after the conversion, the co-op board never raised fees. This February, pressure from the bank forced the new board to bring payments in line with the actual operating cost of the building. But the co-op bylaws only allowed increases of 10 percent at a time, so the board asked residents to agree to a 25-percent hike, which would have meant several hundred dollars a month more for most of them.

The vote failed, naturally. Worse, the fight divided the building against itself. And as the co-op board kept stumbling, many residents—including the former president—began suspecting their new elected leaders of skimming money off the top. A few even stopped paying their monthly fees, daring the board to do anything about it. When the board sent around a letter a few weeks ago asking residents whether they wanted to move forward with purchasing their units, the dissidents complained to Ward 4 Councilmember Muriel Bowser, claiming they were told to move out.

“They’re procrastinating, because they know they’re not going to qualify,” says Land. “But instead of facing up to the fact that they cannot buy, and finding another place to move to, I think they like the area, they have family and friends in the area...It’s very easy to stay here.”

Things came to a head in mid-June, when a few dozen residents crammed into a small basement meeting room with the co-op board and Housing Counseling Services Director Marian Siegel, whom Bowser had asked to help break through the internal gridlock. Speaking slowly, with Spanish translations every few sentences, Siegel re-told the story of how the tenants-turned-“owners” ended up in their current predicament, and finished with a stern message.

“Ultimately, Eagle Bank will be forced by the regulators to foreclose,” she said. “If you were tenants, you would have more rights. In fact, you’re all co-op owners. As owners, you would be forced to move out.”

The hostile questions began immediately. A former co-op president presented a list of 35 signatures supporting a petition for Moreno’s ouster. One man wanted to know if the co-op board members themselves were moving forward with DHCD’s new procedure. While Moreno fought back tears, Siegel came to her defense.

The meeting ended and people filed out. But it’s unclear whether they got the message—or whether they fully understood what was going on from the beginning. Many don’t speak English, and some can’t read Spanish, either, making the concept of co-op ownership that much more difficult to grasp.

“We are culturally different than the North Americans. We are used to paying our bills, but we pay most of them in cash,” said Raul Rodriguez, who was CARECEN’s point person on Randolph Towers before Coppage took over. “Most of the population here don’t speak any English, don’t know how to write checks and use a checking account.”

“A lot of people who were purchasing, they were not educated. They didn’t know what was going on,” Rodriguez continued. “They were not able to understand that they were co-op members, and as co-op members they were owners of the building, even though I explained that over and over. They just kept saying they were paying rent.”

Randolph Towers certainly isn’t the only tenant purchase to have collapsed, half-finished, in an economic earthquake. But it might be the one mired most in D.C.’s bureaucratic muck. By encouraging the purchase, switching policies at a critical moment, and then acting slowly to help residents find an alternative, the city helped turn a tough situation into a fiasco.

After watching the whole mess develop, Sandy Land has an analogy for DHCD’s clumsiness.

“It’s almost like this BP oil thing,” she says. “From day one, all the foreign countries that had all this expertise in catching the oil, the government said ‘thanks but no thanks,’ because it has to be transported on a U.S.-owned ship. It took them two months to get that first group going.”

“It’s that kind of government screwup.”

  • Sally

    Suddenly, it's not so bad having a landlord.

  • WARD4NDC

    I wonder how many of these uneducated and non English residents are legal or have a Green Card? If they are illegally in the United States, I hope the building is foreclosed on along with others overcrowed with Central Americans.

  • WARD4NDC

    Correction:

    I wonder how many of these uneducated and non English speaking residents are legal or have a Green Card? If they are illegally here in the United States, I hope the building is foreclosed on along with other overcrowed building with Salvadorans/Central Americans.

    The majority of Salvadorans living in D.C. are uneducated, lower class, and they live like animals with lots of out of control kids. I've lived around these animals for too long and I wish they would go back to El Salvador and take their nasty habits with them.

  • Delores Anderson

    It never ceases to amaze me that when there is an article on affordable housing some jerk writes in with such racist remarks. Why refer to a group of people as animals. We should be focusing on how to save this proeprty. These folks are the same people cleaning your offices, your homes ,serving you food and doing other jobs that pay crap but are necessary because we have so many people in DC who feel entitled to having brown and black people wait on them.

  • WARD4NDC

    Delores are you on "crack"? For the record, my skin tone in brown, not black. There are no Salvadorans/Central Americans cleaning my home. I clean my own home. Have you ever lived around these people? Many of the apartment buildings in Ward 4 has been destroyed by Salvadorans/Central Americans and their many children. How can 6 or 8 people live in an studio or one bedroom apartment? This is unsanitary. I had a 18 year old Salvadoran to call me a black mother fucker in English because I reported her and others living in an one bedroom apartment for making too much noise. I find Salvadorans to be very racist towards blacks. By the way, I speak Spanish fluently. Please watch the video below regarding Afro or black Latinos being discriminated against by mestizo and white Latinos.

    http://www.youtube.com/watch?v=zCCRCcw9MrY&feature=channel

  • David

    @WARD4NDC Your "explanations" for your racism don't make you sound any less bigoted.

    -Please don't feed the trolls.

  • tom veil

    It's not a big deal, but I don't think Randolph Towers is in Columbia Heights. If this building is where I think it is (the article lacks an exact address) then it's a couple blocks north of Spring Road, and therefore in 16th Street Heights.

  • Adrian Bent-Me

    Ward4- the same predicatment happens to poor blacks in DC as well. And for decades, many of these inner-city housing projects were predominantly made up of blacks, who lived in what you would consider unsanitary conditions. It's a universal problem, one that is not limited to race but rather determined by income. These residents, unfortunately got duped into believing one thing when in fact, it turned out to be something completely different. It is very hard for very low-income folks to become homeowners and to live as cooperative is sometimes the only way of keeping their homes. Unfortunately, this takes vast resources and a lot of cooperation from the members. This obviously has not happened. I hope they get this resolved without any more families being displaced.

  • WARD4NDC

    Adrian Bent-Me, at least these ghetto blacks are U. S. citizens. Many of these Salvadorans/Central Americans are here illegally and should be provided housing with U.S. or District tax dollars. There are many Coop's in the city going under. My brother lived in one of the oldest Coop's in the city and it went under in 2003 due to mismanagement by the predominately black female Board members.

  • WARD4NDC

    Correction:

    Adrian Bent-Me, at least these ghetto blacks are U. S. citizens. Many of these Salvadorans/Central Americans are here illegally and should "NOT" be provided housing with U.S. or District tax dollars. There are many Coop’s in the city going under. My brother lived in one of the oldest Coop’s in the city and it went under in 2003 due to mismanagement by the predominately black female Board members.

    For the record, I don't want to live next to any ghetto blacks, whites, Puerto Ricans, Muslins, Cubans, Arabs, or West Indians who don't take pride in their neighborhood or property by keeping in nice and clean.

  • WARD4NDC

    Adrian Bent-Me my parents live in public housing back in the late 50's but poor blacks get their houses clean, raised their children in mostly 2 parent homes, and they took pride in their public housing. I grew up Catholic, but I could wear jeans or snicker to Mass. I had to wear a suit which was my Sunday's best. I don't discriminate because I can't stand the ghetto blacks destroying neighborhoods. If I could deport them, I would. I have a problem with countries like El Salvador, Mexico, Dominican Republic, etc. importing their poverty or sending their poorest uneducated nationals to the United States. We can no longer take in the world's poor with so many U.S. citizens out of work and struggling. Our country will collapse and become a third world nation.

  • WARD4NDC

    Correction:

    Adrian Bent-Me my parents lived in public housing back in the late 50’s, but poor blacks kept their houses clean, raised their children in mostly 2 parent homes, and they took pride in their public houses. I grew up Catholic, but I couldn't wear jeans or sneakers to Mass. I had to wear a suit which was my Sunday’s best. I don’t discriminate when it comes to living around dirty nasty people. I can’t stand or want to live around ghetto blacks destroying neighborhoods. If I could deport them, I would, but these black "savages" are U.S. citizens. I have a problem with countries like El Salvador, Mexico, Dominican Republic, etc. importing their poverty or sending their poorest uneducated nationals to the United States. We can no longer take in the world’s poor with so many U.S. citizens being out of work and struggling. Our country will collapse and become a third world nation soon.

  • Sally

    @Delores - No, we should not be looking at how to save this property. We should be looking at what mortgage fraud or idiocy allowed these people to be given mortgages when they clearly couldn't afford it.

  • WARD4NDC

    @David: You can kiss my brown ass. Why don't you move next door or in an apartment building with a bunch of "savages" who live like animals and don't give a dam about the property or the neighborhood. I am so sick of you liberal white yuppies/hippies and your liberal thinking.

  • LaModiste

    This building definitely is not in Columbia Heights--it's in Petworth. The news media often make the same mistake when reporting street crimes.

  • WARD4NDC

    LaModiste, 14th & Randolph Streets, NW is in Columbia Heights, not Petworth. My cousin live in Twin Oaks apartments back in the 70's while attending Federal City College.

    I am a native Washingtonian and I grew up in Wards 1 & 4.

  • Adrian Bent-Me

    Ward4- your experience is vastly different than what is a reality today. Everything you indicated to justify your position is not true anymore. Poor blacks living in housing projects have conditions similar to the ones described in this article, not the idyllic, two doting parent scenario you outline. Your racism blinds you from the truth.

    America was founded, built, and will continue to thrive on immigrant labor. The poorest countries in the world look to us because of this. Unfortunately, narrow-minded bigots use personal prejudices to disparage entire races.

    I grew up in the same District as you did, except, I see things vastly different than you do. My own ignorance, maybe, but the fact remain- poverty does not discriminate.

  • WARD4NDC

    Adrian Bent-Me, you are a confused homosexual man who don't know if he's of the black or white race. Who in the fuck are you to judge me? Fuck you and racist Salvadorans that have done harm to me. Go get fucked in your ass by several MS-13 gang members or some white sissies hanging out in DuPont Circle. America was not founded by illegal aliens. Black slaves help to be this country for free and didn't get a dime to do it. You mulatto ass wouldn't now anything about this because you don't have a black ancestry in this country back to slavery. I do!

  • NOODLEZ

    ADRIAN BENT ME IS A FAGGOT LIKE FENTY. HE PREFERS WHITE MEN TO FUCK HIM IN HIS ASS RAW.

  • Jesse Helms

    Adrian Bent Me, has the AIDS virus caused you to go insane? I think it has. Please go take your medication and pick out the pink castet you will be buried in. Your days are numbered on earth. You can come join me in hell seated at the right hand of Satan.

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  • gerry

    OMG please be kind to one another.

  • Mil Berrios

    LOL...and most of you have the audacity to belittle these hard working people. Read what you're writing...seems that most of you are TRASH in every color.

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