Housing Complex

Who Wants to Be a Millionaire?

Lakritz Adler's Clinton Canady knocked on doors for months, trying to get owners to sell.

If you’ve ever walked down 14th Street NW, you know the Frontiers condominiums at S Street. Set apart from the graceful townhomes that line the surrounding streets, Frontiers is made up of squat rowhouses with featureless brick façades and narrow windows.

The condominiums look like public housing units—and they are, built in 1977 by the National Capital Housing Authority. Residents were placed there by lottery—a lucky draw for those who had lived in more depressed neighborhoods east of the Anacostia River. In the late 1990s, then-tenants were able to buy their units for between $100,000 and $150,000 each.

The neighborhood looks different now. Luxury condos and apartments are under construction from downtown to U Street NW, with a new restaurant opening every month. Frontiers is now one of the last refuges of poorer, mostly black residents who could never have bought in at 2012 prices.

Shirley Jones has lived on the corner of 14th and S streets for two decades. She retired from her job at D.C. General Hospital a few years ago, and now has to raise her voice over the din of drinkers on the patio across the street—but she likes the change.

“Lord, I just set out here, looking at the people all dressed up,” Jones says, smiling into the balmy Saturday evening. “This street be just like a little Georgetown. Very nice.”

Nice enough that the humble Frontiers looks increasingly tempting to developers seeking new construction sites. Since last summer, several have called up the condo association, figuring they could buy people out, knock down their houses, erect new buildings, and make a killing when yuppies moved in.

A year and three offers later, Frontiers isn’t going anywhere. Jones says she would’ve made $750,000 on the last proposal, which she wanted to take. But a few of her neighbors weren’t interested in selling and tanked the deal for everybody.

“What I heard is, most of ’em wanted more money. Nobody’s stupid. Everybody knows it’s an up-and-coming area,” Jones says. The developers seemed nice, she added. “But can you trust ’em? This is what people are afraid of. I think most people are afraid of being taken.”

For most housing projects in fast-gentrifying areas, redevelopment is simply a matter of time. But because of the particular circumstances of Frontiers’ formation, it may never happen at all.

* * *

Josh Olson, the director of acquisitions at Monument Realty, knew Frontiers was going to be tough when he unearthed the condo association’s bylaws. Along with the 14th Street homes, it also covers three smaller clusters of identical houses over on 11th Street. Redeveloping any one of the parcels would require unanimous consent from the owners of all 54 units—so just one person could doom any deal.

Still, the land is so valuable that Olson figured it was worth a try. Last June, he called the owners together in a meeting room at the posh Washington Plaza hotel, providing munchies and an open bar. He described Monument’s offer: Between $681,000 and $810,000 per house, depending on location and whether the developers got all the zoning changes they wanted.

Almost immediately, some owners started demanding more money. “We’re living on a gold mine!” one guy protested. “You can live on the gold mine for the rest of your life!” replied Olson, whose patience started to erode after several minutes of audience chaos. “You’re not going to get gold out of the gold mine unless you sell!”

Monument asked people to turn in cards indicating whether they were interested. But the firm ultimately didn’t submit a formal offer, giving up late last year.

That didn’t discourage Lakritz Adler, a smaller outfit that specializes in complicated deals. The company convened an initial meeting in late August at equally swank Donovan House. Seeking to win over undecided residents, principal Josh Adler detailed staffer Clinton Canady to meet with each owner individually. As the proposal firmed up in December, the firm even threw the owners a party at Ben’s Next Door on U Street. The entertainment was somewhat unlikely: An appearance by Adler’s college a capella group, the world-renowned Yale University Whiffenpoofs.

“We’re literally doing community organizing work,” says Adler. “But we’re doing it from the outside, which is tough.” No wonder: It’s a lot easier to organize people to stay in their homes than to leave them.

Adler’s bid started out simple, but soon got more complicated. Some owners insisted they should be paid more for having more bedrooms or having recently renovated their homes. Offers topped out at almost $1 million. Adler argues that even the lower amounts would be much better than owners could get selling their homes individually. The payday could have allowed residents to buy someplace else and have a nest egg left over.

“For a lot of the owners, this would be a life-changing event. If you own a home with no mortgage, and have half a million in the bank, a sensible person would never be worried about money again,” Adler says. “If this works out, these people are making out like bandits. They are cashing in. They are getting a crazy great deal.”

The condo’s board, however, wasn’t so sure. When they presented Lakritz Adler’s offer to residents in December, they emphasized all the caveats: The buyout money wouldn’t come until years down the road, for example, and homeowners would get nothing if the developer had to back out. Adler says next to nobody tried hard to advocate for the deal. Adding to the confused atmosphere, some people in the majority-black association suspected that the developer was colluding with the association’s president, a white man named David Levey. A speechwriter, Levey bought his unit for $425,000 in 2010 and completely renovated it.

“They just took an unfair approach to him and whoever was white on the board,” says Dale Young, an African-American who owns a unit on 11th Street and wanted to take the deal. “They said things like, he was in it to take peoples’ property.” (Levey actually offered to buy Young’s house, and said he’d buy others if given the opportunity.) In March, Lakritz Adler’s proposal sputtered, too. (Adler still holds out hope that the association might reconsider.)

Levey thinks more developers will come courting, and says they’ll consider each offer carefully. But Adler points out that the deal will just keep getting more difficult as the units turn over at market prices—the last house on the west side sold for $550,000—and the new owners have less to gain by selling to a developer who can offer more because of the land’s potential.

Still, the idea was probably doomed from the start. Homeowners aren’t just motivated by economics: Many simply don’t want to leave, for any amount of money that a developer could rationally offer, because their home matters more than cash.

Take Lenna Burke, who retired last year from her job as a secretary for the National Park Service. Her children are grown and live in Maryland, but she’s been living in her house on N Street for 20 years, and doesn’t plan on moving—on Mother’s Day, her whole family came back to visit. “These people are trying to force us out of here. That’s just my opinion,” she says. “If it can be convenient for everybody else, why can’t it be convenient for me?”

Photo by Darrow Montgomery

Got a real-estate tip? Send suggestions to ldepillis@washingtoncitypaper.com. Or call (202) 650-6928.

  • The Java Master

    Get as much $$ as you can UP FRONT! These cats are sitting on a freaking GOLD MINE and there is no point in having to wait months and years for your buyout $$ until some builder can put together a deal, only to see it fall through for a myriad of reasons. Put your faith in the GREENBACK, not some developer's words.

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  • http://blog.inshaw.com Marie

    Um, how sure are you about the Frontier's origin story? As I remember African American businessmen were the major sponsors of the project as reported in the Washington Post, not so much RLA/National Capital Housing Authority.

  • Logan Res

    Those are some incredible offers. I'm sure some of them will be sorry they passed up an opportunity of a lifetime. That's basically like winning the lottery.

  • iCare

    Money isn't the only thing that matters to some people. The last statement in the article says it all.

  • shawguy

    These people seem pretty stupid, to put it bluntly, to me. This city is full of places where people "held out" for more money and ended up passing the highest bid by. See the little townhouse next to Budda Bar on Mass Ave for the most striking example. 14th Street will only be the next "must have" corridor for another couple years. Development is moving to NoMa, the Riverfront, Shaw / 7th & 9th Streets. Once prices stabilize on 14th, which will happen soon, a developer isn't going to be able to make money on the Frontier housing project. On top of that, when there are so many other options in the neighborhood that look like nice townhomes or condos and not Section 8 housing, the value of these units as individual units on the market plummets. They're the ugliest properties in the neighborhood. Period.

    As for the ones who say a developer is trying to "force" them out, that's incorrect. Unless eminent domain is used, you're not being "forced" anywhere. They're offering you a generous buyout where you can easily relocate within the same neighborhood for the money. The developer wants to give you the most generous offer you've ever had for anything in your life. It's the neighborhood who wants you out...

  • Realist

    Shawguy- some of the families aren't obviously interested in the money. This is their home and who cares how ugly the thing is, you’ll plop half a million to buy an 800 sqft condo next to it in a heartbeat. There is no grounds for Eminent Domain and none of these families are section 8 renters. THEY ALL OWN!
    So, it is their right to take an offer or to not. No obligation to cash in on your so called offer of a lifetime. These offers are conditional and requires years of pre-development work and if the market tanks, the developer has the right to walk away from it. So, you lock up your home for a few years based on a highly speculative deal and then you risk getting nothing if the developer can’t solidify his financing or get the density he wants. These families don’t seem greedy or stupid to me, just very aware HOMEOWNERS.

  • KnowsABit

    Keep in mind these properties are not some little townhouses- combined, the property on 14th Street is about a contiguous 55,000 square feet and the other properties in Frontiers are about 20,20 and 10,000 square feet each.

    Don't think that if the "market tanks" that any developer would not walk away if they could easily do so at little cost.

    The bet is that the overall DC market continues to grow and that stable gentrification continues to slowly creep eastward as it has been doing for at least a generation. As that happens the few large properties left will continue to go up in value, and the zoning environment will continue to improve.

    Could be wrong, but if a developer believes that to be true, let them make an offer that reflects that and let them take the bet, and the risk (and some of the reward), not the Frontiers owners.

  • soulshadow55

    Shawguy - just because lower income people decide in their own free will not to sell their homes to developers for any price doesn't make them stupid. It just means that some people would rather live peacefully in homes the purchased than sell out and move. It is only your opinion that the "neighborhood doesn't want them." I don't have an issue with lower income people keeping the homes that they bought and paid for. The neighborhood can go to hell. If they don't like lower income people living near them, then they should remember - they moved into a lower income neighborhood - not the other way around. Some people talk about wanting to live in a diverse neighborhood but I guess that means people making $500,000 living with people who make $100,000. These people are not bothering anyone. They have apid their dues and lived through a lot of crime, drugs, Metro construction to reap the benefits of their newly chic neighborhood. They aren't committng any crimes. They have just as much right to live unencumbered in their neighborhood as anyone who moved in years and years later.

  • Cap City Records Panhandler

    Lots of hands-to-hands have been made up in there. Nice work following this story. To be continued...

  • Mistr Knucklz

    They should Google "433 Massachusetts Avenue" to see what happens when people hold out for too much.

  • noodlez

    UNLESS THOSE CLOWNS COME WITH MILLION DOLLAR CHECKS IN HAND THERE IS NO WAY THESE FOLKS WILL MOVE TO PROMISE STREET.

  • Hey But Wait

    Hey Mr. Nucklehead, note that the owner of that little teardown property did get 800K for it, first off... second, that is a single, small, individual property- the Frontiers property would be more akin to the development on either side of 433- 50,000 square feet, not 1,500 square feet.

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