Reprinted from The Washington Post
By John B. Willmann
The Washington Post
Parkfairfax, once the home of the Richard M. Nixons (1943-44) and the Gerald R. Fords (1951-55), is in the early stage of being converted to condominium ownership for 1,684 persons of moderate Incomes.
In the nearby Fairlington Villages, all but 57 of the 3,439 units rehabilitated there over the past six years have been sold.
By converting to condominium ownership, the two World War II – vintage apartment complexes, which border Rte. I-395 at Shirlington, are adding more than 5,000 town houses and apartments to the privately owned housing stock here. It is described as one of the largest concentrations of converted condominiums in the nation.
Elsewhere in the metropolitan area, particularly in Northwest Washington, and in the nation, sound but aging rental complexes are also being converted to condominium ownership. It’s obviously a major trend. The conventional explanation is that landlords are disenchanted by rising overhead and their inability to raise rents.
But rentals buildings and complexes can often be sold for relatively high prices – Parkfairfax went for $21.5 million – to developers who then can make a nifty profit by rehabilitating the apartments and selling them as condominiums. It’s a long, complicated process but one that pays big dividends for success. It adds up to one that pays big dividends for success. It adds up to one of the major real estate procedures of the 1970s.
Ruth Ewing, a retired Washington native who lived with her late husband in Parkfairfax for 27 years as a tenant, is ready to got to settlement on a $477000, a two bedroom town house there.
“Parkfairfax had been going downhill,” she said this week. “I am pleased and satisfied to be buying. The location is convenient. I use the city a lot. My husband and I had decided to buy before he died last year. I’m just glad it wasn’t razed and turned into high rise apartments.”
Another tenant, teacher Bette Holland, also plans to buy in Parkfairfax. “I raised my daughter here and it was a good place for her to grow up. We have nice neighbors. But I do have some mixed feelings about buying – even though I am not opposed to the conversion to condominium ownership.”
Holland is president of the Parkfairfax Citizens Association. The association has hired an attorney to deal with the developer and the condominium section of the Virginia Real Estate Commission, which administers this form of real estate ownership under state laws.
Holland said she and other tenants feel that the “developer is not treating us fairly and that we need legal protection because the documents have been drawn up to the advantage of the developer and to our disadvantage.”
In the year since International Developers Inc. announced that it was going to convert the apartment complex, a quiet battle between the developer and the association has been waged. The association maintains, for instance that the ownership of the developing firm was inadequately disclosed, and that the sales contract is “extremely weighted” to the benefit of the developer.
The association says it has been denied access to a consultant’s architectural and engineering reports about Parkfairfax and have inadequate information about the condition of the structures and the nature of the rehabilitation.
There is also a question about the validity of titles conveying individual units to buyers. On the latter score, James Brincefield Jr., who represents the citizens association, said: “I’m not saying the title is not good but that they are not willing to say it is good.”
Robert Diamond, an attorney for the developer said the association’s lawyer was invited to review the title document but didn’t. As to the consultant’s report, he said it has no legal standing and is not part of the documentation that is required to be submitted to the buyers.
In response to Brincefield’s request, Virginia condominium administrator James E. Naggles recently notified Giuseppe Cecchi, president of Parkfairfax Improvement Associates (the developer), to make several changes in the complex’s public offering statement.
In the statement, the developer had described Parkfairfax as having a “considerably higher potential value” because of its location and environmental quality. Naggles ordered that the statement be deleted because of the possibility that the units may “actually remain at their current value, or even decrease in value.”
(Cecchi points out that some of the first units to be sold at nearby Fairlington recently were resold for twice their original price.)
The condominium administrator also ordered the developer to revise a statement concerning plans to keep the existing density at 13 units per acre to clarify the fact that the 13 units per acre refers to the entire project and not just the first section of Parkfairfax to be rehabilitated.
Meanwhile, the first buyers are about to move in to renewed units at the complex. Some dwellings are being bought “as is” by tenants. Buyers have the option of arranging with a private contractor to make the improvements beyond the work being done by the developer.
At Fairlington, the units were totally rehabilitated. Even so, there were some complaints by disgruntled buyers.
At Parkfairfax, Cecchi and his people reasoned that since the kitchens had been redone eight years ago, a less than full rehabilitation could keep sale prices down. In addition to painting and other cosmetic changes, the developer is replacing storm windows installing new electrical heating systems.
One buyer, mortgage banker Phillip Ettinger, said that both he and his fiancé are purchasing Parkfairfax dwellings and that they will keep one as an investment after they are married next September.
“It’s the best buy in the area,” said Ettinger, 34. He said the fact that the developer is not doing a full interior rehab gives the buyer a price advantage.
Buyer Ruth Ewing said she liked the option of being able to improve her place when and how she wanted to do it.
Charna Lazar, a government researcher, is planning to buy a unit after living there for a year. She had looked at Fairlington but likes the room sizes better at Parkfairfax. “It’s also better maintained,” she said. “I just wish there was more than one bathroom.”
But the Parkfairfax Citizens Association plan to keep up the legal pressure on the developer. President Holland said that about 350 of the association’s 750 to 800 member households have contributed to the legal fund.
One of the continuing concerns is the condition of the underground pipes serving the project, she said, because replacing them could be a major expense.
Several years back, the citizens group, along with neighbors in single family houses, fought unsuccessfully to prevent the former owner (Arlen Realty) from building more than one high rise apartment on undeveloped Parkfairfax land. International Developers now owns that rental building, and Cecchi says it will remain rental. There are no plans to build additional high rises at the 140 acre complex, he adds.
Monthly condominium fees may range up to $85, the developer said, depending on size of the unit. That assessment covers landscaping and care of all common areas, water and sewerage, gas, general insurance, exterior maintenance, and trash collection, as well as a reserve for future expenditures.
Because some of the older residents don’t want to buy but also do not want to leave, the developers plan to continue renting up to 20 percent of the units at higher rents – on a long term basis.
About 60 per cent of the 323 units in the first section have been purchased by Parkfairfax residents, according to sales chief Harold A. Lewis. He headed the sales staff at the Watergate condominium, where Cecchi was an executive engineer for the developer, an Italian financial conglomerate. Cecchi organized IDI several years ago. It is a firm based in the U.S. but has foreign investors.
In addition to the conversion of Parkfairfax, Cecchi and IDI are now involved in the development of Burke Center in Fairfax County and the giant Rotonda high rise condominium at Tysons Corner.
Changes seen strong now that other older rental projects will be going the condominium route in the next few years.
Cecchi and Walter J. Hodges, who headed the Fairlington rehab-conversions for Fairmac CBI Corp., are known to be those interested in other major rental properties that can be retailored for condominium ownership.
Reprinted from The Washington Post, Saturday February 18, 1978.