Housing authority makes bid to buy Oakwood apartments
July 27, 2005
Jaime Ciavarra
Staff Writer

Charlie Shoemaker/The Gazette

Philip M. Andrews and Thomas E. Perez, members of the Montgomery County Council, at a news conference last week near Gaithersburg, discuss condominium conversion plans.

The Montgomery County Housing Opportunities Commission wants to buy a Gaithersburg-area apartment development to protect 157 lower-rent apartments threatened by a potential sale.

The commission, which manages public housing, voted Friday to offer $116 million for the 784-unit Oakwood Gaithersburg Apartments off Fields Road near Washingtonian Center.

South Bay Club-Van Nuys, a California company that has owned the apartments since 1989, wants to sell them to a real-estate investment trust set up by a Colorado investment company.

The HOC, which issued $54 million to finance a loan for the development in 1985, claims it has the right of first-refusal to buy the buildings, but South Bay Club argues the right can't be enforced.

South Bay has offered to sell the apartments to Umbrella Partnership Real Estate Investment Trust, Archstone-Smith, for $116 million, according to an HOC memo detailing negotiations.

South Bay has said it will sell the apartments to the HOC for $148 million. South Bay wouldn't be able to defer capital gains taxes if it sold the apartments to HOC, the HOC memo said.

Two County Council members held a news conference last week to "highlight the need to save 157 affordable housing units" in Oakwood "which would be converted to expensive condominiums under a proposed sale."

"A county cannot be truly a community if we have public policy that is displacing hardworking people," Council President Thomas E. Perez (D-District 5) of Takoma Park said at a news conference.

"Condominium conversions ... is ground zero in the affordable housing debate here in Montgomery County," Perez said. "If necessary, I will fight this challenge one building at a time."

South Bay issued a statement after the news conference saying "there are absolutely no plans to convert any apartments ... to condominiums."

A spokeswoman for potential buyer Archstone-Smith said she could not give details about the company's plans for the apartments until the complex is sold.

The 157 affordable apartments in the complex are for residents earning 50 to 60 percent of the area's median income, allowing renters to pay nearly $700 less a month than market price for a two-bedroom apartment.

In Montgomery County, the median income for a family of four is $89,300.

About 2,600 apartment units in a dozen buildings around the county have applied in the past six to eight months to convert to condominiums, and the number of condos in the county is expected to nearly double, according to county estimates.

Condominium conversions are a quick and easy way to make maximum profits on property, real estate agents say.

HOC would use tax-exempt financing to buy the apartments, said Councilman Philip M. Andrews (D-District 3) of Gaithersburg, who joined Perez at the news conference outside the apartments.