CITY Pro and Condo

Mamie, a 70-year-old widow, is about to be forced out of an apartment tor the fourth timein three years; not becauseshe’s behind on her rent, butbecause she’s once again hadthe misfortune of living in anapartment complex that’s being converted to condominiums. She’s distraught, shesays, “because I can’t affordto buy at these prices,” andshe’s run out of places to livein the North Dallas area whereshe wants to remain. She’safraid to have her full nameappear in this article because”you never know what theymight do to get me out of here.I’d only have 30 days’ notice.Then I wouldn’t know whereto go.”

Mamie is an example of what’s been happening with more frequency to people of all ages, but particularly the elderly, as condominium conversions increase in Dallas.

“Conversions are making displaced persons of many of our senior citizens,” complains Mrs. Irving Pierce, a widow who’s lived at Preston Tower for eight years but is also on her way out. She, like many of her over-60 neighbors, is on a fixed income and has neither the desire nor the ability to buy her one-bedroom apartment, priced at about $50,000 and requiring a monthly maintenance fee of $160.

“Basically I’m scared and I don’t know where to go. We need some controls on these conversions. All I’m asking is that I can be assured of living where I choose without having my life disrupted at any time.”

But not everybody in the Tower, which is noted for its magnificent view of downtown Dallas, shares Mrs. Pierce’s dislike of apartment conversion. A. R. Allsup, 79, recently bought a 17th-floor condominium there and says that he and his wife now have the security and benefits of home ownership without the hassles of maintaining a yard and a house, which, because they travel a lot, suits them perfectly.

“It’s an ideal situation. It allows us to do exactly what we want to do.” As for the mass exodus it caused among his fellow senior citizens at the Tower, Allsup said, “I think a man has his property and he can do with it what he likes – whether it means 100 people have to find another place to live or not. If they haven’t got the money to buy they shouldn’t have been here to begin with.”

Therein lies the dilemma presented by what has been described by the business community, city officials, investors, and home buyers as a blessed phenomenon. For every Mrs. Pierce who’s cursing the sale of her apartment there’s a Mr. Allsup who’s dying to buy it.

Almost 1400 units were built or converted from rental units, raising the total to more than 5000 which have been created since the market dawned here in 1970, according to M/PF Research Inc., a Dallas-based research firm.

Dallas developers have made North Dallas their target area for condo conversions with the intersection of Preston Road and Northwest Highway the bull’s-eye: At the corner are the recently converted, 28-story Preston Tower and the 21-story Athena, both behind the famed “pink wall;” down Preston are the Preston-wood Country Club condominiums. On North Central Expressway the Park Central conversion project has gobbled up 198 units (four apartment buildings): Park Central House, Park Central North, Park Valleydale, and Park Northaven. Also converted are University Gardens at North Central and Mockingbird, Le Chateau on Cedar Springs, 5800 Royal Lane on Royal at the tollway, and 3525 Turtle Creek.

According to M/PF, other units included in projections for 1979 are in the Skillman/ University Boulevard area. Also scheduled are a number of smaller conversions in the Oak Lawn area, where a handful of small condominium buildings (under 30 units) have been constructed.

The primary negative aspect of condominium conversion is the matter of displacement; for the elderly and those with lower or fixed incomes, often there is no real choice. Their inability to qualify for a mortgage or their lack of assets for a down payment prevents many of them from buying their units.

As a result, a large number of people in Dallas found themselves unwilling apartment hunters last year: Of the 1400 units that came onto the market, about 80 percent were conversions. Based on a displacement average quoted by a local developer, that meant for every 10 happy new condo owners, there were eight unhappy tenants – roughly 900 people, many of whom were elderly.

In other cities the problem of displacement has eventually resulted in a renters’ revolt that has produced bans and moratoriums on condo conversion and resulted in the enacting of strict controls. San Francisco’s city planning department reported last year, “Relocation can be psychologically devastating for the elderly, many of whom are long-term tenants. Also, many tenants, regardless of their circumstances, prefer to rent. Conversion represents an infringement on their choice of personal life style. In view of this reason, condominium conversion should be allowed only when the rights and needs of the disadvantaged and other tenants can be protected.”

Such is the philosophy behind tough ordinances passed by cities across the country, perhaps the most rigid being New York’s, which delays tenant eviction from a converted building for two years beyond the term of the lease. (Tenants are generally given 30-day leases after conversion in Dallas.) New York also requires that 35 percent of the tenants agree to purchase their apartments within one year before conversion can take place. Washington, D.C., imposed similar controls recently, while San Francisco is considering an ordinance that would require landlords to give lifetime leases to people over 60 and force developers to pay up to $1000 in moving costs for displaced tenants.

Yet even in cities that have passed strict ordinances regarding conversion, it has generally been agreed that conversion benefits the community by stimulating the preservation, improvement and rehabilitation of housing. Condos usually also provide greater tax revenues due to their high unit costs and often upgraded physical condition, although in Dallas there is presently “no increase in assesed value” of a converted apartment building, according to Bill Holland, assessor-supervisor in the city tax office.

Owner occupancy provides a stabilizing influence in the areas that are predominantly renter-occupied – homeowners tend to move less frequently. Because prices of most condominium units are generally less than single-family homes in a comparable location, many people are able to own who wouldn’t otherwise be able to afford a home, although most conversions here have taken place in the upper-income areas of North Dallas. Those who buy condominiums have the advantages of home ownership: equity, appreciation due to the rising cost of housing, tax savings, and a refuge from rapidly increasing rents.

So far, the city of Dallas has taken a laissez-faire attitude toward condo conversion, thus partially accounting for the mushrooming business.

City Councilman Steve Bartlett, chairman of the council’s housing committee, favors condominium development. “I tend to look very favorably on additional condominium units,” says Bartlett. “In all income categories, housing costs are getting entirely away from the abilities of families to pay. And what we’re increasingly seeing is families who want to make that choice to own a home in the city of Dallas but cannot find a home anywhere in their price range. So we lose them to De Soto, Carrollton, Garland, or Duncan-ville.

“We have now gone to less than 50-percent home ownership in Dallas. That happened for the first time in 1978. That’s a particularly devastating kind of ratio for a city. That’s not to say there’s anything wrong with or second-class about tenants, not at all. The point is that we want the tenants who are renting to stay in Dallas; typically a young family rents for a while, they save up their money and they want to buy a home. We want those citizens so badly we want them to be able to buy a home in Dallas when they’re ready to buy.”

Since conversion is the most practical way to provide reasonably priced housing – new construction costs about 30 percent more – Bartlett says he sympathizes with displaced tenants, but basically takes a tough-luck stance. “That of course is the essence of the problem of tenancy. By definition, a tenant has only those rights to occupy space till the end of that lease.”

There is nothing in the Dallas zoning or building codes that mentions condominium conversion. Buying an apartment building and converting it to condos is virtually free of red tape. There’s no public hearing, no permit or inspection required. “You don’t need to see anybody in the city [government],” said Jerry Blatt, chief zoning inspector. “As far as we’re concerned it’s just a concept of ownership. We don’t even keep records of conversions – we don’t care who owns it.” In other words, because conversion most often involves little more than a new contract and cosmetic improvements to the units, it is not considered something under construction and is therefore beyond city business: like an individual selling his home to another individual. Fred Timm, subdivision administrator in the Housing and Urban Planning department, says his department views conversions as “simply a method of selling” a building – one increment at a time.

Dorothy Masterson, president of the Dallas Tenants Association, is concerned about the city’s lack of control over conversions.

“I’m not against people making a profit, but it goes against my grain to see investors making a huge windfall profit without regard to the hardship it will place on the people whose lives will be disrupted by it. It forces old people to be gypsies. . . The tenant-landlord laws in Texas are in the medieval stage. Somewhere the public welfare needs to be put back into the picture.”

By their very nature, condominiums cause problems for consumers: You are not actually buying a structure, but rather a share in a building – most often an old building, and you and the other owners bear the responsibility of maintaining the building and its grounds through a homeowners association. Each owner kicks in a maintenance fee based on the size of his condo, which goes for upkeep and also pays utilities. Right now in Dallas, you have no guarantee or warranty that the heating and air conditioning system isn’t going to go out a month after the association takes responsibility of a newly converted building, or that any number of things won’t malfunction. If major repairs are needed on a building, the maintenance fee needed to cover the expenses can quickly become a burden. The way some contracts are written, you don’t have any solid assurance that a developer will come through on any of the conveniences he promised before you signed on the dotted line.

A young California transplant found this out two years ago after she bought a $40,000 condominium which had been converted from a North Dallas apartment complex. The woman, who did not want the development identified for fear that it would hurt her unit’s resale value, said her complex was a nightmare of unfulfilled promises:

“They had promised to cover up a new heating and air conditioning unit with shrubbery and aesthetically it’s a disaster. They promised to heat the pool and it isn’t. They said they would do some necessary carpentry work in several units and it hasn’t been done. They were going to replace appliances that didn’t function properly – drapes were supposed to be provided but weren’t. Everyone’s affected.”

As other people from across the country continue to move into Dallas, rental property gets harder to find and home ownership is bought at an even dearer price. Tenants and developers may yet square off here to decide who has the right- to do what with another rapidly diminishing resource – land.

How does the building industry feel about this? Obviously, not too happy.

“I don’t like to listen to those things,” says Walter Schroeder, the 30-year-old president of International Housing Systems, one of Dallas’ biggest developers. “A lot of people talk about controls, but if you make a lot of paperwork you cost the developer money. Our idea is to pass on the lowest possible price per square foot to the consumer that we can.”

Concerning controls that would limit conversion only to those properties where 35 percent of the tenants agree to buy, Schroeder said that would definitely put a crimp in their business and be shortchanging the home buyer. The 35-percent rule would also have made impossible the conversion of what IHS expects to be its most successful property – the 321-unit Preston Tower. Gazing down Northwest Highway at the Tower from his office suite in Campbell Center, Schroeder said, “I don’t think there should be controls. There should be a right for everybody to buy a home.

“The one question you have here is this – what are you doing? You’re pushing people out of their units. The question is how many do you displace? Let’s say we’ve done about 1200 units in Dallas, and maybe we’ve displaced 600 to 700; but we’ve put 1200 people in homes in Dallas, and that’s important. Some people say, well, you’re doing this bad thing to old ladies. You know the happiest thing you can do for an old lady? Give her a fixed mortgage, not increasing rent rates. You know how rents have gone up tremendously. We’re not hurting those people, we’re making them happy homeowners.”

The fact is, however, that 70 percent of the tenants at Preston Tower were not happy about saddling themselves with mortgage payments and sizable maintenance fees, because only 30 percent took advantage of their option to buy at discount rates. Many have moved already. Most were on fixed incomes and simply couldn’t afford to buy.

Although developers lean heavily on the spiraling rent phenomenon as inducement to buy, Mrs. Pierce isn’t so sure that her $160 monthly maintenance fee wouldn’t increase just as rapidly. “Also, when people tell me I’d better buy now because my rent will go sky high anyway, I say we ought to be putting controls on rent.”

Mrs. Masterson said that getting rent controls enacted is one of the primary concerns of the Tenants Association, and there’s a chance now, with renters making up about 52 percent of the occupants in Dallas, that they could have the clout to do it. But there’s a problem, Mrs. Master-son admitted. “People here have been conditioned to accept things as they are – accepting that the business community knows best. Tenant consciousness level has not been widely raised in Dallas.”

Some sort of compensation for the inconvenience and expense of displacement is also in order, contends Mrs. Pierce, because “it’s not just ’little old ladies’ who are affected by displacement, but young people too. Imagine having just moved your family into an apartment building and learning a month later that you have to either buy your apartment or move out, but you just can’t afford it; and then you’re faced with the agony and expense of having to search out another apartment and move once again.”

Bartlett believes that the city “ought to look at the possibility of softening the blow of displacement in terms of stretching out the time,” but is against monetary compensation, and said controls would be interfering with the free enterprise system.

“Senior citizens believe in free enterprise too,” said Mrs. Pierce. “However, they know that controls have been and must be implemented when necessity warrants it. Our free enterprise system does have all kinds of controls. We have only to refer to the auto industry and housing industry, and even now legislation is being prepared in the large mergers area.”

Whatever the validity of the two opposing arguments, one thing is certain: The problem is not going to go away. Another 1600 condos are projected by M/PF Research for next year and you can bet that virtually every apartment building going up today is being constructed with conversion at a later date in mind.