With a sale pending, Enclave tenants fear the worst

A troubled high-rise housing complex called the Enclave, located in the White Oak area of Silver Spring, faces two pressing problems. The first is years of landlord disinvestment in the property. Tenants have been grappling with rat infestations, broken elevators, spotty heat and hot water, and untreated mold, among other problems since well before the pandemic. The second is a contracted sale for $230 million that could threaten one of the biggest naturally occurring low-income housing options in the county. Although some of the county’s tools will no longer work, others are still on the table.

The Enclave was built in 1965 by Jerry Wolman, a local developer who built several other high rise apartment buildings in the region. When it was built, the complex had 1,119 apartments spread across three high rise towers. The property has changed hands multiple times and has had a variety of names, from the whimsical (El Dorado Towers) to the traditional (Berkshire Towers).

When the complex was built, White Oak was an up-and-coming suburban neighborhood, best known as the inspiration for the sitcom The Wonder Years. The property was located at the busy intersection of Columbia Pike and New Hampshire Avenue, next to the then-new White Oak Shopping Center and just over a mile from the Naval Surface Warfare Center. Unfortunately, the promise of the area as a hub for new development did not take off as planned, but when the federal government closed the naval facility in the 1990s, residents worried about losing a major employer successfully advocated to have the Food and Drug Administration take over the campus.

In turn, Montgomery County envisioned creating a biotech hub around the FDA. The 1997 White Oak Master Plan recommended making the area more pedestrian friendly and building a transit center at the White Oak Shopping Center to take advantage of the new campus. Then in 2013, the County Council approved the White Oak Science Gateway Master Plan, which fleshed out the 1997 plan, recommending a new business park on the edge of the campus, new Bus Rapid Transit (BRT) lanes on New Hampshire, better pedestrian walkability, and the development of mixed used properties in the area.

The revised plan only mentioned the Enclave in passing, describing it as part of a concentrated cluster of “market affordable” housing, a term planners use to describe properties that are not subsidized but have lower rents than comparable properties. The plan also noted that the majority of the area’s multi-family housing “may need extensive renovations or may be reaching the end of their maximum life expectancy.” However, it did not suggest rezoning the Enclave to allow greater density or a mix of other uses like retail.

An uncertain future

The Enclave may be reaching the end of its maximum life expectancy, but its age isn’t the only reason why. The Enclave tenants argue that the property’s owners, Enclave Holdings LLC of New York, and a succession of management companies have been slow-walking repairs for years. In 2019, for example, the Department of Housing and Community Affairs cited the Enclave for over 2,500 housing code violations. Although a Circuit Court judge assessed a $1,100 fine and the owners brought in a new management company, the disinvestment continued.

In January, the Enclave Tenant Association posted a video of a flooded elevator the management company had not fixed despite repeated calls over several days. In March, District 5 Councilmember Kristin Mink posted a picture of Enclave tenants helping another resident in a wheelchair down the stairwell because all four of the building’s elevators were broken.

One reason why the management company may be refusing to do repairs is because the owner recently sold the property to Beach Hill Capital, a Miami-based real estate investment firm. The new ownership group has not publicized its plans, but tenant organizers fear the worst: tearing down the complex to redevelop it, or raising rents while deferring much-needed but costly repairs before selling the property a few years later, a strategy called “milking.”

A list of projects on the firm’s website shows a mix of rental complexes and condominium conversions. “Most of [Beach Hill Capital]’s properties are buildings they’ve converted to condos—this seems like it’s their business model,” says Ann Keasling, a housing organizer for Progressive Maryland.

In a condo conversion, units in an apartment complex are offered for sale, sometimes as part of a wholesale renovation. It also requires changing the legal structure of the property to allow the sale of individual units, which can be a lengthy and expensive process. If the Enclave were converted to condos, it’s possible most, if not all of the building’s tenants would be displaced in the process.

How can the Enclave’s tenants make things better?

Given the high number of market affordable housing units in the Enclave, one solution is for the tenants’ association to invoke their right of first refusal (ROFR). The association, the Montgomery County Housing Opportunities Commission, or the county itself could refuse a contracted sale and purchase the property instead for the same price. Unfortunately, this is not a viable option for tenants. As Keasling explained, the building is “immigrant heavy.” Most residents are new to the country and lack the resources to buy property.

The county or HOC could also refuse the sale, but until a few months ago, it would have needed to have cash on hand to cover the purchase and any costs associated with reselling the property to an eligible developer. This is a tall order given that the county’s housing production fund only has $100 million in its coffers. In February, the county council quickly amended the statute to allow the county to assign its right of first refusal to a “qualified entity,” such as a for- or non-profit organization with experience managing affordable rental housing. Despite the opening, the county declined to refuse the sale—likely because of the price.

While the right of first refusal didn’t work out for the Enclave’s tenants, the county may yet be able to help them. It’s possible that the sale will fall apart. Progressive Maryland believes the property is overvalued and as such, the new buyers could have trouble arranging financing. But if the two parties renegotiate a lower sales price, or another buyer expresses interest, the new sale would trigger the county’s ROFR requirements. The county might be more inclined to assign its rights to a qualified buyer with a lower price tag.

Even if the Enclave is sold, the county still has leverage. Most options for redeveloping the site will require county assistance. To build a larger complex, for example, the new owner will need to change the zoning, which the County Council has to approve. As the new owner considers these or other changes, the county is in a position to extract concessions that both preserve the current level of affordable housing and provide guarantees to current tenants in the Enclave. The chances of this happening are probably greater than they have been in a very long time, given the slate of tenant-friendly and pro-affordable housing bills recently passed by the council.