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Abuse of Property Rights in Minneapolis and St. Paul
Examples and Types of Abuse cited by Metro Property Rights Action Committee
1. City inspectors disregard code violations caused by tenants. Some tenants do damage to rental property in order to create code violations that can be an excuse not to pay their rent. For instance, they might break windows in the winter and complain of inadequate heat. The inspectors routinely hold the property owner responsible despite evidence of tenant wrongdoing. (Witnesses: Jim Swartwood and Steve Meldahl)
2. Hearing officers who hear inspections appeals are paid by the city and routinely rule in the city’s favor. We are talking about Fabian Hoffner who is alleged to have been paid $175,000 by the city of Minneapolis over a three-year period. Some landlords who have come before Hoffner believe that his decisions always favor the city. Another referee of questionable merit is Jack Vigoran who was hired by the head of the Minneapolis water department fifteen years ago. Reportedly, he appears not even to listen to landlords’ arguments but simply rubber stamps city assessments. (Witness: Steve Meldahl)
3. Prestigious law firms represent tenants pro bono in meritless cases referred by Legal Aid, sometimes allowing tenants to remain in their rental units without paying rent and forcing landlords to incur legal expenses. Briggs & Morgan, a law firm in downtown Minneapolis, took the case of Jim Swartwood’s tenant in St. Paul after he had been awarded an Unlawful Detainer for non-payment of rent. The tenant then caused damage to Swartwood’s property and called inspections. These facts were known to Briggs & Morgan. This firm petitioned the court under the Tenants Remedy Act to remove Swartwood from management of his own property and turn control to a court-appointed trustee. The judge, who had previously been a partner at Briggs & Morgan, refused to recuse himself from this case. The tenant has now received seven months of free rent. Lindquist & Vennum and Njus & Johnson are some other law firms known to take such cases. There seem to be no criteria for such law firms taking pro bono cases except perhaps that the client not be a landlord. (Witnesses: Jim Swartwood and Steve Meldahl)
4. The City of Minneapolis has levied excessive “fees” against rental property owners as a revenue-raising device. The city requires the owner of housing which is vacant for at least five days to register with the city and pay an annual fee of $6,550. This so-called Vacant Building Registration (VBR) fee began at $300 in 2007. It was raised to $2,000 in 2008, $6,000 in 2009, and $6,550 in 2010. The law does not allow cities to raise revenue (in lieu of taxes) through fees; the fees must be in proportion to related expenses. In this case, there are few such expenses. For instance, unpaid utilities associated with vacant buildings go with the property & are not borne by the city. This fee is clearly excessive & revenue-raising. (Witnesses: Jim Swartwood and Mahmood Khan)
5. City inspectors have been known to force landlords into vacancies which result in paying the VBR fee. After a tenant trashed a house owned by Jim Swartwood, a Minneapolis housing inspector issued a large number of related work orders and also ordered that the building could not be occupied until all work orders were completed. Because Swartwood could not finish the work in time, his property was vacant for the required period and Swartwood was required to pay the Vacant and Boarded Registration fee. (Witness: Jim Swartwood)
6. City inspectors arbitrarily ignore compliance with work orders and proceed straight to condemnation. On a Friday, a tenant of property owned by Steve Meldahl complained to Minneapolis inspections that her furnace was not working. Meldahl’s worker fixed the problem immediately, which might have been caused by the tenant herself. Meldahl telephoned the inspector to say that the furnace was now functioning and he would wait for the inspector on site. The inspector did not answer the call. Instead, he condemned the property on Saturday. When the city condemns houses, it is supposed to get a court order and the property owner is supposed to be notified of a hearing. (Witness: Steve Meldahl)
7. The City of Minneapolis has established a “Problem Properties Unit” - now called “Guided Compliance” unit - to harass certain disfavored landlords, curry favor with neighborhood groups, and provide employment for current or retired politicians. This unit requires staff support from several city departments. It is essentially a mechanism for unequal enforcement of city codes, designed to run certain property owners out of business. The “problem properties” concept is a public-relations ploy that places the blame for criminal activity on property owners rather than on the city police or the criminals themselves. It is a hate-driven approach to housing regulation which curries favor with neighborhood groups and helps City Council members get re-elected. Small business owners are unpopular in Minneapolis political circles.
8. The City of Minneapolis sometimes organizes its inspections activity to make sure that a property owner cannot comply with the work orders and therefore will be punished. This is a specialty of the Problem Properties Unit. One such tactic would be to assign housing inspectors to inspect all of a person’s properties at the same time, producing a huge volume of work orders that must be completed by a certain date. The property owner is unable to respond to these orders in time. The city assesses penalties on the work orders that have not been completed or sometimes condemns the buildings. (Witness: Howard Gangestad) Another variation is to use health inspections to condemn a building so that it becomes vacant and then use housing inspectors to do a full rental-license inspection whose work is expensive and time-consuming. The property owner is meanwhile not receiving rent. He could be put into a position of forfeiting his property or having to sell at a low price. (Witness: Bill McGaughey)
9. If the city of Minneapolis revokes two rental licenses on property owned by the same owner, it is allowed to revoke the licenses on all properties owned by that person. The theory here is that the landlord is a bad person - which is politically salable to block clubs and neighborhood groups wanting to demonize certain individuals - rather than that conditions exist at particular properties that might warrant revocation of the license. Politics, not fairness, drives property regulation in this instance.
10. If a landlord has a judgment against the city, it can be difficult to collect. The tax court ruled that Steve Meldahl’s properties were overvalued by the city assessor. The city refused to refund the overpayment saying that Meldahl had to pay the 2nd half taxes first, even though those taxes were not yet due and the refund exceeded the amount owing. Meldahl estimates that it could take two years to get his money. (Witness: Steve Meldahl)
11. The city of Minneapolis (and other municipalities) charges a $1,000.00 conversion fee if a vacant or foreclosed house is converted into rental property. Again, there is a question whether the city incurs additional expense as a result of this change. Such an ordinance reduces the flexibility of property owners. It creates a disincentive for investors to purchase vacant or foreclosed properties, fix them up, and put them back on the market and tax rolls. (Witness: Doug McGibbon)
12. The process of evicting troublesome or nonpaying tenants in Minnesota courts is too costly and lengthy. In Colorado, tenants can be evicted within three days of being served a court summons. In Minnesota, it can take three to five weeks - up to three weeks until the court date and perhaps another two weeks for the writ to be served. The court filing fee to seek an Unlawful Detainer is $322. Then there are $155 in additional fees to get a writ and have the Sheriff serve it. Tenants may receive free representation from Legal Aid to fight the landlord in court. Most evictions have few legal issues. Housing evictions are a cash cow for the court system. (Witnesses: Doug MacGibbon, Mahmood Khan, Steve Meldahl)
13. City inspectors often hold landlords responsible for maintenance problems that are the tenants’ responsibility in the lease. For example, residents of homes occupied by a single family are often required to do snow shoveling, cut grass, pay water bills, etc., under the lease. Inspectors often cite the property owner for those violations. (Witness: Doug MacGibbon)
14. The city of Minneapolis sometimes illegally requires city-licensed contractors to do general-contracting work which the property owner is entitled to do on his own. In one case, the property owner checked with the director of the state department of labor & industry who assured him that he could do his own work; but the Minneapolis inspector refused to allow this. (Witness: Mahmood Kahn)
15. A St. Paul inspections supervisor threatened to have a home demolished - and he carried out this threat - if she did not agree to sell the house to a certain named individual for $40,000. Originally, St. Paul city police wanted the woman to be a drug informant. When she refused, the problem was turned over to housing inspections. To the best of our knowledge, the inspections supervisor has not been punished. His misconduct is among the complaints brought in court against the city of St. Paul by a group of St. Paul property owners. (Witness: Nancy Osterman) Read the story.
16. St. Paul housing inspectors attempted to steal building supplies from the garage of a house that they had condemned. City employees broke into the house through a window, threatened the property owner with arrest, and then leaked false information to the press that a single, tilting hydraulic jack was holding up the house. Contractors hired by the city disconnected the utilities to the condemned house despite a restraining order temporarily halting the demolition. These thug-like actions indicate the general lawlessness and arrogance of St. Paul city officials. Protected by the City Attorney’s office, they do as they please. (Witnesses: Jim Swartwood, Nancy Osterman) Read the story.
17. The St. Paul city council gave the new owner of the above-mentioned house sixty days to complete existing work orders if he posted a bond of $10,000. Thirty days before the deadline, the same city council ordered this building to be demolished. The City Council went back on its promise and tricked the property owner into forfeiting $10,000 to the city. (Witnesses: Julian Jayasuriya, Nancy Osterman) Read the story.
18. St. Paul city inspectors condemned the home of a 68-year-old woman who lived behind the state capitol and served a bench warrant for her arrest while she was in the hospital having kidney dialysis. City workers excavating a trench near her home had accidently damaged the sewer line and the city decided to hold the property owner responsible. She was forced to allow city inspectors into her home who proceeded to condemn it. City inspectors hounded an innocent, elderly woman for problems that the city itself had caused, forcing her to become homeless. (Witnesses: Betty Speaker, Joe LeVasseur, Jim Swartwood) Read the story.
19. St. Paul inspectors condemned a building owned by a newspaper publisher after he had run an article about the woman mentioned in #18. This action was so obviously retaliatory that a hearing officer dismissed the condemnation. (witness: Jim Swartwood) Much the same thing happened to a former legislator, Phil Krinkie, owner of St. Paul Heating, when he introduced a bill that would allow property owners to hire their own inspectors. His business was peppered with work orders and Krinke was forced to spend $10,000 to defend himself in court.
20. After a fatal shooting took place in a bar whose security apparatus had failed to detect the gun, the city of St. Paul began a process to revoke the bar’s liquor license. A judge who had inspected the bar refused to grant its request. The city then began harassing the female bar owner by arresting and jailing her, requiring an expensive hood for a grill, tapping her phone, and confiscating her license plates. The area’s City Council member, who attended a nearby church, visited the bar periodically to make threats. It turned out that the church wanted to buy out her interest inexpensively so that the site could be used for a church-owned assisted-living facility. This is garden-variety corruption and thuggery associated with St. Paul city officials. (Witness: Debra Johnson) Read the story.
21. The Minneapolis mayor and a leading City Council member (as reported in a Star Tribune article) virtually ordered the city’s fire inspectors to condemn a building that housed a convenience store, “Uncle Bill’s Food Market”, after an unrelated shooting took place in a north Minneapolis neighborhood. Some area residents believed it attracted the wrong clientele. Fire Department inspectors promptly condemned the property for structural defects - specifically, sagging floor joists that were later found not to exist and eventually had the building demolished - even though the same inspectors had signed off on the condition of the building six months earlier. This is an example of inspectors inventing code violations to condemn buildings at the urging of their superiors in government. (Witnesses: Bill Sanigular, Ali Hassan Meshjell) Read the story.
22. A high-ranking Minneapolis police officer has accused the Walgreens drug store chain of inviting criminals to rob its stores by allowing customers too easy access to the stores and selling the wrong kind of merchandise. Evidently, Walgreens stores have suffered a disproportionate number of robberies. It is suspected that this campaign is partly a ploy to force Walgreens to hire more off-duty police officers. (Witness: Walgreen loss-prevention manager Ryan Harris, reported in City Pages, December 8, 2010)
23. Minneapolis police operatives routinely accuse the owners and managers of small convenience stores of selling “drug paraphernalia” if they sell single cigarettes - you can take the tobacco out and insert marijuana - Chore Boy products, clay pipes, or oxycodone in 80 milligram tablets. However, many of the larger stores sell these products as well. There is no law or ordinance forbidding their sale. This is selective interpretation or misrepresentation of law to achieve certain police objectives. (Witness: Bill Sanigular)
24. The City of Minneapolis revoked the grocery licenses of Big Stop (1800 26th Street North) and Wafanas (2326 Lyndale Avenue North) convenience stores at the urging of Council Member Don Samuels. Both stores had recently been sold to persons of Middle Eastern descent who had taken the precaution of checking first with city licensing officials. They were both told that there was no problem with purchasing the stores from the city’s standpoint. The new owners each put more than $100,000 into renovating the stores. Shortly afterwards, Don Samuels produced evidence of numerous police calls to these stores under the previous ownership and had their grocery licenses revoked. This is another tale of city treachery and blame shifting for crime problems. (Witness: Ali Hassan Meshjell) Read the story.
25. Trygg Truelson, owner of the iconic “Porkys” fast-food restaurant on University Avenue in St. Paul, was approached about opening a similar restaurant on Central Avenue in northeast Minneapolis. During hearings before the Minneapolis city council, a council member proposed that the new Porkys be required to erect an expensive concrete wall behind the parking lot to muffle sound. His amendment was not approved. Nevertheless, three days after the restaurant opened, a team of city inspectors descended upon Porkys and kicked all its customers out of the restaurant, claiming that it was not in compliance with city regulations. Even though the Council had not voted to require a concrete wall, the area’s Council member, who was feeling pressure from a neighborhood group, was now insisting on it. The restaurant continued in business during a lengthy legal battle, but then Truelson decided it was not worth the trouble. Porkys closed. (Witnesses: Trygg Truelson, Nora Truelson) Read the story.
26. Minneapolis City Council member Diane Hofstede went after Gabby’s restaurant on Marshall street in northeast Minneapolis after “neighbors” complained about the noise and other nuisances that took place after the restaurant’s Tuesday evening event. Gabby’s was forced to hire extra security, cut back on hours, and change its program. Its owner, Jeff Ormond, sued the city and won a substantial settlement. Subsequently Gabby’s went out of business. (Witness: Jeff Ormond)
27. A sports bar called “Johnny A’s”, near Broadway and Washington Avenue in north Minneapolis, was forced out of business by the city because police believed its clientele was too rowdy. Another, even rowdier bar nearby was allowed to remain open. (Witness: Johnny Alexander)
28. The city of Minneapolis ordered a 10-unit apartment building at 2400 Dupont Avenue North, owned by Leroy Smithrud, to be demolished. Originally, Smithrud received work order relating to peeling paint along the roof. He fell from a ladder while trying to correct the problem and became permanently disabled. He was unable to complete the work orders in time. A group of lawyers persuaded the tenants that they need not pay any rent. Smithrud evicted them. Because a zoning change took place and the building had been vacant for a year, it was put on the 249 list which gave the City Council the right to have the building demolished at the owner’s expense. Smithrud found a buyer who agreed to purchase it to house tenants with special needs, providing 24-hour onsite management. Instead, on August 15, 2008, the City Council voted to have the building demolished. (Witness: Leroy Smithrud)
29. Another case considered at the August 15th City Council meeting was that of Morris Klock, a north Minneapolis property manager. Because Klock had failed to submit a suitable management plan after illegal drugs had twice been discovered in his building, the Council voted to revoke his rental license. Klock tried to have Council Member Don Samuels arrested at the meeting. He testified that he had been summoned to the Butter Ball Bakery on Broadway in May 2007, where Don Samuels and a city inspector had physically threatened him. The police would take no action at the Council meeting, chaired by Samuels. This was later the subject of a lawsuit brought by Klock and his parents against Samuels. (Witnesses: Morris Klock, Don Samuels)
30. Neighborhood associations are given a certain power by the Minneapolis City Council to screen business proposals requiring action by the city which affect their neighborhood. Some associations try to exact a price from the businesses for approving their projects, sometimes under the guise of Community Benefits Agreements. This often involves preferential hiring. The neighborhood-association staff, if any, is paid by NRP (Neighborhood Revitalization Program) funds or by foundations. Because these neighborhood associations act as political operations rather than service providers, it might be asked why the foundations - which exist as an alternative to rich people paying estate taxes - should be allowed to use their untaxed funds to support particular political groups and their points of view, especially when these groups are generally hostile to small businesses. There is a certain amount of “free money” floating around that gives power to people whose main contribution to a community is their willingness to sit through long meetings. (Witness: Bill McGaughey) Read the story.
31. Minneapolis residents are required by ordinance to shovel their sidewalks to the full width down to the pavement within four hours after the snow has stopped falling. If they do not do this by the date indicated on the citation, the city can send expensive contractors to do the work for them charging the property owner. (As the ordinance is written, Minneapolis residents dare not take weekend trips out of town for fear that snow will fall and their sidewalks will remain unshoveled after four hours.) After the first citation has been issued in a season, the city can send the contractors out without further notification. On some major highways, city or county snow plows traveling at high rates of speed dump snow or ice on freshly shoveled sidewalks. The property owner is responsible for shoveling them again. A similar situation exists in the summer when property owners are responsible for keeping grasses cut below eight inches. (Witness: Bill McGaughey)
32. City officials are unprofessional in their approach to landlords. Some inspectors illegally force their way into buildings without giving the required notice. The manager of Housing Inspections Services, Janine Atchinson, told a judge in court that she did not like Mahmood Khan although she had never met or spoken with him during his 24 years of owning Minneapolis rental property. Council Member Don Samuels emailed a group of Northside supporters that he would lead to picket at landlord Steve Meldahl’s house and distribute a leaflet with an “emotionally introduced version of the facts” to Steve’s neighbors. (Witnesses: Mahmood Khan, Steve Meldahl)
33. Rental licenses can be revoked for minor reasons, even if they are the tenant’s fault. The city of Minneapolis revoked the license on a house owned by Mahmood Khan because a tenant had illegally put a bed in the basement and then called inspections. This was done after the tenant had been served eviction papers. A previous tenant had had a bed in the basement but inspections knew it had been removed. Fabian Hoffner, of course, denied Khan’s appeal, so now he has to appear before the Minneapolis City Council to petition for return of the rental license, paying a $3,000 fine. If two rental licenses are revoked for the same property owner, the city can revoke all the owner’s licenses and effectively put him out of business. That’s good for someone who wants to buy properties on the cheap; bad for the city’s and state’s tax base. (Witness: Mahmood Khan)
Note: These are some of the more recent examples of abuse.
A general scheme of legislation to deal with these problems
It is conceded that the residents of cities such as Minneapolis and St. Paul have the right to choose their own elected officials and that some officials behave badly. The state has an interest in preserving the state’s tax base. Where local officials are recklessly destroying the tax base (such as forcing legitimate businesses to close or tearing down structurally sound housing), the state needs to impose sanctions on local government.
This can be done through Local Government Aid. State government needs to share some of its revenues with local governments which must provide services to people. However, if local officials waste the tax base, the state of Minnesota can punish those governments by cutting their state aid.
We propose that an appeals board be established, controlled by state government. Activities by Inspections or other local-government decisions that destroy the tax base, either directly or indirectly by discouraging business activity, will be evaluated by this board; and when a local government is found to be at fault, its state aid will be cut by a certain amount.
The appeals board would identify the cause of that local-government decision. Where a particular elected official is found to be at fault, that fact will be known by the time of the next election. Abusive officials can be personally tied to the cuts in state aid, causing their constituents to bear a greater tax burden.
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