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How Nancy Osterman Lost her Home

(This story illustrates misbehavior by a city housing inspector and
city council members in St. Paul, Minnesota.)

Part 1

Nancy Osterman grew up on St. Paul’s east side. City housing inspectors peppered with her home with work orders. In response, Osterman put a new roof on the house, mortared the basement and exterior, and removed major items tagged by the inspectors. She spent more than $10,000 bringing the house up to code.

According to Osterman’s sworn affidavit, when all was complete, the city of St. Paul refused to return the bond that she had posted with the city but instead condemned the building.

Osterman states, under oath, that in the spring or summer of 2003 housing inspector Steve Magner and police officer Joel Johnson told her that “they were determined not to let me complete rehabilitation of my house ... Mr. Magner sent someone to look at my house and I was instructed by Magner to sell my home to that person or ‘I would be looking at a hole in the ground’ instead of my house.”

The price that inspector Magner set for his friend’s “purchase” of Osterman’s house was $40,000 - this at the height of the housing boom when such properties were worth four or five times that amount. Magner then proceeded to issue another set of work orders that would make it even more difficult to comply with the city’s inspection requirements.

Instead, Osterman turned to a friend, Julian Jayasuriya, who agreed to purchase her home and complete the work orders himself. The sales price was $90,000.” Hearing about the possible sale, “Magner again directed that I had to sell it under the proposed sales agreement if I wanted to get anything at all out of my home, or he would have my home demolished,” according to Osterman’s affidavit.

But the sale to Jayasuriya did go through. Inspector Magner now directed his wrath at the home’s new owner, threatening him “with dire consequences, including condemnation of my properties, when I expressed disagreement with his methods of code enforcement and ethics”, according to Jayasuriya.
On May 18, 2005, the city of St. Paul gave Jayasuriya sixty days to complete the work order. However, it required that he first post a $10,000 bond - much higher than what is normally required.

The St. Paul City Council met on June 15, 2005 - 30 days before the deadline given to Jayasuriya was to expire - to consider his case. Despite Jayasuriya’s explanation of the deal he had with the city and his progress with the building’s rehabilitation, the Council voted to have the house torn down in five days.

Reportedly, Jayasuriya managed to stay the building’s execution by commencing a court case. It has not been reported, however, that inspector Steve Magner was ever disciplined for his attempted shakedown of a city homeowner. As for the reneging City Council members, they do not have to be honorable people since they make the laws - (a little editorial here).

Part 2

The City of St. Paul was determined to follow through on its threat to demolish the house. In June, 2005, Judge Higgs (whom the city later had removed from the case) issued an order directing St. Paul city government to “desist and refrain from demolishing, damaging, or destroying the property at 14 E. Jessamine, St. Paul, Minnesota.” Negotiations continued between Julian Jayasuriya and the city throughout the year. An agreement was reached that Jayasuriya should complete the city-imposed work orders by January 13, 2006. He failed to meet that deadline.

The city announced that it would demolish the house at 14 E. Jessamine on Wednesday, February 15th. Jim Swartwood, editor of the Watchdog newspaper, contacted Nancy Osterman to see what might be done. Osterman had sold the property to Jayasuriya on a contract for deed and stood to lose tens of thousands of dollars if the city demolished the house and Jayasuriya defaulted on his debt obligation. She was reconciled to the idea that she would never live in that house again but wanted the money to “get on with my life.”

Osterman and Bill McGaughey, a member of the now-defunct Minneapolis Property Rights Action Committee, discussed the possibility of a protest demonstration at the house. They set it for 1 p.m. on Tuesday, February 14, which was the day before the planned demolition. McGaughey posted a notice of this event on the St. Paul e-democracy discussion list, which includes 390 community activists in St. Paul.

The posting created quite a stir. Lee Helgen, who represented the 5th ward on the St. Paul City Council, quickly weighed in with a posting on February 9 to the effect that Nancy Osterman was not the owner of record for 14 E. Jessamine (and therefore presumably had no business protesting the demolition) and that the house had a long history of code violations.

McGaughey responded by explaining how Osterman stood to lose if Jayasuriya defaulted on the contract for deed. He argued that the main consideration should not be the past history of code violations but whether the building was structurally sound and habitable now.

McGaughey also brought up the fact that the St. Paul City Council had reneged on its agreement with Jayasuriya while taking from him a $10,000 bond and that a city housing inspector had tried to force Osterman to sell the house to an associate for $40,000. “Most civilized people would agree that for a city inspector to demand sale of an inspected building to a particular person for a particular price is an example of corrupt government. Have we reached a point in St. Paul that this is considered OK?,” he asked.

In a posting titled “14 E Jessamine is a problem property!”, Helgen responded: “The property owners failed to maintain this property ... The neighbors who live on Jessamine should not have to put up with failure of the property owners to effectively deal with this nuisance property.” In all his postings, he failed to respond to the allegation of city corruption, especially Magner’s attempted shakedown of Nancy Osterman, although McGaughey raised the issue three or four times.

Others joined the discussion. Some recognized that the owners of 14 E. Jessamine had made a great effort to satisfy the work orders, that the house was basically in good shape, and there was little justification for ordering its demolition. Others agreed with Helgen. One man wrote: “Oh my goodness the grand conspiracy theorists have reappeared... Somebody thinks that there is a group of City employees linked up with the elected officials who think that it would be a good idea to stop private individuals from renting property ... Right Wing Talk Radio is Making The Public Crazy!!!!!! There are now people who actually believe the evil government is out to get them so that the nonprofit Public Housing Authority will make money!!!!!”

Soon the St. Paul e-democracy forum was buzzing with comments on this subject. Between February 9 and February 18, more than 200 messages were posted in relation to the proposed demolition - more than for all other subjects put together.

A common theme was that the people helping Osterman, associated with the Watchdog, were self-interested troublemakers who were trying to interfere with a legitimate process of city government. They were, said one, “an industry group that is chronically good at playing the victim in order to build public support for the loosening of housing codes ... It would seem the property rights group knows few bounds in making baseless claims, and Ms. Osterman's work with them suggests a pretty serious lapse of judgement on her part.”

Still there was no response to the corruption charge other than to suggest they were “ rumors ... used for a huge character assassination of Inspector Steve Magner.” One man proposed that it was unfair for the property owners to raise the corruption issue “given that the City is being sued” and officials would be ill-advised to talk about it. (However, no one was suing the city over this particular issue. There was no “gag order” or restraint of any kind.) In another twist, the same man proposed that inspector Steve Magner might actually have been trying to help Osterman. He, Magner, was proposing that, as one option to solve her financial problems, she might consider selling the house - and to facilitate that option, he proposed a buyer and a price. To be fair, many others did not agree with that logic and thought the city should respond to the corruption issue.

McGaughey’s posting on February 13 was dramatic: “FLASH - St. Paul officials break into 14 E. Jessamine.” On that day, Julian Jayasuriya was inside the house when he heard a noise. He discovered that several St. Paul city employees, attorneys and inspectors, had broken into the house through a back window. A number of police officers were with them. They threatened to have Jayasuriya arrested if he did not leave immediately. The city employees had photographic and other equipment with them.

When Nancy Osterman learned of this, she rushed over to the house along with another man. They were looking things over inside the house after the city employees had gone. Suddenly, there was a knock on the door. Inspector Steve Magner, accompanied by two inspectors from West St. Paul, was standing on the door step. He informed the two that the City of St. Paul now had control of the property. He angrily informed them to get out of the house or they would be arrested. On the following day it became clear that the city employees were in the house with a video camera looking for evidences of the house’s poor condition that would appear in the St. Paul newspaper.

The protest demonstration did take place in the early afternoon on February 14th, St. Valentine’s Day. About twenty-five to thirty protesters turned out. Television crews from Channel 5 (KSTP-TV) and Channel 9 (KMSP-TV) were there, including Cyndy Brucato, Channel 5’s news anchor. A reporter from public radio interviewed a number of people. Three squad cars were parked near the scene, but the officers were amiable and engaged in friendly discussions. It is reported that some female St. Paul City Council members were watching the event from the back seat of the squad cars, rather shocked that the planned demolition had provoked a demonstration.

An article in that day’s St. Paul Pioneer Press cited city concerns that “the house remains dangerous ... Video taken Monday (during the break-in by city employees) ... shows a hydraulic jack that is tilted noticeably to one side as it holds up a basement beam used to support the first floor.” To allay such concerns, the protesters asked Nancy Osterman to open up the house so people could look at this jack. What they saw were two screw jacks supporting a beam in a crawl space at the front of the house which evidently was an addition to the building. The jacks, which were not hydraulic, did not appear to be tilting. One man climbed into the crawl space to take a closer look. The jacks were solidly placed on stable foundations. They did not tilt. The main part of the house was supported by thick wooden pillars.

After a thorough inspection of the house, the Channel 9 news reporter knocked on the door of the next-door neighbor to ask his opinion of the “problem property”. This neighbor, a Hmong man, said he had had no trouble with the house.

When they were packing up their camera equipment, the protesters, who had not done a formal rally, proposed staging a last-minute event. As Ronald Reagan once had stood on a platform in Berlin, saying “Mr. Gorbachev, tear down this wall” so they began to chant “Mayor Coleman, don’t tear down this house”; but that didn’t sound right so they settled for the more rhythmic “Mayor Coleman, safeguard this house.” About ten seconds of that was included in Channel 9’s report on the 5 o’clock news.

The excitement was not yet over. The Watchdog editor, who was keeping an eye on the house, reported suspicious activity near the garage. He reported his findings to McGaughey who then emailed the St. Paul issues list: “FLASH: Apparent burglary today at 14 E. Jessamine”.

McGaughey reported: “A man wearing sunglasses, believed to be St. Paul housing inspector Steve Magner, was caught today removing building supplies from the garage behind the house at 14 E. Jessamine which the city of St. Paul proposes to demolish tomorrow. Called to the scene, Watchdog newspaper editor Jim Swartwood caught the incident on film. He plans to develop the photos and post them on the newspaper’s web site at”

There were two other men with Magner. A truck was parked near the garage, partially loaded with sheets of plywood and other building material. The garage door was open so that Swartwood could determine that the material came from the garage. Fearful of arrest, Swartwood and his companion beat a hasty exit and had lunch in a nearby restaurant - but not before taking photographs. When they returned to the scene, they could see that the materials had been returned to the garage.

Meanwhile, a judge in District Court was considering Julian Jayasuriya’s request to delay the demolition. This judge granted him a temporary restraining order to postpone the demolition until a full Evidentiary hearing took place to determine the house’s condition. This hearing was scheduled for February 24. The judge’s decision was issued in the mid afternoon on Wednesday, February 15th.

Around 5 p.m. on February 15, the Watchdog editor and his friend observed a work crew from Xcel Energy digging up the ground in the front yard of 14 E. Jessamine. Evidently they were disconnecting the utility lines. A photograph of Swartwood standing next to the backhoe was posted on the Watchdog web site. McGaughey posted another notice on the discussion list: “TRO violated at 14 E. Jessamine.” For those weary of the discussion, he noted that “It’²s unclear whether this incident represents the I-can-do-anything-I-please mentality of the St. Paul inspections department or is an innocent mistake. Perhaps someone at City Hall was unaware of the restraining order or forgot to notify the excavation crew to cancel a previously scheduled order.”

Meanwhile, City Council member Lee Helgen posted a press release issued by Bob Kessler, head of St. Paul’s inspections department. Kessler’s statement said in part: “We are disappointed in today's findings, as we have been attempting to resolve this situation for more than three years. This structure is dangerous and a clear nuisance to the neighborhood. However, we respect the Temporary Restraining Order granted and will not demolish this building until the outcome of a hearing scheduled for Friday, February 24, 2006.” It's reported that Kessler is no longer accepting interviews with the press on this matter.

Part 3

For a time, it seemed that the house at 14 E. Jessamine might be saved from the bulldozer. A judge had agreed to issue a temporary restraining order against the demolition. After a month, she lifted the order stating in a footnote that she was not recommending demolition before the owner’s attorney had time to take further action. Nancy Osterman received her copy of the court order on Friday, March 24th. A St. Paul neighbor had already called her to report that the demolition was underway.

It’s clear that St. Paul city government was no more respectful of legal processes on the back end, when it demolished the house before giving the owner’s attorney a chance to respond to the judge’s decision, than it was on the front end, when it began removing utility lines to the building after the restraining order was issued. The City Council and mayor were hell-bent on demolishing this house. “Good News! 14 E Jessamine Demolished” was the header of a posting on the St. Paul e-democracy forum from Lee Helgen, the City Council member representing this area. The house at 14 E. Jessamine had to be torn down because it was a “nuisance property” with a long history of code violations.

I’ve had a chance to talk with Nancy Osterman who owned the house until she sold it to Julian Jayasuriya when the city threatened to condemn the building. According to her, there were no code violations for many years - not until January 31, 2002, when city police did a drug raid on the house. Though the police found no drugs, they began pressuring Osterman to become a drug informant. Policeman Joel Johnston brought inspector Steve Magner into the picture instructing him to write up code violations on the house if Osterman did not cooperate with the police.

It’s true that Osterman at the time had a drug problem. The St. Paul police wanted her to go undercover and inform on some of the people she knew who were involved in drug activity. If Osterman cooperated, she could continue to use drugs and live in the house at 14 E. Jessamine and there would be no inspections pressure on the house. Osterman refused. Fearing for her own and her children’s safety, she instead went into a drug-treatment program. Upon learning of her decision, city officials put Osterman’s children in foster care. They began plastering Osterman’s house with work orders. They gave Osterman 24 hours to vacate the property.

Osterman moved into a one-bedroom apartment near University Avenue and Victoria. According to her, the St. Paul police continued to harass her at that location. The circumstances are quite bizarre. Someone stole her ex-husband’s check book and wrote a check in north Minnesota. The police then arrested the ex-husband in St. Paul; he was soon released. While making the arrest, however, they searched his pockets and found a crack pipe. The police then turned the ex-husband’s belongings (including the crack pipe) over to Nancy Osterman at her new apartment. Once in the apartment, the police noticed that the apartment was too small for two children and an adult, so they called child protection. Noticing the crack pipe on the bed (which they themselves had brought), the police decided they had probable cause to search Osterman’s apartment. They wound up “trashing it” in her words.

Then there’s the little stuff: sheriff’s deputies peeping through windows where her daughter lived, saying that they were looking for Osterman, the mother, when they should have known that Osterman was in jail. And another time, the police caught the daughter waiting for a bus after the 10 p.m. curfew; instead of simply telling the daughter to go inside the house, they hauled her off to juvenile detention center for the night. Then there was the time that Osterman was caught speeding and the police asked her for “dope”. She didn’t have any. Osterman thinks she was going 20 miles an hour - well within the speed limit - but the officer said she was going 40 miles an hour. Osterman was advised that it would be no use to contest this in court so she paid the fine. Meanwhile she completed the drug-treatment program and has been clean of drugs ever since.

I don’t know what to make of all these dealings with the St. Paul police. What I know for sure is that at 14 East Jessamine street, where a structurally sound house once stood, there is now a hole in the ground. Inspector Steve Magner had predicted so much when he had advised Osterman to sell the property to someone for $40,000. Also, the garage behind the house was demolished. Osterman does not know what happened to the building materials, cement mixer, and other things in the garage. Are they piled beneath the rubble of the building or did someone remove them first?

Nancy Osterman now lives in Isanti County. She feels as if she has died and gone to heaven. Osterman herself decided to demolish a small cabin. When she applied for a permit, county officials told her no permit was needed. Just go ahead and do it, she was told. Now that’s “property rights” when you get a certain distance away from the big city! Despite the rising cost of gasoline, many are making the choice to emigrate to such places.


Nancy's own statement

I know I am not liked or respected but that’s OK. I will write my story anyway.

Let me tell you how City of Ham Lake in Anoka County deals with “problem property” compared with the City of St. Paul. When I completed a drug treatment program in 2004, I moved to Ham Lake to take over management of a 50-unit property facing condemnation. There were many code violations that had been left unaddressed.

I talked with inspectors and city-council members who who were fed up with this property. Together we worked out a plan. The building and fire Inspector and I inspected five units per week. The tenant and I had one week to correct minor problems. If there was a more major problem I received additional time. City officials recognized that I couldn't control all tenant behavior; I made reports on what I witnessed.

This system worked well. Granted, it took some time but it worked. The inspectors in Ham Lake acknowledged that this was an older building and didn't ask for all the impossible repairs that would bankrupt an owner as St. Paul does. Best of all, they treated me with respect - something I never received in St. Paul.

After complying with this inspection routine for one year, I now do my own inspection on each apartment every three months. I give a written report of the apartments’ condition and repairs I have made. Then once a year, together with the building and fire inspectors, I go through each unit. Things are working out great!

When I do have a problem with a tenant, I don’t have to get rid of the tenant overnight. City officials here understand that it’s a long process to evict someone.

I have been clean since June 10, 2004 and feel that I have been punished for it by St. Paul city officials. Why? When I refused to become an undercover informant deciding instead that I would get my life back together, a St. Paul police officer told housing inspectors to write me me up with so many work orders that I could not afford to repair my home. I have witnesses to his statement.

I will never understand how a city official would rather see you continue using drugs so you could work with the police to catch other drug users than allow you work with your own family to put your life back together. It’s OK. I did manage to move forward with my life. I am building a home on the lake away from the city for my children and me.

I don't agree with the policy of moving the families of drug addicts to another location or to the streets. Give them the help they really need. They need long-term treatment and sober housing for their families to keep the family together and deal with the drug problem.

Drug addiction is an illness. Treat it like one. This could happen to someone close to you. Think about it. Addiction does not have an overnight cure or even a 30-day cure. Even so, these people can be helped and become productive, tax-paying citizens. Taking homes away from families hurts them more than you will ever know. It is a big obstacle to recovery.

Until I met the Substance Abuse team in court I was led to believe there was no help for me. I learned that this group of Corrections people cared about people - they would help you to the max! They are the most supportive people I have ever met. That goes for everyone from the Honorable Judge down to the Probation Department. There is hope for everyone if they are given a chance and the right tools.

Taking homes away from drug addicts is not the right approach. You need to arrest the people with these problems and deal correctly with the problem itself. I don't think anyone’s goal in life is to become an addict but the reality is that it does happen. If you don't care about people, then you can't help them with their problem. They just keep moving from one bad situation to another. There are better ways to deal with this.

St. Paul city officials chose to threaten me and take my home away. That is how I see St. Paul dealing with these problems. I now live a wonderful life blessed by God.

My heart goes out to the people who are still trapped in drug addiction. The community can decide whether to help them and their families or to hurt them more than they have already hurt themselves. That is the choice that will have to be made.

Thank you for taking the time to read my message even if it means little to you.



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