Tuesday, November 27, 2012

Problem Landlords File Fair Housing Complaint

Post by the Hawthorne Hawkman, photo from the Johnny Northside blog.

A few weeks ago, a small blurb caught my attention in the Star Tribune.  A group of landlords had filed a federal fair housing complaint against the cities of Minneapolis and St. Paul.  It was worth barely a few inches of newsprint, but the small article was so chock full of wonkish housing policy tidbits that I had to dig deeper.  What kind of complaint?  Who, specifically filed it?  And most importantly, could I track down the full complaint document?

Well, the answer to the last question is an affirmative.  The complainants' press release can be found here, and here is the full complaint document.

The case alleges that Minneapolis and St. Paul haven't complied with some reporting requirements, and goes on to state that since the Complainants rent predominantly to minorities, each city's housing policies have a disparate effect on people of a protected class.  Therefore, neither Minneapolis nor St. Paul should be eligible for federal funds such as Neighborhood Stabilization Program (NSP) or Community Development Block Grants (CDBG).  As for who filed the complaint, there are a few infamous bad actors involved, such as...

...Ronald and Julie Folger, who lost all of their Minneapolis rental licenses last year, and two other landlords who need no northside introduction:  Mahmood Khan and Steven Meldahl.  There are two LLC's listed as Minneapolis Complainants as well, RBE Properties and SJM Properties.  RBE does not have a current license through the state of Minnesota, but basic Google searches connect the name to the Folgers' rental enterprise.  SJM is Meldahl's LLC.  James Swartwood, a sometimes fringe political candidate and longtime landlord active with the Landlord Politics group, rounds out the Minneapolis Complainants.

Swartwood holds the distinction of being the only name in both the Minneapolis and St. Paul groups.  St. Paul's Complainants are:  Rock of Ages Missionary Baptist Church and its reverend Sylvester Davis, Johnny Earl Howard Sr., Gregory Ryan, David Roering, Joseph Egan, Robert Egan, Leslie Lucht, Ronald Staeheli, James Swartwood, and Kenneth Johnson and his LLC, CK Properties.

Since I am not as familiar with the St. Paul landlords and the ins and outs of St. Paul's housing policies, I'll focus on the Complaint on this side of the river.  Although I do welcome any insight readers might have about the particulars of our sister city's case.

Normally my first inclination would be that anything Khan and Meldahl team up on HAS to be wrong.  The fact that northsiders have been trying to rid ourselves of these two slumlords for years, and they're joined by someone the city actually has managed to shut down lends no credence to the claim on its face.  But what if they're right?  What if this is the housing equivalent of discovering plutonium completely by accident?  Or in a reference that only the nerdiest of readers might catch, Ultron creating The Vision, which eventually led to Ultron's defeat?

Under federal guidelines, the complaint alleges, St. Paul and Minneapolis are required to do a timely analysis of housing impediments (referred to as "AI" in the document).  Cities are supposed to review their housing codes, policies, and practices to determine if there are any impairments that primarily impact minorities or people in protected classes in a negative way.  Failure to adhere to this guideline may result in funds being withheld.  An AI report is required every 3-5 years.

The Complainants undercut their own argument by admitting that AI reports were done in 2009, although they later allege that the 2009 documents were incomplete and have yet to be updated.  I find the prospect that this claim will stand to be highly unlikely.  The city employees working on qualifications for such funding almost certainly did their job well, and if even they didn't then I think we'll see a resolution that isn't so draconian as to remove all federal housing funding in the midst of a crisis.

The approach that just might work - although it's a long shot - is the claim that the cities' practices, while impartial on their face, have a disproportionately negative impact on people of color or people with disabilities.  The Minneapolis Complainants have 170 rental units, and allege that over 80% of those units are rented out to persons of color, many of whom are disabled as well.  And the part of that argument that holds the most water is that demolitions, displacement, and inconsistent enforcement of housing policies have a disparate effect on people of a protected class.

However, even if that line of reasoning holds up to federal scrutiny, it would seem to almost HAVE to backfire on the Complainants.  When eighty percent of your renters are people of color, and you fail to maintain your rental licenses due in part to basic clerical errors, then maybe the actions of Ron Folger are violations of federal fair housing rules.  When eighty percent of Stephen Meldahl's tenants are in a protected class, and he frequently loses properties to tax forfeiture and demolition, how is Meldahl innocent of the exact same charges he brings forth?  When murder suspects are arrested at a Khan property, when child prostitution is uncovered at another, and when a girl's dead body is found at yet another Mahmood Khan house, there would seem to be no way he could argue that minorities aren't disproportionately impacted.

The Minneapolis Complainants, at least, are guilty of far graver injustices than the ones they allege of the City.  The more publicity they try and make for themselves, the easier it will be to ultimately hold them accountable.


  1. Well these civic minded individuals obviously see things differently than you. The heat must be getting to them.

  2. How many "disabled persons of color" are represented as litigants in this case?

    Go team go! I hope they win.

    Then maybe the City will rework the problem properties administration to pursue the OWNERS of these tenements under the Minnesota Nuisance Property Act rather than attacking the STRUCTURES for code violations. This means we can finally have some recourse for Nuisance and Criminal activities at these sights as well as code violations from these poverty pimps. It also means that CPED inspections would be self funded since penalties and court costs that are directed towards the profiteers (not linger on vacant buildings) revert back to the City. It gives the City recourse to step in and make necessary changes at the owners cost and encourages receivership before the home has been abandoned so those "low income minorities" will get proper housing and won't have to be displaced.

  3. "And the part of that argument that holds the most water is that demolitions, displacement, and inconsistent enforcement of housing policies have a disparate effect on people of a protected class."

    How many of these foreclosures were owner occupied and how many were investment properties. I think you will find that if investors had not contaminated the market, most owner occupants would have had the property value to refinance rather than face foreclosure.

    It is true that the City is insanely inefficient at protecting community livability standards.

  4. Having done thousands of Minneapolis Truth in Housing Inspections over the last 25 years, both for owner occupied and non owner occupied properties, I still say that all properties whether owner occupied or rental properties should ALL be inspected by "qualified" inspectors! Some of the illegal and shoddy work done by homeowners to their own homes is as bad if not worse than the rental property remodeling work done by the suposed slumlords. The homeowners have tenants too - their kids! No disparate impact claim if that happened.

  5. In regard to the photo from the Johnny Northside blog, it is a Star Tribune photo that was used in a slideshow that was then lifted for use by this blog that is now being used by YOUR blog. I think.

    That photo has been used and worn out like carpet in a Mahmood Khan rental.

  6. Anon 9:15

    If you are saying that social services needs to take a heavier hand in our community you are correct.

    Sure, there are a few knuckle-headed homeowners who shouldn't be doing their own work and if that impacts others around them they should be held to the same standards of inspections. When the home goes up for sale and you do your Truth in Housing inspection these errors will personally impact them financially.

    But, if you live in this area you know that building code violations are the tip of the iceberg. The landlords that don't care about the quality of repairs also don't care who lives in these homes or what goes on there. They don't care about the neighbors or the community. All they want is to reap the greatest financial profit for a minimal investment. It's just a business.

    The difference between shoddy work done by homeowners and that of done by profiteers is that the home owners live in what they create vs. landlords who are (in many cases)subsidized through public housing funds get market rates under assumed business entities that right off and walk away from financial losses leaving the mess to local taxpayers.

    It is beyond my understanding why the City of Minneapolis ties problem property administration to structural code violations.

  7. Jeff, this story you wrote is great work and you don't need me to tell you that. I do think more explanatory hyperlinks would help the story to be a long term archival resource because this turn of events is going to play out over the long term.

    By the way, if anybody wants to see the ugly truth of "disparate impact" (in terms of what these slumlords are doing to their tenants, many or most people of color and/or handicapped) go to the hyperlink below and read up about the conditions at Steven Meldahl's property at a home where a toddler was crippled.


    And, yes, this complaint is a sign the community pressure is getting to them. I say keep up the pressure.

  8. we are just asking for fair playing field to do business. There are many small landlord that be run out of the business . So the city can take over the business of rentals. it happend in CAL. and the city that did it went broke. I was taught that you can do anything in the United State of America. I guest that I am wrong. Let the cities to do the business and see how many homeless there is?

  9. You are right, Karl, when you say that you are wrong.

    The decent people in North Minneapolis are banding together, filing complaints, attending hearings, documenting facts, and using social media to drive out the slumlords from our neighborhood. Now is the time for slumlords to take stock of the trend and pack their bags for wherever it is these loathsome slumlord creatures go to roost like flying monkeys when neighborhoods turn themselves around.

    Read the article linked below and take heed, take heed, for the hour or your imminent defeat and flight into the night is nigh, is nigh.


    1. Hey Johnny Northside: Your blog is always an interesting read and I think a good way to keep up on happenings. With this comment I wonder if maybe you're being a bit jaded. North Minneapolis has the largest housing stock of all of Minneapolis. A good portion of that housing is rental for a reason. A study of economics shows that owning a home does not always provide the greatest financial benefit to the inhabitant. As you know, it's expensive and 30-40% of our population can't afford it. So, what should we do?

      It seems like history has proven when "decent people" are "banding together" they do indecent things in the name of what THEY feel is right. The Christian crusades come to mind. How about The Hunch Back of Notre Dame or Frankenstein. " Drive out the monsters". Here's a thought, the decent people could band together and buy a house to rent to someone and run the place how they see fit? Maybe the decent people could buy the whole city? You could risk some of your own money and hold your self to your high standards. Before calling someone a " loathsome creature " maybe you should see if you can do it better. Seems to me like those principles are much more productive than name calling and whining. Just a thought.

  10. Do Anything?

    You mean like housing drug dealers and pedophiles in residential neighborhoods? You mean like taking tax payer dollars at market rate to house the poor in dilapidated conditions that are shoddily maintained with incompatible materials? Do you mean forcing local community members and law enforcement to monitor the activities at your "investments"?

    Is that your idea of FAIR? What gives you the right to profit at the expense of others around you?

    You won't find many good landlords standing up to support your cause because your actions hurt them also. But go ahead and display your ignorance so we can toughen the laws and keep your kind out of residential neighborhoods!

  11. I agree with Anonymous November 27, 2012 9:15 PM
    We really need to take a look at the entire housing stock to lift the neighborhood. Why should we allow owner occupants to hold property that does not meet the quality standards Minneapolis is setting for rental properties. Don't home owners and their kids deserve the same protection that the city inspections department is offering to rental unit tenants? I think that owner occupants would eventually appreciate the push that bi-annual inspections would provide to keep their properties to a proper standard. It would make them more salable and lift property values across Minneapolis.

  12. Anon 2:54

    Most residential properties do meet Minneapolis standards because these people actually live in those homes.

    But, if you are so concerned about the welfare of the few children in owner occupied homes that may be sub-standard then I can't think of a better revenue source to fund the additional inspections than to raise the fees for rental licensure. $$$

    Your right, As soon as all the greedy landlords stopped investing here the property values would dramatically increase.

    1. REALLY? Is it true that when you have less buyers for a house that the prices of the houses go up? If that's the case, then maybe the city and the neighbors should start voting on a potential buyer for every house. Maybe we could even put a system of parameters in place that only let a certain kind of person buy a place. We could limited the color of the house as well. If we all banded together I'm sure we could come to an agreement on who should buy and what they can do. That's sure to drive housing prices up isn't it?

      Seriously, do you actually believe in the things you say or do you just not know better?

    2. Economics 101. Supply and demand. Fewer houses, same or more buyers, price goes up.

  13. What really needs to be done is to get rid of the Minneapolis Housing Inspectors and use licensed and bonded professional inspectors that belong to NAHI or MSHI. Believe it or not, not one single Minneapolis Housing Inspector has any sort of training or accreditation! The City stated years ago that they are not required to train or supervise their Housing Inspectors. How can that ever work?

  14. So tenants don't "live" in their homes? This is a rather arrogant and classist statement.

    "Most residential properties do meet Minneapolis standards because these people actually live in those homes. "

    Why would rental licenses fund inspections of owner occupied properties? I would think that occupied is occupied and we would put the cost for "occupation inspections" right on the city tax bill. One inspection per unit would be a very fair way to ensure all properties are safe for occupancy and neighborhood standards and would be funded by that property directly. A very fair way to fund this.

    I'm fine using either city inspectors or outsourcing this to an appropriate vendor. My concern is the safety of every property so as long as its done by a qualified professional we should be fine.

    Maybe this is something the neighborhood group could take up? I'd love to see a pilot start in North where clearly the need for property inspections and general upkeep of properties is the highest.

  15. No, Landlords don't live in the squalled tenements they expect to rent out to the poor. In fact, very few of these slumlords even live in the community.

    The reason rental properties need to pay more is that they are the primary source of nuisance complaints, structural assessments, and criminal activities that detract from our community and are an overwhelming drain on City services.

    And Yes, neighborhood groups are addressing this problem. Thank you for dramatizing the ignorance our local community is faced with.

    1. Maybe you should look in to how much landlords pay in fees, taxes, and fines. In reality, it's not even the landlord that pays the fines. They are passed on to the tenant. Any tax, fine, fee on a business is always passed on to the consumer. Seems to me like it's you who is dramatizing the ignorance and propagating a hate based fear mongering solution to a financial issue.

    2. Or in the case of Mahmood Khan, he has over $120,000 in unpaid fines and assessments on his Franklin Bank-financed properties alone. Before Paul Koenig's slumpire came crashing down, he had hundreds of thousands in unpaid back taxes, city assessments, and mechanic's liens. Word is that Stephen Meldahl is declaring or has declared bankruptcy. Who pays those bills? Ultimately these slumlords pass the buck to the taxpayers and communities they've preyed upon.

  16. Anon 7:05

    Really! Is this where I sign up for my credentials?



    The State of Minnesota has no requirement for licensure and neither do these fee collecting trade/referal organizations that you elude would make inspectors more qualified.

    Please publish the name of your company so everyone can see who is trying to pull the wool over our eyes.

  17. I think we need to sic Johnny Northside on these guys and shut their efforts down. If they happen to win Minneapolis will lose a source of much needed funding. Perhaps some guerrella blog warfare is needed?

  18. They won't win. But as a matter of fact I have been on these guys like white on rice for a long time. Jeff has been, too.

    I would love to know, and I keep asking the question, where does Khan's money go? Is any of it going back to Pakistan?


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