Renters caught in middle as cities spend years battling landlords to fix problem properties

Minneapolis officials announced that they had solved one of the city's biggest landlord problems when Stephen Frenz bought Spiros Zorbalas' troubled properties four years ago.

But complaints continued to mount about the decrepit conditions at the apartments, leading to a lawsuit that revealed Zorbalas' ongoing involvement and illustrated just how difficult it is for cities to oust bad landlords. Tenants, many of them people with low incomes, are stuck in the middle as legal battles drag on for months or years.

"Landlords routinely get evictions within two weeks of filing their complaints," said Michael Cockson, an attorney with Faegre Baker Daniels representing tenants in the lawsuit against Frenz. "We brought our housing code violation lawsuit 11 months ago against Frenz, and he's still in business."

Frenz and his attorney did not return phone calls.

Meanwhile, the city has notified thousands of Frenz's tenants — he's one of the biggest landlords in the city — that it is trying to revoke his license. The notice from the city's Department of Regulatory Services says tenants don't have to move yet.

"This is the beginning of a process that will take some time," it reads. "If the City Council decides to revoke the rental license, tenants will be notified and will be given time to move."

But that is hardly reassuring to Jose Ramirez, who lives with his wife in a one-bedroom apartment in one of Frenz's buildings in the 3100 block of Bloomington Avenue S. The roof leaks, the thermostat is broken and there are cockroaches, among other problems, but the apartment, even with an impending rent increase, is $735 a month and close to his wife's work.

"I don't know what's going to happen to us," said Ramirez. "We're scared. What happens to us if we have to leave?"

While the Frenz case has taken extra twists and turns with the courtroom revelations about the properties' ownership, even more straightforward license revocations can lead to a lengthy process for city regulators. And tenant advocates say that tilts the process in favor of landlords.

But Noah Schuchman, Minneapolis' director of regulatory services said most of the city's more than 24,000 licensed rental properties are managed by conscientious owners.

"Because property owners have due process rights to abate orders and appeal violations, citations and revocation actions, the process to stop problematic landlords is lengthy and work-intensive," he said. "We have been effective at addressing problematic landlords and remain committed to doing so in the future."

In another case, the city notified tenants that they were revoking the rental licenses of Mahmood Khan, a prominent North Side landlord, in early 2015. Although the City Council approved the revocation in January 2016, it hasn't gone into effect as Khan works through an appeals process. Oral arguments before the state Court of Appeals are slated for January.

Khan also sued the city this September in federal court arguing, like other landlords before him, that the city is discriminating against a protected class of minority renters by yanking his licenses and depriving them of housing — alleging a violation of the Fair Housing Act.

Khan's attorney, James Heiberg, said they are also challenging the city's policy of barring a landlord from renting for five years if two of their licenses are revoked. He said a fair process would be based on a percentage of the landlord's total properties.

Pulling a landlord's licenses isn't the only method of resolving problems, however.

Tenants can individually pressure for repairs by holding rent in escrow with the courts. Cities and tenants can also file a court complaint, known as a tenant remedy action, demanding repairs at a particular property. Some result in the appointment of a third-party administrator to fix problems.

Tenant advocacy group Home Line, along with other organizations, recently received a grant from the McKnight Foundation to pursue more remedy actions and other proactive legal actions addressing substandard conditions in Minneapolis.

"That would have been such a better response to the Khan situation … if you could get somebody in there to actually run the property correctly in the meantime," said Eric Hauge, lead tenant organizer with Home Line.

Minneapolis once pursued such tenant remedy actions aggressively under a pilot program more than a decade ago. Now they are rarer.

Minneapolis recently implemented a tiered licensing system that uses data metrics to subject some properties to more frequent inspections than others. But stiffer enforcement brings its own legal challenges.

A group of St. Paul landlords spent years fighting the city in federal court, alleging inspectors were discriminating against minority tenants through extra code enforcement. In another case out of Golden Valley that will be reviewed by the Minnesota Supreme Court, landlords are arguing that routine inspections — conducted although no one has reported a problem — invade residents' privacy.

But Hauge, of Home Line, said routine inspections are an important protection for renters who may hesitate to report violations for fear of retaliation.

Cockson, the tenants' attorney, is hopeful a judge will put Frenz's entire apartment portfolio in receivership, which could get the needed repairs done and the rents collected, while a class-action suit against Frenz goes forward.

Meanwhile groups like United Renters for Justice (InquilinXs UnidXs por Justicia) are continuing to organize tenants and draw attention to substandard buildings. The group, which spurred the lawsuit against Frenz and his business, Apartment Shop, met last week with a group of affected tenants and encouraged them.

"I think the situation is going to get better because there are a lot of eyes on Apartment Shop," organizer Roberto de la Riva told them.

Eric Roper • 612-673-1732

Randy Furst • 612-673-4224