Minneapolis begins process to revoke landlord Stephen Frenz's rental licenses

The city of Minneapolis began the process this week to revoke the 62 rental licenses of Stephen Frenz, one of the city's biggest landlords.

The action comes after a monthslong housing court battle over a rundown south Minneapolis apartment building. The case revealed that Spiros Zorbalas, a landlord banned by the city, was a business partner in Frenz's properties.

Thousands of tenants could be affected if the city strips Frenz of the rental licenses. The city has identified at least 1,300 tenants who live in the apartments and believe the total figure is between 2,500 and 4,000 tenants, according to Noah Schuchman, the city's director of regulatory services.

Matthew Schaap, Frenz's attorney, declined to comment on the possible revocations. He is appealing the housing court's finding that there were housing violations at the apartment complex on 14th Av. S. that was the subject of the lawsuit.

In a letter sent to Frenz's tenants this week, Schuchman said the revocation process could take several months or years, and announced two meetings this months to answer tenants' questions. The City Council would have to approve the revocation and is not expected to consider it before spring.

"It is a process that will be managed very carefully and thoughtfully by the city," City Attorney Susan Segal said Thursday. "The city is well aware of the potential impact."

Meanwhile, Frenz's legal troubles continued to mount Thursday when Hennepin County Chief Judge Ivy Bernhardson signed an order requiring Frenz to appear in court Tuesday to show why he should not be held in contempt of court for failing to cooperate with a court-appointed administrator.

Her order followed a move by Frenz to divest himself of the apartment house on the 3000 block of 14th Ave. S. that had been the subject of a tenants' lawsuit. According to the suit, it was in disrepair and infested with cockroaches and vermin.

Housing court referee Jason Hutchison ruled in the tenants' favor in September and last month named James Bartholomew administrator to oversee repairs on the building.

But on Wednesday, Schaap sent a letter to Michael Cockson, an attorney for the tenants who sued Frenz, saying Frenz could not cooperate with Bartholomew since he no longer owned the building.

"I do not know who bought the building although I expect to have that information soon," Schaap wrote to Cockson.

In 2013, the city announced that Frenz purchased 40 apartment buildings belonging to Zorbalas, one of the city's most notorious landlords, after the city forced Zorbalas out of the rental business. Zorbalas had earlier had his licenses revoked on two rental properties, triggering a city ordinance that requires the council to revoke all of a landlord's rental licenses for five years.

Frenz was hailed at the time by city officials as a savior, but soon tenants' complaints began mounting that the buildings remained in disrepair.

The tenants at the apartment building on 14th Av. sued him in January with the help of a pro-bono legal team at Faegre Baker Daniels, led by Cockson.

The trial revealed that Frenz had staged vacant apartments — with children's shoes and names on mailboxes — in an attempt to get the case dismissed. After learning of the fraud, Frenz's initial lawyers resigned.

Also during the trial, Frenz contended he and his wife owned his rental properties in Minneapolis.

But when Cockson confronted Frenz with information obtained from public records in Florida, Frenz conceded that Zorbalas, who lives in Florida, continued to have a major ownership role.

That disclosure has prompted the city to move against Frenz.

In a letter to Frenz on Tuesday, Schuchman informed him that "a license proceeding has been commenced against you because the buildings have been found to be in violation of the housing maintenance code based on the continued ownership interests possessed by individuals and entities" including Spiros Zorbalas and his wife, Mary Brandt. He listed two companies registered in Florida, previously identified in court as controlled by Zorbalas.

Schuchman wrote that Frenz had 10 days "to bring the buildings into compliance" or the City Council could proceed with license revocation.

If the council takes such action, he wrote, those dwellings must be vacated and cannot be reoccupied until a new license is granted by the council.

Randy Furst • 612-673-4224

Twitter: @randyfurst