Despite penalties, Khan's tenants still waiting for repairs

Mold around the windows. Faulty electric wiring. Peeling lead paint and asbestos in the basement.

Officials say these problems and dozens more permeate houses owned by landlord Mahmood Khan, one of the largest and most penalized landlords of single-family homes in Minneapolis. Barring major repairs and renovations, many of them are borderline unsuitable for tenants.

After Khan's legal options were exhausted, the city of Minneapolis stripped him of his approximately 43 rental licenses in December, putting hundreds of tenants in limbo. Housing Court referee Mark Labine appointed an administrator, Lighthouse Management, to do immediate repairs, study the economic viability of rehabilitating the buildings and then report back to him on what they recommend. The report is due out Friday.

Urban Homeworks, a local nonprofit, has been given responsibility by Lighthouse to review the problems in Khan's 32 homes and duplexes where tenants are still living, and the buildings are in need of major overhaul.

"I would rank [Khan's buildings] among the worst that I have seen," said Paul Bauknight, an official with Urban Homeworks. Bauknight estimated it will cost $40,000 on the low end to $80,000 to $90,000 on the high end to do the repairs and rehab work on each of the buildings. The total could approach $2 million, he said.

Three months after Khan lost his licenses, tenants are fed up that most major repair work has not yet begun.

Kevin Woods lives at 4000 Dupont Av. N. and says his wife had a nervous breakdown over the conditions, which include continuous water leaks, bedbugs and heating problems. The crevice between the door and the door frame is so wide that snow blows into the house during storms.

"I have to turn up the heat to 80 or 90 degrees just to keep warm," he said. "Everybody in the house gets sick."

Minneapolis Mayor Jacob Frey said he looked at some of Khan's properties last year and has met with tenants since he took office in January.

"In many instances the conditions were uninhabitable, which is of course what led to housing rental revocations," he said. "Affordable housing is my number one priority and assuring tenants are treated fairly is a critical component. ... The treatment they have been subjected to in the past is unacceptable."

Khan, who works part-time as a flight attendant, said he's been acquiring properties on the north side of Minneapolis since the 1980s and bought a batch of them a decade ago during the foreclosure crisis. Tenant advocates note that many of his tenants are poor blacks with housing records that included previous evictions, making it difficult to find better places to rent.

Khan said he will rent to people when no one else will.

"I am not making money," he maintained. On a recent workday he had workers, who rent houses from him, making repairs on one house he hopes to sell. Khan was sweeping the floor.

Khan rejects tenants' criticism of his buildings.

"If it's that bad, why are they living there?" he asked. He offered some letters, written by tenants praising him as a landlord, that were submitted to the federal court in an unsuccessful bid to have the rental license revocations overturned.

Candice Vance, 32, who lives on the 2100 block of Oliver Av. N., has rented from Khan for four years and was one of the tenants who wrote a letter praising Khan. She said she sat in his car and "he told me what to write and how to write it." She said he had previously taken her to court to try and evict her when she withheld rent because she said he did not make adequate repairs, and she feared he might do it again if she didn't write the letter.

Khan denies he went to Vance's house and dictated the letter to her.

"I would never do that," he said. "I only wanted them to write the truth."

Khan's attorney, James Heiberg, said he approached Vance and other tenants but did not force her to write the letter.

"That would be a violation of ethical rules," he said. "I can't go around strong-arming clients."

Vance said when she would complain about problems with her house, Khan would send someone out who was not a professional and it would not be properly fixed. She said her toilet won't stop running, doors lack doorknobs and don't close properly, tiles are falling off in the bathroom, and the back bedroom is extremely cold.

"It's better than being homeless, but it would be nice to have something more comfortable," she said.

Her rent is $1,200 a month, but like other tenants she has joined a rent strike, refusing to pay rent to the new administrator because of the living conditions.

"These tenants are paying sky-high rents and not getting the service they deserve," says Roberto de la Riva, an organizer with Renters United, a tenants group, supporting the rent strike. He blames the poor conditions on the city for not cracking down sooner.

But the tough actions the city has taken against Khan are evidence of its commitment to clean up the problem, says Noah Schuchman, the city's regulatory services director. He supported the appointment of an administrator at the request of pro bono tenants attorney Matt Harris of Faegre Baker Daniels.

"Mr. Khan mismanaged, neglected and kept his properties at the bare minimum housing standards during his tenure as the property owner," he said in an e-mail. "Our inspections and Mr. Khan's actions are what led to the action to revoke all of his licenses in January 2016."

A major issue is how renovations in Khan's properties will be paid for.

Michael Cockson, an attorney with Faegre Baker Daniels who is representing some of the Khan tenants pro bono, said some of the money could come from a revolving fund for such purposes that the city has. But to cover additional expenses for the rehabs, he thinks the housing court should allow the administrator to take out mortgages that Khan would be required to repay. Such court authorizations are allowed under state law and if the buildings are sold, the new owner would be responsible for paying off the mortgages.

Last Wednesday, Cockson and Lighthouse filed a joint motion in housing court proposing the same method for raising funds to pay for repairs on several properties once owned by Stephen Frenz, another major landlord, who has had his rental licenses revoked. The properties in question are five apartment buildings Frenz sold to landlord Rickey Misco on a contract for deed which the city found unacceptable. The city refused to grant rental licenses to Misco, and the housing court has appointed Lighthouse to administer Misco's properties.

Heiberg, Khan's attorney, said any effort to take out mortgages and force Khan to pay for the rehab would be "outrageous," and he vowed to contest it.

"We're going to fight them really hard," Heiberg said.

Lighthouse director Alex Dybsky, declined to say what he will propose to the court as his company finishes its economic viability report. He said it's trying to ascertain the value of the properties and what the market rate on rents would be if the homes were repaired.

In the meantime, Cockson has applied to the court to have some of Khan's rents rebated to tenants on the basis Khan was improperly renting properties when he had no licenses.

"In a case like this it should be retroactive and ongoing until [the properties are] in good condition," said Eric Hauge, director of organizing and public policy at HOME Line, a state tenants support group.

Randy Furst • 612-673-4224