Hennepin County judge grants class-action status to tenants in case against Dominium

Affordable-housing developer Dominium is facing a class-action lawsuit from a group that could ultimately include more than 3,000 current and former tenants accusing the company of fraud.

A Hennepin County district judge on Monday granted a group of tenants class-action certification, giving them added leverage in the lawsuit against their landlord. The tenants accuse Dominium of consumer fraud, alleging the company claims to comply with laws surrounding the federal Low Income Housing Tax Credit program at properties financed using the credits, but knowingly fails to do so.

At issue, the tenants allege, is Dominium charging residents money on top of rent for reserved parking in underground facilities the tenants say they believe were financed using the tax credits.

Federal law says affordable-housing developers cannot charge tenants extra to use an amenity financed with low-income housing tax credits, according to Monday's judgment.

In a memorandum filed in June, the tenants accused Dominium of running a "double-dipping scheme" that "starts by grossly misrepresenting the actual construction costs associated with parking facilities to secure maximum tax credits, and the scheme pays off when Dominium wrongly collects parking rent from its tenants."

One of those tenants is Linda Cobb, a plaintiff in the case and a resident of the Legends at Silver Lake Village, an affordable property for people age 55 and older in St. Anthony. Cobb said for most of the eight years she's lived at the property, she's paid $80 a month for underground parking.

"Most of us are on fixed incomes, so $80 a month really can make a difference," Cobb said, adding that underground parking is important to people in her community for health and safety reasons.

Paula Prahl, a Dominium partner, chief policy and corporate affairs officer and executive vice president, said in a statement the company was disappointed in the court's actions and plans to appeal. Prahl wrote that there are more tenants at the Dominium properties included in the suit than there are underground parking spots, and that free parking is available to tenants outside. If the tenants succeed, she wrote, the company will no longer provide reserved underground parking.

The judgment, issued by Hennepin County District Court Judge Thomas Conley, doesn't mean the court is siding with tenants, said Allan Erbsen, a professor at the University of Minnesota Law School. Rather, it shows that they've met the requirements to be considered a class.

"The court is saying that the plaintiffs' legal claims are of a type that is sufficiently similar that they should be able to litigate them as a class rather than individually," Erbsen said.

In cases like this, plaintiffs try to get class certification because, compared to a smaller claim by one or a few tenants, a bigger class with larger potential damages may be more likely to influence the defendant to settle, Erbsen said.

The way he sees it, Dominium has a steeper hill to climb now that the tenants have been certified as a class.

Legal representatives for the tenants celebrated the class certification. "We are pleased with the Court's order and look forward to trial on the tenants' consumer protection claims," said Jim Poradek, an attorney at Housing Justice Center, in a statement.

The plaintiffs estimate the class could contain 3,000-plus people who have paid for underground parking at 24 Minnesota Dominium properties built with low-income housing tax-credit financing. Those potentially eligible will be notified by mail so they can decide whether to participate in the lawsuit.