Mahmood Khan, landlord for low-income residents, takes beef with Minneapolis to the feds

An embattled Minneapolis landlord is fighting back against the city's attempt to shut down his operations, claiming in a federal complaint that city officials are discriminating against his predominantly low-income, minority tenants.

Mahmood Khan filed the housing discrimination complaint this week with the U.S. Department of Housing and Urban Development, several months after the city informed his tenants they were stripping his licenses. Khan has waged an extensive battle with city regulators over dilapidated North Side properties, racking up more than 1,000 violations in the past two years alone.

The dispute illustrates larger conflicts between local governments and landlords who rent to the area's low-income residents — and where to draw the line between affordable housing and unsafe living conditions. Two other landlords, Ron Folger and Andrew Ellis, have made similar allegations in lawsuits against the city in recent years.

Khan has appealed the city's revocation, likely leaving tenants in limbo until later this year, as an administrative hearing officer must first weigh in on the matters. Khan may appeal the issue further, as well. At stake are 43 properties, 63 rental units and nearly 350 tenants largely clustered in the most distressed neighborhoods of north Minneapolis. In his complaint, Khan said all but two units are rented by minorities.

"Here is the city's fair housing plan in a nutshell: Get rid of the 'low-rent' landlords and the poor, most of whom are protected class members," said the lengthy 49-page complaint, which alleges several violations of the Fair Housing Act. It also charges the city with failing to properly analyze how its policies affect affordable housing choices, a condition of receiving HUD funds.

City Attorney Susan Segal said the complaint is "without merit."

"Everyone has the right to live in safe housing that complies with City codes, regardless of whether they are renters or homeowners," Segal said in a statement. "The City does hold landlords accountable for code violations and will continue to do so on an equitable and fair basis."

Khan's properties have a long history of problems. Eric Hauge, a tenant organizer with HOME Line, said at least 35 different tenant households contacted them after the city distributed fliers recommending they call the organization with legal questions.

"We definitely have heard from a good number of folks who — it's not through any fault of their own — they're moving into these places and seeing a good amount of disrepair," Hauge said. "And a lot of these folks are in vulnerable situations so they don't necessarily call 311 because they're concerned about retaliation."

In February, the Star Tribune visited 3406 Penn Av. N., a Khan property where then-tenants Rosheeda and Bobbi Credit showed off a broken stairway railing, poorly patched holes in the walls, a door that looked to have been kicked in and what appeared to be a bullet hole in the front window. One of the children living at the apartment had sustained severe cuts on his legs, which the Credits attributed to an exposed nail that Khan had not fixed on the stairway.

Rosheeda Credit, who was later evicted for unpaid rent, said a wooden baluster on the stairs fell off after they arrived. "We asked him to come fix it and he never came," explained Credit in an interview Tuesday. "And then my son got hurt."

Khan responded that his staff could not get permission to come inside and make repairs. "We don't have a problem fixing it, but she has to let us in," Khan said in March. "If you look at my text messages, how many times I have sent messages: 'Please call me, please call me.' "

The city's head of regulatory affairs, Nuria Rivera-Vandermyde, said in March that an inspector did not see these conditions during a September 2014 review of the property when the Credits moved in.

Khan's attorney, James Heiberg, said they filed a HUD complaint rather than a lawsuit since there are strict time limits and it may pressure the city into changing practices without the expense and delay of a legal battle. He added a HUD investigation could also unearth helpful fodder for any potential future lawsuit.

Among other charges, the complaint states that the city's policy of stripping all of a landlord's licenses for five years following two revocations "illegally denies housing to protected class members by displacing them from occupied units that are safe, decent and sanitary." An appeals court upheld the city's revocation of Khan's second license last December, after the city had repeatedly cited a property at 2714 N. 4th St. for trash violations.

More broadly, however, Khan says the city has unfairly targeted him through the aggressive enforcement of the Problem Properties Unit and levying about $60,000 in fees for vacant buildings. "The 'Problem Properties Unit' is where protected class landlords go to die," the complaint said.

A similar case involving another landlord who lost 19 licenses, Ron Folger, is winding through federal court. Folger and his wife sued the city in 2013, also citing several violations of the Federal Housing Act. In August, a judge dismissed some of their claims against the city because they had not proven it was the city's intent to discriminate.

The case, which is in the discovery phase, now hinges on whether they can prove the city's revocation policy has a disproportionate impact on a minority group, according to the order from Judge Susan Richard Nelson. "It is not unreasonable to infer that enforcement of the automatic revocation provision — which presumably reduces, at least temporarily, the amount of affordable housing in the city — could have a disproportionate impact on such protected-class members," Nelson wrote.

The judge added, however, that this does not close the door on the city's defense. The city could claim the policy was necessary for a nondiscriminatory goal, forcing plaintiffs to outline viable alternatives. Citing a similar ruling, Khan's complaint suggests the city could instead use HUD funds to distribute landscaping grants for unattractive rental properties or provide money and jobs to poor tenants so they can afford higher rents.

Both the Khan complaint and the Folger decision cite a St. Paul case that nearly went to the U.S. Supreme Court in 2012. In that lawsuit, landlords said the city targeted them for renting to poor and minority tenants. Two of those landlords settled with the city this year, but the case continues in federal court and trial is expected this fall.

Eric Roper • 612-673-1732

Twitter: @StribRoper