Rent control ruling too late to help one St. Paul tenant

More than a year ago, Sumeya Mohamed received a letter saying the city had granted her St. Paul landlord permission to raise her rent by up to 26% — far surpassing the 3% limit set by the city’s rent stabilization law.

Mohamed quickly appealed the city staff’s decision in July 2023. She won her appeal last month by a unanimous City Council vote.

The victory was somewhat hollow, though, because it came too late. Mohamed and her family had moved out of their East Side apartment earlier this summer to escape the possibility of a $400 monthly rent increase.

“We never had any intentions of leaving St. Paul, but the fact that this process took so long caused our family so much anxiety,” said 23-year-old Mohamed, who now lives in St. Anthony.

Representatives for Marquette Management, Mohamed’s former property manager at the Haven of Battle Creek, declined to comment.

The case between Mohamed and Marquette tested St. Paul’s first-in-the-Midwest rent control law in new ways, generating thousands of documents, demanding hours of staff time and ultimately producing more questions than answers.

The city ordinance was crafted by tenant advocates and approved by voters in 2021. From the get-go, the advocates said property owners should be allowed to raise rents by more than 3% if they can show it’s needed to offset growing costs. That hasn’t been difficult for many landlords in recent years as they faced skyrocketing insurance prices, property tax hikes and other effects of inflation.

Marquette cited increased operating expenses and capital improvements when seeking permission to impose rent increases ranging from 26% to 80% on every tenant in the 216-unit building.

Mohamed, who was represented by attorneys from the nonprofit Housing Justice Center, argued the city should not have approved rent increases for any unit at the Haven since property owners violated asbestos and lead safety laws, among other aspects of the state statute governing landlord-tenant covenants.

The case sat with legislative hearing officer Marcia Moermond for months, delayed by the continued influx of documents, Moermond’s medical leave and turnover in council offices.

As Moermond was writing her recommendations for the council, which has the final say in such matters, she learned of Mohamed’s move. Moermond threw out her lengthy draft and recommended the council dismiss the appeal since Mohamed no longer had legal standing.

But council members bucked the recommendation: The appeal process took an inordinate amount of time, they said, and city staff should have denied a rent increase if they had knowledge of habitability violations.

It’s not uncommon to find asbestos or lead in St. Paul’s older housing stock. The mere presence of either substance does not constitute a hazard. If the materials are disturbed, however, they can pose serious health risks — so federal and state laws mandate safety practices.

During the rent stabilization case, a quasi-judicial proceeding, city officials were asked to dive deep into these policies and other state statutes since the city’s ordinance says no extraordinary rent increase will be granted to landlords violating Minnesota’s habitability law.

Housing Justice Center attorneys delivered many of the same arguments they made last year in an eight-count lawsuit filed by Mohamed and other tenants against Marquette and its affiliates.

They alleged that the property management company is aiming to displace the building’s large Muslim Somali population through a mass renovation, which is simultaneously exposing tenants to hazards and being used to justify rent hikes.

Marquette sent city staff reports documenting recent tests for asbestos at the Haven, which found no evidence of the material. Angie Wiese, director of St. Paul’s Department of Safety and Inspections (DSI), said the city will sometimes require such tests before issuing construction permits, though asbestos and lead generally fall under the purview of the state and county.

An asbestos and lead expert contracted by the Housing Justice Center wrote a follow-up letter to the city saying Marquette’s testing was based on limited samples. He also referenced older environmental assessment reports that said prior testing confirmed the presence of asbestos in the building’s popcorn ceiling and lead coatings in the bathtubs.

“These third-party documents reinforce my opinion that Marquette has violated and continues to violate lead and asbestos safety laws,” the expert wrote.

Housing Justice Center attorneys pointed to an enforceable agreement they reached with Marquette in federal court earlier this year. Though the company did not admit wrongdoing, property managers said they would provide notices to tenants saying the building contains “confirmed and assumed asbestos material” and conduct future maintenance in an asbestos-safe manner.

Attorneys also pointed to an order issued by a Ramsey County District judge this year in response to legal action taken by another Haven tenant. The judge wrote that Marquette did not use proper language in a lease agreement to describe how it bills for shared utilities, a technical violation of state habitability law.

Before council members voted on Mohamed’s appeal, Deputy City Attorney Therese Skarda told them owners of the Haven could appeal their decision in court.

In an interview afterward, Wiese said though the city has received complaints about pests and other code violations at the Haven, property management has remedied problems fairly quickly. In early 2023, fire safety inspectors gave the Haven a Class A grade, the best score a property can receive.

“Ms. Mohamed’s unit was never considered uninhabitable,” Wiese said. “We do not let people live in spaces that we believe are not safe.”

“The warranty of habitability means that the owner has been given a reasonable amount of time to come into compliance and that they’ve come into compliance,” she added. “It doesn’t mean the building has never had a complaint. It doesn’t mean that it’s pristine.”

City Council Member Cheniqua Johnson, who represents the East Side, said she has meet with DSI staff and other city officials since the council’s vote, to discuss conditions at the Haven. She plans to follow up with tenants in the coming months.

“I can’t not see what I’ve seen so far on the public record,” she said. “Now that I’m no longer in my quasi-judicial capacity, I’m able to ask the tough questions that need to be asked.”

A city spokesperson said the council’s decision narrowly applies to the request to increase rent on Mohamed’s unit by 26%. Marquette could request another rent increase for that unit through a different process.

Attorneys for the Housing Justice Center, on the other hand, argue that the council’s reasoning should apply to all units at the Haven. Jim Poradek, director of litigation for the nonprofit, said it was not yet clear whether other tenants’ rents jumped while Mohamed’s hung in limbo.

“I think this is obviously a real victory,” Poradek said. “The legal effect of this decision is something that isn’t in the city’s hands right now. It’s in the hands of Marquette — and then, if necessary, the courts.”

The council has heard about 15 appeals from tenants since St. Paul’s rent stabilization law took effect in 2022. Before Mohamed, just two of those cases resulted in reductions of prospective rent increases. Both tenants were represented by the Housing Justice Center.