Landlordpolitics.com
   

THE MCKNIGHT FOUNDATION SUBSIDIZES TENANTS-RIGHTS ORGANIZATIONS

an exchange of views

(A) It started with an article by Randy Furst in the Star Tribune on December 28, 2016. The article read:

 

Minneapolis renters' group puts landlords on notice

"You have to make noise to get landlords to listen," tenant organizer says. 

By Randy Furst Star Tribune DECEMBER 28, 2016 — 10:10AM

On a bitterly cold afternoon, Roberto de la Riva worked with lawyers to obtain a court order to force a landlord to fix the heat in a south Minneapolis apartment where the temperature had dropped to 54 degrees.

A few days later and a few blocks away, Jennifer Arnold spoke with tenants about getting a landlord to fix insufferable humidity and mold layered on the ceiling. Meanwhile, Arianna Feldman knocked on doors in another apartment building where tenants say roaches crawled through the kitchens and the landlord ignored complaints.

All three are tenant organizers working for Inquilinxs Unidxs por Justicia — United Renters for Justice — a group causing ripples across Minneapolis where affordable housing is at a premium. They have mobilized hundreds of tenants, many of whom don't speak English, to draw attention to rising rents and buildings with substandard maintenance.

"We don't see tenants as clients," said de la Riva. "We see them as the solution to the problem."

In one case, the group organized renters to take Stephen Frenz, one of the city's most violation-prone landlords, to court. The lawsuit revealed that Spiros Zorbalas, another landlord banned from operating in the city for five years, still owned the properties. Now the city is trying to strip Frenz of his 62 rental licenses.

United Renters' dogged organizing is gaining increased attention and recently received a $140,000 grant from the McKnight Foundation.

"I think they are filling a void where there hasn't been an organized voice," City Council Member Elizabeth Glidden said.

But some landlords question the group's actions.

"They've spun this scenario to say we have not done our repairs properly," said Jason Quilling of QT Properties, one of the landlords targeted by the group. "We are inspecting every unit. If there is a leaky faucet, we're taking care of it. If there are any cracks, we're taking care of it."

Tenants vs. landlords

Most of the group's organizing occurs at night when tenants complete their mostly low-paid day jobs and gather to talk strategy at United Renters' offices at 3715 Chicago Av.

At an early December meeting, about a dozen tenants, some toting children, discussed what they could do to roll back monthly rent increases of up to $150 at QT Properties apartments.

"You have to make noise to get landlords to listen," said Natasha Villanueva, one of United Renters' founders.

A few days later, Luis Caguana was among about a dozen sign-carrying tenants who filed into QT Properties' office in south Minneapolis. A secretary ordered them to leave or she would call police.

"I don't understand why you don't dialogue with us," said Caguana, whose window sills are wet from water dripping into the building.

A city housing inspector who visited the building Dec. 12 after Caguana called 311 noted several violations and ordered repairs or replacements within 30 days. Similar violations were found in another unit in the building.

Quilling estimates he is raising the rent of 80 tenants, and said earlier this month he had already gotten 42 to sign new leases. Quilling also said he would fix leaks in several apartments.

"It's a business decision to raise rents," he said, noting it's been more than two years since QT Properties raised the rent, which he said is still below market rate.

"If any one of these people wants to talk to us, they can come in," he said.

But he said he will not negotiate with United Renters. Tenants in the group say that's unacceptable.

"He'd like to divide us up and say, 'You have to pay this much' and then you have to pay it," Marta Pacheco said through a translator.

Expanding outreach

Minneapolis neighborhood associations are taking notice of United Renters' work.

"They are doing something unique and doing it well and they are now in the position to teach us and other groups how to do it well," says Eric Gustafson, executive director of the Corcoran Neighborhood Organization, which also received a McKnight Foundation grant to work with renters.

"Landlords generally have a great deal more resources and power than tenants," says Lee Sheehy, a program director at the foundation. "So organizations like United Renters for Justice are critical to trying to bring more balance to the marketplace on behalf of tenants by giving them a collective voice and access to ways to work with landlords and to influence landlords."

Jodie Boderman, pro bono manager of Faegre Baker Daniels, the law firm that has represented tenants in the lawsuit against Frenz, said the organizers are effective, hard workers.

"They are not dilettantes," she said. "And they have been good about seeking out people who will help them out, too."

United Renters is part of a new umbrella group, the Minneapolis Renters Coalition, of neighborhood organizations and advocacy groups that deal with problem landlords and common enforcement issues. Among its members is the Lyndale Neighborhood Association, where United Renters' de la Riva was once on the board and Arnold was on the staff.

United Renters' work is "bringing to light a lot of issues faced by our community that are normally invisible," said Brad Bourn, the association's executive director.

These days de la Riva and Arnold and some of their board members talk about the possibility of a citywide tenants union and new laws to toughen enforcement and provide rent control.

"It feels like we have a potential to build something that can change the way our city is run," Arnold said.

Twitter: @randyfurst

 

(B) I sent an email to Lee Sheehy at the McKnight Foundation on December 31, 2016, complaining of its assistance to a tenants-right group:

I am responding to a Star Tribune article written by Randy Furst titled “Minneapolis renters' group puts landlords on notice” which appeared on December 28, 2016. The article is largely a puff piece about a newly formed organization called “ United Renters for Justice” which is aggressively going after landlords in Minneapolis. Two landlords, Stephen Frenz and Spiros Zorbalas, as well as QT Properties, are among their particular targets.

I have never met Frenz or Zorbalas or anyone associated with QT Properties and have no information other than what was presented in the article about how they are managing their properties. However, as a small-scale landlord (owner of 13 rental units) with some personal experience, I do have an idea of the political situation in Minneapolis and how city officials and their political allies regard landlords. As a general principle, they don’t think highly of us. For some, we are lunch.

The article reports that United Renters for Justice, which has a largely Hispanic clientele, recently received a grant from the McKnight Foundation for $140,000. This organization works with neighborhood groups including the Corcoran Neighborhood Organization which also received a grant of unspecified size to go after landlords from the McKnight Foundation.

The McKnight Foundation seems to be a good organization to know if you are lucky enough to get in their good graces. They seem to have all kinds of money to give to certain individuals or groups. Unfortunately, in this case, it is money for activities that will cause some other person or group - i.e., landlords - to spend money to defend themselves against the recipients of foundation largess. Is this fair? There seems to be no mechanism by which the two parties, landlords and tenants, can plead their respective cases before the money is awarded.

I know this sounds heartless but I’ll say it anyhow. In a free-market economy such as ours, the primary defense against being abused by poor housing or any other purchased good or service is for the buyer to go elsewhere. If you have a landlord who simply does not care to fix broken plumbing or does not provide adequate heat, then try to find some other housing for yourself. Somewhere in this large city of ours there must be a better housing deal for those who are currently being short-changed. Then, if the “bad” landlords fail to attract tenants, they will be forced to improve their offering or else go out of business.

What I find objectionable is that an organization such as the McKnight Foundation, sitting upon a pile of money, is able to spend huge sums of money for essentially political purposes. They have morally prejudged disputes between landlords and tenants so as to tip the scales in favor of the tenants (or, more accurately, whoever purports to represent them). If there is a dispute, would it not be better to try to bring both sides together to discuss grievances? Has this been tried?

Believe me, being a landlord is not easy. No one I know tries to make money by shortchanging their customers with respect to the product or service delivered. That’s a good way to run your business into the ground.

The reality is that landlords have been political whipping boys for a long time. No one likes them on general principles, if only because they tend to take on the moral or social coloration of the classes of people who depend on them. They are persons fit for dealing with plumbing or heating emergencies rather than for attracting admiration by engaging in the higher things of life.

Pushed too hard, landlords can fight back as a group as Charlie Disney’s group, Minneapolis Property Rights Action Committee, did in previous decades. They ran the political rascals out of town. But Charlie has died and he has no fit successor.

And so, the political weeds have grown back. You now have groups flush with foundation money going after the people who actually provide housing. You have city officials and police more than willing to foist their socially regulatory or policing responsibilities on others.

What else is new? Not much.

 

(C) Lee Sheehy responded to my complaint on January 3, 2017.

Dear Mr. McGaughey,
 
Thank you for your email of December 30th. We appreciate hearing your insights and feedback. 
 
The work we have funded, which includes Renters United and Corcoran Neighborhood, as well as with groups that assist and educate landlords, focuses on fair access to quality affordable housing and increasing the understanding of and compliance with the law and regulations governing the landlord-tenant relationship. We respect the role of conscientious landlords and recognize the fact that the private sector supplies a large majority of rental housing in our region and state. That's why we have invited landlords to the table and involved the private sector from the beginning of our efforts toward these goals.
 
As market data demonstrates, there is a severe shortage of affordable rental housing, which makes mobility options limited for those in need of stable shelter. This increases the importance and challenge of achieving fair access to quality affordable housing. Please see this recent commentary for greater insight into McKnight's overall goals and values on affordable housing. You’ll see that collaboration is key tenet, with much of our work about bringing all the various actors in this system together.
 
While we may see this issue from different vantage points, we appreciate this opportunity for an exchange of views.
 
Sincerely,
 
Lee Sheehy
 
 
Lee Sheehy
Program Director, Region & Communities

 

(D) I responded to Mr Sheehy on December 4, 2017.

Dear Mr Sheehy:

Thank you for your message yesterday in response to my earlier email concerning the McKnight Foundation’s assistance to tenants-rights organizations in Minneapolis. I do not think it adequately addressed the concerns that I conveyed to you by email on December 30th.

Confessing once again that I am unfamiliar with the particular issues involving landlords Stephen Frenz and Spiros Zorbalas or with the management of QT Properties, I do know the situation that many Minneapolis landlords face, being one myself. I also know that the issue of rental housing does not merely concern landlords and their tenants but also landlords and their adversaries including elected officials, city inspections, police, and now, it seems, foundation executives such as yourself.

Landlords have long had a generally bad image. No doubt some deserve this. But there is also a cultural component that has little to do with housing per se. If you as a foundation executive are responding or pandering to the stereotypical image of a landlord in our culture, then I as a real-life landlord need to weigh in on the discussion.

You wrote in yesterday’s message that your organization “respect(s) the role of conscientious landlords”. Well, I respect the role of conscientious foundation executives. But you do not seem to be one of them considering your prejudged position on tenant-landlord relations.

If you were conscientious, you would be more concerned with finding a mutually suitable solution to inadequate housing rather than aiding one of the parties on the assumption of the other’s guilt. You would be doing more fact finding before you award money. You would be sponsoring solutions-seeking discussions between tenants and landlords, respecting their respective points of view.

You see, when you give $140,000 to organizations such as Renters United for Justice which are essentially adversarial groups, then you impose an equivalent additional cost upon the parties they are fighting. Not all landlords are wealthy but all who deal with aggressive tenants-rights groups must bear the defensive expense related to their activity. Your well-heeled organization is tipping the scales toward one of the parties without an adequate inquiry into the situation.

You talk about “invit(ing) landlords to the table” and of “work (to) assist and educate landlords.” I have no idea what you are talking about. I have not heard of any of the McKnight Foundation’s programs to help landlords. However, as a general rule, landlords ought to be self-reliant with respect to their business. They educate themselves not so much by listening to outside experts who are paid by organizations such as yours but by listening to landlords with greater experience or by experiencing a number of different situations themselves. What qualifications do you have to render such assistance? What assistance have you actually given?

Feeling a rant coming on, I will stop here. But I do want to say that a well-heeled organization such as yours has a certain responsibility to the community which has decided not to tax away its inheritance from a previous generation but give it discretion to award money accumulated by others.

I actually knew the man, Francis G. Okie, who invented 3M’s first great success as a commercial product - wet-or-dry sandpaper. In later years, he wrote religious poetry. I have posted information about this unusual activity at http://www.worldhistorysite.com/fgokie.html.

In conclusion, when you complain of “a severe shortage of affordable housing”, consider that greater supply might be a solution. But who would want to invest in inner-city housing with heavily subsidized groups such as Renters United for Justice aggressively going after landlords?

Again, without being too familiar with the situation, I think your record in subsidizing such activity is one of harm rather than help. Stop it, please.

 

(E) Sheehy's message had referred to a Commentary piece in the Star Tribune on September 29, 2016:

Courageous Minneapolis tenants point the way

• We must recognize that lawsuits alone cannot create the systematic changes and market conditions that will increase fair access to decent and affordable rental housing.

Tenants in south Minneapolis recently won an important victory in the pursuit of justice. It may be the most recent case to reveal the substandard housing conditions of many low-income renters, but it’s hardly an isolated situation.

Even as we are encouraged by this court ruling, we must recognize that lawsuits alone cannot create the systematic changes and market conditions that will increase fair access to decent and affordable rental housing. To accomplish that, we must focus on the failures of the rental housing marketplace and the needs of the people who navigate within it.

Renters make up half of all residents of the City of Minneapolis. The burden of renting in a tight housing market, combined with stagnant or declining incomes, has never been heavier. More than 50 percent of renters spend more than a third of their income on housing. This high cost burden, combined with the exploitative practices of some landlords, can lead to families with no place to live. In certain Minneapolis ZIP codes, a jaw-dropping 46 percent of renter households experienced an eviction filing in the past three years.

In the eye-opening new book "Evicted," Matthew Desmond argues these failed markets lead to devastating consequences for families and communities. He concludes, “Eviction is a cause, not just a condition, of poverty.”

What will it take to move toward fair access to decent, affordable rental housing?

Look beyond the familiar remedy

The good news is that solutions are well within our reach. The first step is to look beyond the familiar remedy of simply constructing more affordable housing. Building is certainly one key strategy, and so are subsidies. It is increasingly clear, however, that we cannot build or subsidize our way out of this problem. As Mayor Betsy Hodges recently noted, since 2000, Minneapolis has lost 10,000 units affordable to households with incomes below $43,000 a year.

What has been missing from the conversation is the fact that the vast majority of low-income and cost-burdened households live in units offered by the private sector, not in housing provided by charitable groups or the government. That’s why we need to direct greater attention to improving the availability and quality of that housing stock throughout the region. An increasing number are either in disrepair or in danger of getting converted to higher-priced rentals, which would then displace low and moderate-income residents. Engaging the private sector and investing in this market can preserve affordability in the long term.

Everyone has a role to play. Local governments can educate landlords and tenants on their rights and responsibilities, and they can provide proactive licensing and inspections oversight, timely remediation, and enforcement when required. Neighborhoods can embrace and advocate for tenants, engage landlords and city housing officials as partners, and promote a welcoming community for all. Landlords can treat their tenants with dignity, as required by law, and collaborate with the city and community; to do otherwise likely triggers more regulation and suspicion of their business as a whole. Legal advocates and an increasingly innovative housing court can help parties avoid unnecessary litigation and ensure that justice is fair and swift to protect families and hold parties accountable.

Collaboration is transformative

We applaud some of the efforts already under way to advance this collective approach in Minneapolis. We’ve seen how transformative it can be when neighborhoods, landlords, government, advocates, legal services and the courts come together to learn from one another. Organizations such as HousingLink offer support to tenants and landlords, as well as a path to a more transparent rental marketplace focused on quality sustainable, affordable homes for all. We intend to continue to support this work and encourage others to learn from these experiences.

If our region and state are to grow and prosper, we must recognize that adequate affordable housing is an essential part of the equation for success — for the entire region and all of its people wherever they live, work or play. Stable housing means more children will do better in school, and their parents will have a better shot at maintaining their jobs and escaping the cycle of poverty. This, in turn, benefits us all.

In securing their victory in housing court, the tenants and their allies had the courage to bring an invisible problem to light. Now we need the collective wisdom to do our part to ensure fair access, quality, and expanded opportunities for more affordable housing throughout the region.

Kate Wolford is president of The McKnight Foundation. Lee Sheehy is director of McKnight’s Region & Communities program.


(F) The Star Tribune commentary article, in turn, referred to the case of landlord Stephen Frenz which is discussed on an earlier Star Tribune article:

Minneapolis landlord Stephen Frenz deceived court, housing referee rules

By Randy Furst Star Tribune SEPTEMBER 14, 2016 — 8:43PM

A Hennepin Court housing court referee has ruled that Stephen Frenz, one of Minneapolis’ biggest landlords, deceived the court in a deliberate and elaborate scheme to get a lawsuit dismissed. Once the ruse failed, the ruling said, Frenz offered testimony that was not credible.

The referee, Jason Hutchison, ordered that an independent administrator be appointed to oversee one of Frenz’s apartment houses at 3057 14th Av. S. that was the subject of a lawsuit alleging it was in disrepair and overrun by bedbugs, roaches and vermin.

Hutchison has yet to rule on other matters in the case, including a motion for sanctions against Frenz, punitive damages, and a recommendation by tenants’ lawyers that the case be turned over to the Hennepin County attorney’s office to consider criminal perjury charges against Frenz.
The tenants have been represented pro bono by lawyers from the Faegre Baker Daniels law firm, including lead attorney Michael Cockson.
“We’re thrilled with the court’s well-reasoned and detailed analysis,” Cockson said Wednesday.

Neither Frenz, operator of The Apartment Shop rental company, nor his attorney, Matthew Schaap of Apple Valley, returned phone calls Wednesday.
Sanctions, which Faegre’s lawyers are seeking, could be commensurate with legal fees and costs incurred by the tenants’ attorneys to uncover the misconduct. Faegre attorneys have said in court that their bills had reached $1.1 million.

City officials have been following the case.

Besides the allegations of fraud and housing violations, they must weigh Frenz’s admission during the trial that Spiros Zorbalas still has a controlling interest in Frenz’s properties. The city ordered Zorbalas, described by officials as the city’s biggest slumlord, to sell all his rental properties in 2012. When Frenz announced he’d bought them, the deal was applauded by the city.

Tenants’ attorneys argued during the trial that the sale from Zorbalas to Frenz was a sham.

“There is a range of options available to the city,” City Attorney Susan Segal said Wednesday. “Ultimately the city ordinances allow us to revoke rental licenses in appropriate situations. The city has been closely monitoring the lawsuit and the city wants to make sure every tenant in the city is living in decent, safe housing.”

Before the trial began, Frenz’s lawyers had asked that the case be dismissed because a majority of tenants had not signed on to the lawsuit as required by state law.

But in court, it came to light that Frenz staged three empty apartments with furniture and children’s items to make it look like the building had more tenants who had not signed on to the lawsuit. He also fabricated three leases to further the scheme, according to Hutchison, and got a pest control company to produce fake invoices to suggest work had been done in unoccupied units on behalf of the fictitious tenants.

The Faegre lawyers “proved by a preponderance of the evidence, that Frenz engaged in a deliberate and elaborate misrepresentation to inflate the number of occupied units in the property,” Hutchison wrote in Tuesday’s ruling.

“This was not a knee-jerk, trivial or negligent misrepresentation,” Hutchison wrote. He characterized Frenz’s actions as “well-orchestrated deception.”

Hutchison said the tenant lawyers proved housing violations existed at the time of the lawsuit, including a front door that did not lock and infestations of roaches, bedbugs and mice. Frenz failed to complete repairs as directed by city inspectors and heat in the building in the winter “dipped slightly below the 68-degree Fahrenheit standard established by ordinance.”

Frenz and his attorneys argued he made substantial efforts to resolve the problems, but Hutchison ruled that Frenz only acted after the lawsuit was filed. He wrote that Frenz and his company’s “lack of credibility precludes the court from making an affirmative finding that any of the violations have been remedied as of the date of this order.”

Hutchison said he will appoint an administrator for the building to oversee remedial action and asked the Faegre firm to provide a roster of names.
 
Twitter: @randyfurst

 

(G) An email message to Star Tribune reporter Randy Furst:

Hoping to stir up a more vigorous and even-handed discussion of housing issues, I wrote the Star Tribune reporter whose article had spurred the latest round of discussions, Randy Furst, urging him to follow up with such stories from a different angle. I wrote on January 5th:

Dear Randy Furst,

Your article appearing in the Star Tribune on December 28, 2016, attracted my attention since it seemed to be reviving an old and, in my opinion, unhelpful paradigm of landlord-tenant relations - an adversarial one. I regard this more as a business relationship from which both parties benefit.

Motivated by your article, I sent a message to Lee Sheehy of the McKnight Foundation stating my point of view. Mr Sheehy responded. Because I considered his response inadequate, I restated my position in even stronger terms. I posted your article followed by the exchange of correspondence on the web at http://www.landlordpolitics.com/McKnightFoundation.html. Please take a look.

I am calling this to your attention because I believe it would be useful to revisit issues related to rental housing in an open and perhaps more evenhanded way. It would also be useful to review the role that foundations such as McKnight play in the political process.

I am a veteran of Minneapolis (Property) Rights Action Committee, a landlord advocacy group once headed by the late Charlie Disney. In its absence, some of the old, unhelpful attitudes and relationships have returned.

As a forum of public discussion, I think the Star Tribune has a mandate to promote an intelligent consideration of issues in our community. The need is there. Are you interested?

William McGaughey

 

(H) A response from Mr Furst

Reporter Furst promptly responded:

"Dear Mr. McGaughey,

Nice to hear from you. I recall housing coverage from years ago when we reported on the views of the Minneapolis Rights Action Committee. If something like that gets started again, please let me know so I can inform the editors. I recently changed assignments so I am not sure I would be the reporter to examine such developments but I am interested. Take care, and thanks for writing.

Randy Furst"


(I) Another try

As I interpreted this message, Furst was saying he would not cover the housing situation from a landlords’ standpoint unless we had an organization advocating for our cause comparable to what we had years ago. (Charlie Disney used to say that his organizing “genius” boiled down to a willingness to make “thousands of phone calls”.) Being 75 years of age, I was not in a position personally to devote so much work to this effort.

Even so, I thought I would give it another try. I wrote and sent the following email:

Randy,

As I understand what you are saying, you might be willing to write about the ongoing dispute between landlords and tenants advocates if landlords reconstruct something like what we had with the property rights group in past decades. Fair enough, but I am approaching 76 years of age and am in declining health. I therefore cannot promise much in the area of organizing landlords. It was not easy. I do not have the late Charlie Disney’s gift for such things.

I don’t know anything about your new assignment. However, you have recently (December 28, 2016) published an article about tenants-rights organizations. In the past, you have frequently written about Stephen Frenz and other landlords caught in the crosshairs of elected officials. Is there someone else covering such things or do you have a lingering interest in them?

What I am suggesting here is that the public needs to be informed of what’s going on in high-profile cases involving tenants rights and that the coverage ought to be reasonably balanced. Surely, there is something that can be said from the landlords’ point of view even if these landlords lack an organized voice.

The issue I would raise is the intervention of well-funded organizations such as the McKnight Foundation in landlord-tenant relations and also whether the public interest might be better served by seeking cooperation between landlords and tenants rather than fanning the flames of an ongoing dispute between them. It appears that McKnight is not interested in having an evaluation of its funding activities from an ethical point of view. I’ve tried.

As a curiosity, it might be interesting occasionally to report the point of view of “slumlords” such as Stephen Frenz and Spiros Zorbalas. And what ever happened to that old punching bag, Bob Zeman? Politicians such as Jackie Cherryhomes had a field day with him.

Bill McGaughey

 

(J) Randy Furst responded again on January 6th.

Bill,

Thanks for your letter.

In my new assignment I am a general assignment reporter covering courts and public safety. I will continue to cover housing court developments including the Frenz case. Mr. Frenz and Mr. Zorbalas have declined to return phone calls. Their lawyers say very little outside of court. Frenz recently terminated his current lawyers. I did speak with one of the landlords whose properties were being targeted by the tenants group that I wrote about last week. He is quoted in the story. It is always easier to have a spokesman for people when issues come up and evidently there is none right now for landlords. Nonetheless, I agree with you that we need to be cognizant of the landlord point of view, so I will keep it in mind. In the general area of housing, however, it is not going to be my bailiwick and I am not sure if it is going to be anyone’s. I know this is a concern that you have been devoted to for many, many years and I appreciate your input and insight.

Randy

 

This statement had the air of finality. There was no point to continuing the discussion.

I merely wrote: "Thanks, Randy, good luck with your new assignment."

 

Articles written about housing            Back to: MAIN PAGE

COPYRIGHT 2017 THISTLEROSE PUBLICATIONS - ALL RIGHTS RESERVED
http://www.landlordpolitics.com/McKnightFoundation.html