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The Politics of Housing in Minneapolis Prior to the 1990s

by Jim Jacobsen

 

The Twin Cities were a logistical support center for the Homestead movement and for the North Central farm economy. The steady grain revenue, except in the Depression years, helped to provide a stable economy.

The booming economy brought brisk construction in industrial and office properties and in housing, which, in turn, brought rapidly increasing tax revenues. City, county and state officials became accustomed to increasing government budgets. Bureaucratic and political types, both Democratic and Republican, acquired liberal spending habits.

The movement to protest the war in Viet Nam era popularized protest activities. When the Viet Nam war ended, many accustomed to this way of life gravitated toward landlord-tenant issues as an alternative focus of protesting.

Hardened protester types turned to organizing around housing issues. Their promise of avoiding rent was attractive to many young and impoverished types. While allegedly ‘inadequate’ or ‘defective’ housing was the major complaint, these organizers also carried out community-wide protests against federally funded housing construction on the West Bank, near the University of Minnesota campus.

Housing organizers fought the Cedar Riverside complex, built in 1972, in every possible way. They demanded an Environmental impact statement, which cost the complex $50,000. After the report was delivered, they declared it a mute point.

These people also organized rent strikes. When strikers were served Unlawful Detainers, they demanded jury trials for not paying the rent. Although they invariably lost, such tactics ultimately ruined the developer company that owned the complex. It was driven into receivership. The protesters eventually succeeded in getting an organization to ‘receive’, own and operate this complex which enjoyed a million dollars per month in rental revenues.

The political liberals behind this type of activity went from being benevolent citizens to becoming wolf types in ‘social savior’ sheeps' clothing who sought and gained ownership of a massive amount of real estate, together with rental revenues. Some became millionaires from this activity. Many buildings were acquired, typically with assistance from the city government.

The new owners were often ‘non profits’, who, as such, were exempt from taxes. That did not mean that they could not pay good salaries to executives and staff . The owners of privately owned housing meanwhile had no such benefit. Such persons profited only after long and careful management of their properties.

Meanwhile, the city of Minneapolis was spawning ‘neighborhood’ groups. During the 1970s political types met in the basement of the Government Center to discuss the creation of such organizations throughout the city. Many of the people staffing the neighborhood offices were political helpers for DFL candidates on the level of the City Council or Hennepin County Commission. Such jobs were distributed as a reward for working in successful campaigns. Once ensconced in neighborhood offices, the former campaign workers could work toward future political campaigns themselves, with much of the funding provided by City Hall.

The neighborhood offices could also look for buildings to take over. They could operate these properties as rentals. They could get large loans and grants to rehab buildings. The buildings, once rented, would augment the neighborhood group’s revenues. The principal officers of such groups were able to get salaries of between $50,000 to $85,000 per year. Additionally, workers in these neighborhood offices who were successful in getting control of additional buildings, principally by driving the former owners out of business, received ‘consultant fees’ of $5,000 per building.

There were many non-profit groups. One was headed by a former top executive of the city’s public-housing authority. He resigned his position with the city when the Cedar Riverside housing complex was driven into receivership. He then formed a non-profit corporation to take control of the complex and its large monthly revenues. This man later served as campaign treasurer for a number of DFL candidates.

While financial gain was the main motive of such people, an attitude of hostility toward the owners of private rental property was also rooted in left wing politics. In mid Seventies, the idea became fashionable that private investors should not be allowed to profit from rental housing. Strategies to avoid paying rent were widely promoted. If tenants made complaints about their rental housing, they could go into court and exploit some of the many legal excuses for not paying rent while meanwhile remaining in the apartment. The Unlawful Detainer fees – waived to non profits- were increased from $15 to $150 to the private owners. (Note: The fees are now $252.)

Of the three necessities for life - food, clothing and shelter - only shelter afforded such an opportunity. Persons caught stealing food could expect to be jailed if caught. The clothing stores were similarly staffed with uniformed police. In contrast, agencies of city government were set up to aid and abet tenants who wanted to avoid paying rent to satisfy their housing requirement. There were state statutes that gave tenants the upper hand in court in dealings with landlords who tried to collect rent.

This widespread negative attitude towards property owners lasted for approximately thirty years, beginning in the late 1960s. During that period, there was little new housing construction. Leftist politics was in the ascendancy and the city’s rental-property owners were subdued. So who were these anti-property types of people? What were their motivations and interests?

For purposes of illustration, let us consider the example of Brian Coyle who was a member of the Minneapolis City Council in the 1980s. Like a number of local politicians, Coyle had migrated from out of state. He came down from the Fargo area, where he had been dodging the draft during the Viet Nam era. He was essentially a convict, like all Viet Nam draft dodgers, until President Jimmy Carter pardoned this group. After a few years on the West Bank and in the streets, Coyle gravitated to DFL politics. He tried and failed to get a rent-control law passed. Running for 6th Ward alderman on a left-of-center platform, Coyle received the DFL endorsement. He campaigned as an openly gay candidate, received endorsements from established DFL figures, and was elected.

The Council Members used to hold annual meetings in their wards, usually in February, which the Mayor and other political dignitaries would often attend. At such a meeting, Mayor Fraser at his side, Council Member Coyle announced that private property owners in the city were going to become extinct. He went on to tell how the non-profits would be given many kinds of favors and receive special treatment – exemption from fees, availability of loans, public funding, kind cooperation from city inspectors and other officials, etc., so that private property owners would be unable to compete with them in the housing market.

After four years in office, Council Member Coyle bragged that he was now so experienced at Sixth Ward affairs that he could just ‘put an inspector on a building’. In targeting a building which the neighborhood group coveted, some inspectors would knock on the door, flash their badge and tell the tenants they had to inspect. The tenants, unaware that such searches were illegal, would just let them in. There were instances where, finding a burned-out light bulb, inspectors would order the owner to hire a licensed contractor and pull permits. Then they would set due dates which had already expired when owner got the order in the mail.

Brian Coyle held office in Minneapolis about five and one half years, exerting a malevolent influence upon the city bureaucracy from a property owner’s perspective. Then he died of AIDS, and someone else took his place on the City Council. The anti property movement went into shock. The Inspections department went back to their traditional attitudes of being regulators, and not killers, of privately owned property. The city’s Inspections Office changed noticeably with much publicized death of this council member. Even so, there remained a left-wing element looking to get themselves into property business by promoting dissension between tenant and landlord and then gaining control of properties, as in the case of the Cedar Riverside complex.

Then with the 1986 tax bill, which all but eliminated the tax deductions for commercial property, the bottom fell out of the market for commercial property. The new commercial office buildings and high rises built in the early Reagan era went back to mortgage companies and banks, all over the city and all over the country, causing some big banks to fail. The FDIC went some 50 billion dollars in the red with its deposit insurance program, generating widespread anxiety.

The commercial real estate industry has since recovered. The banking industry has mutated into a quasi-government agency for check cashing and a repository for federal debt, otherwise making its money from overdraft and NSF fees. The housing industry, often managed from out of state, is subject to the ups and downs of the condo market and mortgage default rates.

In the last few years, we have seen a burst of new housing construction which exceeds any other housing boom in the history of the city. This new construction follows the election six, years ago, of seven new City Council members and a new Mayor. Minneapolis city government has been working actively with developers to promote housing construction in response to continued complaints of housing shortage and of thousands of people living in the outdoors, under bridges, and in cars.

Presently there aren’t as many problems for Minneapolis property owners as in the previous 30-year period. City inspectors are back to doing their jobs. The media has been comparatively restrained in its attacks on property interests. The massive new investment in Minneapolis real estate, accompanied by a rise in property values, has brought an increase in tax revenues.

Jim Jacobsen is a veteran rental-property owner in Minneapolis who edited MPRAC's first free-circulation newspaper, The Property Owner. He is now a Montana cattle rancher and author of a book that tells the history of that region.

P.S.

Bill,

It’s nice to be affiliated with the property owners.

When I think back on those days, I shiver at the troubles we had. I don't know why it happened to me. The particular times I got into property management and banking were the worst times in history to be involved in those industries; and I had it better than some.

I know that Coyle was targeting me. Personality conflicts and petty rivalries shouldn’t be involved in something like rental property.

Pleasant Avenue and 22nd Street is a good area for buildings. In fighting through it all I'm the one who kept that area from ghettoing out. I used to carry around a framing hammer. People kind of liked that. They sometimes referred to me as the 'law giver'.

One building I took over at 2200 Pleasant was full of drug dealers, users and burglars. I threw them all out with the housing inspector watching me every day. I guess they wanted that building for Whittier Alliance. They didn't like the fact that I got it and so they harassed me for ten years. There was a steady stream of citations.

I did wonders for the building though. I had a .32 caliber automatic pistol on me and came extremely close to using it at least once.

Then when I got the bank, I did mortgage loans in the neighborhood. Through the Franklin Bank, we had participations of $100,000 each on the Minnesota Council of Churches, that Soo Line art place at 27th and Lyndale, and a construction loan with Whittier Alliance. They all worked out well.

I have been in the poor house since an attorney did a number on me but expect to make a recovery. I might even then try to rehab old houses and apartment buildings. I still would be spending lots of time in Montana.

Jim

 

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