Landlords vs. City of Minneapolis (Nonprofits in the Background)

Before I go into the details of the lawsuit, I’d like to put it in context. Cities with one-party rule traditionally form a second government built around the departments overseeing city services. A Chicago Superintendent of Education, for example, is a lifetime appointment - or at least until he’s arrested by the feds. Eastern cities have long experience with the phenomenon. There is no political recourse in a one-party-rule city. Politically connected entities in Minneapolis, like the many non profits, are the ones that directly influence our business, which is rental property.

These organizations always seem to get the plum contracts, financing and even bailouts when needed. They serve as patronage slots for ex politicians or political hacks who’ve bankrupted other non profits. Like the third generation welfare recipient, the non profit is the pork barrel for life for loyal DFL hacks. And like welfare, they are rewarded for failure. The director of the Phillips Housing trust is a good example. Ousted by his own board with a record of failure admitted by his own ideological buddies, he gets moved to do more damage in the Whittier neighborhood.

My particular beef with non profits is their use of city agencies to acquire their properties. We know they have the fix with the DFL council, get their financing and bailouts approved in advance, have generous grant-paid salaries that belies the term ‘non-profit’, as it is quite profitable for the hacks on the inside. We know they aren’t subject to the same rules the rest of us are. They don’t pay eviction costs. They aren’t subject to license revocation. They get away with things like suddenly emptying a building when the gangs take over that would get a private landlord sued. All this is the natural order of things in a good-old-boy network. If this were a two-party system, a new broom would favor their own political buddies. But because there hasn’t been a new broom for so long in Minneapolis, something else has been going on.

The non profits steal buildings from owners, and they use the Inspections department to do it. Having sat in on many neighborhood meetings in the Whittier and Phillips area, and having known people within the non profits, I’d like to present a fairly typical operation. First they organize by themselves or proxy a block meeting, whereupon one of their own is either the block captain or someone otherwise in charge. Then they proceed with identifying the ‘problem addresses’. Note that while gangs and drugs are the impetus that has galvanized the community, they prefer to deal with properties rather than people. If you go to a meeting, they will have at least one professional activist telling you of the ‘problems’ at certain addresses. They will be armed with printouts of police calls. From the outset, the direction is meant to deal with addresses rather than holding people responsible. And who owns these addresses? Absentee landlords, of course. Usually white male IR (Republican) landlords.

No one mentions the crime rates at local public or non-profit housing. No one even has statistics for them. They solution, says the activist in charge, is simple: Make those evil landlords do something. But how, you ask? Simple, we have here a bona fide City Inspector who assures us she can shut the building down; and, when that happens, your problems will magically disappear. If fact, it’s just possible a kindly non-profit will undertake management if the city offers enough pork. That would be good because everyone knows non-profit management is good, where for-profit management is evil.

If someone asks how the building can be shut down, the City Inspector confidently assures us all there are several ways. First, you can write enough work orders with close deadlines and vague wording to shut anything down. The gangs in the building are indeed cooperating by trashing units faster than the owner can fix it. And organizations like the Tenant’s Union and Legal Aid, in addition to the left-wing Housing Court, are defending their right to do it. What they also do is make promises to a caretaker or tenant that the non-profit will reward them if they turn the building into Inspections, a reward like their own co-op unit.

If the owner doesn’t give up and walk away and desperately tries to keep up, there are still ways. I was impressed by the sophistication of one neighborhood group in their questions to the Inspector. For example, how much does the owner owe? They target buildings with recent debt restructure or purchase because they know if someone papers the building with work orders, something’s got to give. Usually it’s unpaid taxes or water bills. Eventually, the city gets the building and the owner loses his credit rating due to foreclosure. The city sells the building minus all the debt for $1 to the non-profit. The foreclosure results in higher mortgage rates for the rest of us, particularly in that neighborhood if it isn’t already red lined. The nonprofit gets three times the money a private landlord would use to ‘rehab’ the building.

We are becoming familiar with the end result. Many good buildings, our legacy, are torn down. Many having much to much debt to survive without constant taxpayer bailout. The same people doing the same crimes, which is perhaps what we should have addressed in the first place. A few with fat grant-paid salaries sitting at desks rewarded for their loyalty to the party.

As a transplanted East Coaster, one-party rule is a familiar song. But I am wondering if we have the time to continue with a city government that is repeating all the failed liberal solutions of the East. In fact, now it might be instructive to look East. The big liberal welfare states are passing draconian welfare reform; and they, above all, know reform is a misnomer. They are planning and budgeting for having a lot less people collecting welfare in their cities a few years from now. They are planning on moving the human results of their ideological Great Society failures elsewhere. Do we want to be that Elsewhere?

Brad Rickertsen, August 3, 1995


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