stoWhen ownership changed, the Section 8 contract should have transferred, too, but an improper transfer leaves the outcome in doubt: Condos? Resale? Lawsuit?
Residents of a building set aside for low-income housing in Stevens Square are wondering what their fate will be after its recent sale.
The new owner originally said he’d like to drop the building’s Section 8 designation and convert it into condos. He changed his mind, however, when it came to light that the Section 8 contract was not properly transferred, raising questions about whether he would be allowed to drop the designation. That got others involved in a struggle to preserve the building’s low-income status.
The legal issues are still murky, as are some details about the identity of the new owner.
Seth Rowley purchased the building at 1801 1st Ave. S. this summer for $1.1 million. Although neither he nor his sales agent returned calls for comment, Rowley told attorney Tim Thompson several months ago that he intended to convert the 18-unit building into condos. Thompson said that Rowley had second thoughts after that.
Some of the tenants at 1801 1st Ave. S., which was built in 1920 for young professionals and first-time homebuyers, have called the building home for as many as 20 years. They were worried enough about the future of their home to go to the Stevens Square Community Organization (SSCO) to ask for help in July.
SSCO’s Executive Director Julie Filapek said she sympathized with the tenants but at the same time felt the burden of the neighborhood’s goal to establish more owner-occupied housing. Filapek said that puts SSCO in a tough position.
While the 1801 tenants had always been “good neighbors,” unfortunately, “There’s not a lot we can do.”
If they were displaced, the tenants would get 18 to 24 months notice, but they might have trouble finding other Section 8 housing nearby. Their building is among a dying breed of housing tied to income, although there are other Section 8 buildings in Stevens Square.
Building Manager Jeni Carrier, whom Rowley retained after he purchased the building, said, “Nothing will change. Everything will remain the same.” Earlier on, however, she had chosen her words more cautiously, saying, “The new owner has no direct plans to cancel Section 8.”
What provoked the turnaround is unclear.
Carrier has since declined to answer any questions about the building.
Jack Cann said the sale of the building hadn’t followed Housing and Urban Development (HUD) protocol.
Cann said that HUD’s approval should have been sought before the deal was sealed. Because it wasn’t, the change in ownership is questionable.
“I have absolutely no idea what they’ll do in this case,” Cann said. “For sure, the owner shouldn’t be getting any payments from the [Housing Assistance Program] HAP contract. Arguably the whole deal ought to be undone.”
Furthermore, “The threat of condo conversions is hanging over this situation,” he said.
However, Jim Larson, who owned the building for 30 years before selling it to Rowley, claimed that he’d attempted to reach HUD but asserted that they “didn’t open their mail.”
Larson, who’s currently unloading all of his Minneapolis property, said that the building’s subsidy couldn’t keep up with its operating costs. That was the problem he encountered when he offered the building to various agencies, including the Minnesota Housing Finance Agency and the Plymouth Church Neighborhood Foundation.
He said that the state agency declined because they didn’t want to invest in such a high-cost rental building. The Plymouth Church Neighborhood Foundation didn’t want to pay Larson’s asking price, according to Plymouth’s Executive Director Lee Blons.
However, Larson insisted that the building was reasonably priced.
“I’m trying to bring some perspective as to what the government should be paying and the cost to all of us as taxpayers. I paid heat, water, sewer and insurance. Do you know what that left? Nothing. I don’t know anyone who can run a business on a zero percent profit.”
But considering the cost of renovation, new construction or conversion, “Someone has to fund the purchase of that building,” he said.
He added, “There are some exceptionally fine people in that building. They may have disabilities or are poor, but they’re very fine tenants.”
Larson declared, “I’m not a slum lord, con artist or a flipper of properties.”
In September, Minnesota Housing Finance Agency’s Bob Odman said that the building’s sale “was not in keeping with HUD. The seller didn’t provide proper notice of intention not to renew [the Section 8 contract]. The new owner is obliged to renew. Our agency and HUD are working with [Rowley] to renew at least for another year. It’s not clear to us what his intention is, except to convert to something else that’s not Section 8.”
Furthermore, Odman added, “It’s conceivable that if he tried to not renew [the Section 8 contract] and tenants objected, they’d bring a lawsuit against him, forcing him to renew, in which case, I think the law would side with the tenants.”
At this point, Rowley’s identity is as mysterious as his intentions. Larson has never met him, and tenants who met him briefly as he walked through with video cameras to get footage of the apartment described him simply as a “young” college student in his 20s.
Rowley represents banker Credit Dauphine, which also happens to be the name of a bad guys’ front business in the TV show “Alias.” At the bottom of the estoppels forms Rowley gave to tenants to sign, he wrote, “Secret Agent Limited.” And when you google “Credit Dauphine, Minneapolis,” right away you get a hit for Marcus R. Dixon, a character on the show who was born in Minneapolis.
The phone number linked to the address for the locally based Credit Dauphine reaches a voicemail message that seems to be a private home. It doesn’t mention Rowley or even a male occupant.
Moving to another Section 8 home could mean a major lifestyle change for the building’s 20 tenants, most of whom have various health problems, ranging from depression to HIV. Some said they appreciate the building for its convenience. Because many of the residents don’t have cars, being close to their doctors or other health care providers is especially critical.
Five-year resident William Kawski said, “It’s a pleasant place to live. We have a different spectrum of people. I like my neighbors and the people in the building.”
Kawski ended up in the building because he suffered a broken neck and spinal problems. Although he said that he understood the neighborhood’s need to revitalize and upgrade some buildings, he said that he and others were tied to the community.
“I don’t think anyone in the neighborhood objects to the tenants in this building. They’re not undesirable to the neighborhood. We’re citizens just like everyone else,” he said. “I’d be forced to go somewhere else [if he lost his apartment],” he said. “I don’t know what to do. I’m thinking of moving back to Wisconsin.”
Kawski said that in a way, he felt targeted by condo conversion, “It seems like we’re paying the price for upward development,” he said.
Five-year resident Cheryl Horan, who’s being treated for depression, likes the building for its amenities. She’s allowed to have two cats, is close to the bus line, a dollar store, food shelf, concert venues, and parks filled with kids and dog owners. She echoed Kawski’s sentiments. “It’s a great opportunity for me. I have no idea what I’d do if it lost Section 8,” she said.
Six-year resident David Larson is physically disabled and HIV positive. Already, he’s started to look for another place to live. If the apartment converts, he, too, will probably move to a rural area because, “Sometimes it’s nice to hear birds and crickets instead of traffic.”
Larson said that he has heard that most of the tenants no longer feel comfortable walking around at night, although that isn’t due to sale of the building. He said the neighborhood has changed. Stevens Court tenants used to sit outside and talk, but an increase in prostitution, drugs, gang violence and petty theft now keeps them inside, Larson said.
Issues like crime and lack of parking would affect condo living, too, he pointed out. He said that the building was converted into condos in the 1970s but failed then, too.
Committed to the neighborhood
The building’s tenants have chosen to fight for the building’s Section 8 status rather than accept vouchers that would ensure them low-income housing elsewhere.
Julia Rybak of Bloomington-based Home Line Assistance, which works toward preserving affordable housing, praised the building’s residents. She said condos don’t necessarily bring stability to a neighborhood because they’re often bought as starter homes by people who will move on in a few years.
The renters in 1801, on the other hand, are “committed to the neighborhood and might be there a lot longer. A lot of them say that the housing is what makes them active in the community. Condo owners are speculative. I think this building should be the HUD poster child,” she said.
Rybak works with the tenants’ association, 1801 Unlimited. Members of 1801 Unlimited have met with City Council members Robert Lilligren and Dean Zimmermann, staff from Congressman Martin Olav Sabo’s office and HUD officials. They plan to meet with Mayor R.T Rybak next (Julia Rybak is no relation). She said all of these elected officials would like to see the building remain affordable long-term.
A nonprofit organization, the Plymouth Church Foundation, has expressed interest in purchasing the building. Lee Blons, the foundation’s executive director, said that she is currently in negotiation with Rowley about the building’s plight. She hopes to arrive at an agreement that will please all parties but said she couldn’t comment on it further.
On Oct. 24, Carrier, the building’s manager sent a letter to tenants informing them that city officials and officers from the Plymouth Church Neighborhood Foundation would be touring the building on Nov. 4. It read, “This showing is regarding the building owner’s integral [sic] pursuit in keeping 1801 1st Ave. a Section 8 building. Luckily, even with the uncalled for hostile environment that has been created toward him from some individuals, he has continued making all strives [sic] in his pledge to keep 1801 1st Ave. as it is and has always been for tenants of 1801 1st Ave.”
(Note: This story has been corrected from the original version. It misreported that Tim Thompson and Jack Cann worked for the National Low Income Housing Coalition.)