A crowd of Whittier residents attended a recent community meeting in response to proposed rent increases at 2533 3rd Ave. S. Latino families at the podium said they learned in a letter from CPM Companies that their apartments would be marketed to students at the Minneapolis College of Art and Design. Dozens of people copied down CPM co-founder Dan Oberpriller’s cell phone number, and filled his voicemail box.
In the following days, Oberpriller said the company would keep rents flat. He said he was visiting residents door-to-door to apologize.
“We’re going to do the right thing by the tenants,” he said. “…We made what I believe is the right business decision to pull back everything and take the pressure off the tenants, take the pressure off the situation.”
An employee sent letters to tenants without his approval, he said, and the company has made changes in management as a result.
MCAD student Ash Ontiveros identifies as Latinx. The thought of a landlord displacing Latinx people in favor of college students is upsetting, Ontiveros said.
“Most people I know can’t afford it,” said Hannah, another student.
Ontiveros said students received an email from MCAD highlighting two new housing options close to campus: the 3rd Avenue building, called Local 25, and another CPM building called Chroma at 26th & Stevens. MCAD said in the email that it wasn’t endorsing either option, but students would receive special pricing.
MCAD President Jay Coogan said he knows the developers and he’s toured Chroma. He said that although the school alerted students to new housing close to campus, staff are not telling them where to live. He asked CPM not to use the school’s name in any further correspondence.
“We are sorry that our name was linked to it,” he said.
Oberpriller said the company has no partnership with MCAD. He said rents at the 3rd Avenue building are currently below market rate.
“The building was sold at a market rate price. Whenever you buy that, you know what’s happening in the city. The property taxes are going up. Everything is going up. It’s not like I can afford to lose money. It’s just the market,” he said.
He said apartment rents citywide are rising along with property taxes, labor and maintenance costs.
“You can’t really not raise the rent when everything else is rising, that’s in the nature of the economy moving fast,” he said.
Average rents in Southwest Minneapolis were $1,194 in the fourth quarter of 2016, according to Maxfield Research, up from $903 in late 2012. HousingLink’s Twin Cities Rental Revue reports that the average two-bedroom rent in Southwest Minneapolis stands at $1,921, an increase of 32 percent over the past five years.
Rigoberto Gonzalez, a resident at CPM’s building, said it’s challenging to find affordable apartments.
“The problem is if we can find a place we can pay, they don’t accept dogs,” he said through a translator. “If we find a place that accepts dogs, the rent is too high.”
Esperanza said she fought successfully against rent increases at QT Properties last fall. She said people living in these buildings are making $9-$10 an hour.
“Part of the problem is that we don’t have protection from the city,” she said through a translator. “That’s why we need support from all of you to make sure these kinds of displacements don’t happen.”
A “perfect storm”
Council Member Lisa Bender called the tight rental environment a “perfect storm,” due to low vacancy rates, growth in the city’s population and affordable housing transitioning to market rates.
“This kind of community pressure is really helpful,” she said.
At the May community meeting, some in attendance called for rent control to regulate rent increases.
Bender said the state pre-empts the city from imposing rental control, however.
Council Member Alondra Cano said rent control would require a sustained campaign.
“It took the minimum wage movement since 2013 to build up to where we are today,” she said. “It’s taken a few years to get here, but grassroots campaigns can really make that significant policy work happen. Something similar would have to be done with rent control.”
Minneapolis’ tight rental market continues to attract investors, placing increasing pressure on rent rates.
The Laguna apartments, originally developed by CPM at Lagoon & Irving, sold from TLP Services in March to Peter Michael Heinemann for $17 million, according to a report by Colliers.
QT Properties recently sold a portfolio of properties — some of which were the subject of tenant advocacy efforts — to the California-based Villa Nova Real Estate Holdings, according to Hennepin County records. Staff at QT did not respond for comment, and Villa Nova could not be reached for comment.
To curb potential displacement of residents, council members are studying an idea that would require landlords to give notice of plans to sell a property. The notice would make city officials aware of potential displacement and allow them to play a supportive role in finding a buyer that could keep units affordable. Another idea would allow longtime renters a first shot at buying a house that’s going up for sale.
Council members are also talking to the city’s legal team about “just cause” eviction protection measures, which could help prevent retaliation against residents who are organizing.
Cano said the council may also support organizations that provide legal support to tenants.
The City Council recently allocated $1.5 million to the Minneapolis Naturally Occurring Affordable Housing Preservation Fund to assist nonprofits in acquiring and preserving affordable properties. And a new ordinance prohibits Minneapolis landlords from refusing to rent to low-income tenants with federal housing vouchers.
Renters are seeing some impact through community organizing groups.
QT Properties said it planned to increase rents at eight of its buildings this year by an average of $74 per month, describing a long-overdue increase that would still keep rents below market rate. That increase was scaled back for about 30 families, advocates said.
“Tenants who worked with us got decreases between $50 and $75,” said Jennifer Arnold of InquilinXs UnidXs por Justicia.
Tenants at 3057 14th Ave. S. found attorneys to work pro bono on their behalf and spent more than a year in litigation with the landlord. They were granted an administrator to oversee repairs, and a District Court Judge ordered $27,813 in rent abatement to seven tenants at the building in late May. Their landlord, Stephen Frenz, was ordered to pay more than $187,000 in sanctions. The city of Minneapolis is in the process of revoking Frenz’s rental licenses, after litigation revealed that the landlord Spiros Zorbalas may retain an ownership interest in properties the city barred him from holding. The city is in the process of finalizing administrative hearing dates.
Frenz did not respond for comment.
Oberpriller said CPM re-sided the 3rd Avenue building due to water leaks and will continue to make improvements to the building. He said he received many phone calls after his number was given out last month.
“I don’t think anybody likes that, but I understand,” he said. “…It’s too bad it went to this level, but we’re going to do the right thing.”