On Closer Inspection

Before the city bought his duplexes, says Leland Stauch, more than 30 minority families lived in the Sheffield neighborhood. Now only a few remain.

[Editor's note: A correction ran concerning this story; see end of article.]

The cookie-cutter houses on 46th Avenue and Filmore and Pierce streets in Columbia Heights have that new-development look--adolescent trees, beige and slate-blue siding, pristine garage doors. A few blocks away, stucco bungalows bear the characteristic patina of a pre-World War II urban neighborhood, but this cluster of 12 homes--its Tuesday-morning stillness broken only by the rumble of a distant vehicle or a discontent dog--could have been lifted straight out of Eagan.

It wasn't always this way, says landlord Leland Stauch. Less than a decade ago, Filmore and Pierce were home to 40 households, most of them families of color living in 19 duplexes he owned. Stauch says he was one of the few landlords in the area willing to rent to the families. Today, only a few residents of color remain in the Sheffield neighborhood, and Stauch owns just three duplexes.

According to Stauch and his attorney, Tom White, the change didn't come by accident. Six years ago, claims White, Columbia Heights officials launched a campaign of harassment designed to drive Stauch out of business and rid the neighborhood of his tenants. City officials adamantly deny the charge, saying instead that Stauch's neglect forced them to take over his properties. And while the matter is slated to come before a federal jury in Minneapolis this month, a number of housing advocates say the verdict is already in. They maintain that it has become standard practice for local government officials to inspect low-income rental properties into oblivion. The purpose is twofold, they charge: Cities rid themselves of poor residents and drive down property prices, thus allowing developers--or their own agencies--to buy buildings cheaply.

Stauch's troubles began in the fall of 1992, says White. The rental licenses on his 19 duplexes were up for renewal, and when the city conducted the required inspections, 16 of the buildings failed to pass. While some of the inspectors' complaints were legitimate, claims the attorney, a lot of the items were "nitpicky." "They cited him for stuff like bare spots on the lawns and small tears on screen doors," says White. The city gave Stauch until May '93 to correct the violations, but he quickly ran out of money.

In April, Stauch paid a visit to the bank that held his mortgages, and, for the first time in over 20 years, North East State Bank turned down his request for a loan. According to bank documents subpoenaed by White, on April 9, 1993, a loan officer not only declined Stauch's request, but also "strongly suggested he try to get [his mortgages] refinanced out of NESB." While the loan officer's report didn't discuss Stauch's financial condition in depth, it noted that he had "never missed a payment," that his cash flow was "adequate," and that even with the city-ordered repairs, his finances seemed "manageable."

White contends that Stauch was turned down because someone had tipped the bank off to his dispute with the city. In his report, the loan officer noted that "we discussed the rumored legal actions against him and he says he was ticketed by the city... [However], some [bank] officers told me he is supposedly going to jail for something related to housing."

The May deadline rolled around, and while not all the repairs had been completed, Stauch says he wasn't overly concerned because none of the outstanding violations was "life-threatening." "I had upgraded the electrical system a couple years earlier. Most of my appliances were new. And structurally, my buildings were in better shape than some of the others in the neighborhood." Regardless, adds White, his client didn't hear from the city again for two months.

On July 23, 1993, a handful of Columbia Heights police officers appeared at the Stauch properties and nailed "Not Licensed for Occupancy" signs on 16 of his duplexes. "I was stunned," says Stauch. "None of my buildings were unfit for habitation." But that wasn't the issue, maintains city attorney Jim Hoeft. "His buildings didn't make code, so the city revoked his rental licenses. We prosecuted him for not having rental licenses." Stauch, his wife, and their adult son were charged with misdemeanors for operating without a rental license, while their tenants were given 90 days to vacate the premises.

Charlie Disney, head of the landlord-advocacy group Minneapolis Property Rights Action Committee, says that Stauch's case is a perfect example of how cities use housing inspections to "clean up" neighborhoods. "Neighbors know that the way to get undesirable tenants out is to go through the city inspectors." City officials like those in Columbia Heights do this, explains Disney, by either pulling the landlord's rental license, or by burying a property owner with an avalanche of work orders. "In Minneapolis, they're boarding up houses and moving poor people out," charges Disney. "The suburbs are following their lead--it's a disease that's spreading."

Edward Goetz, a housing researcher at the University of Minnesota's Center for Urban and Regional Affairs (CURA) concurs. "Minneapolis and St.Paul have used inspections aggressively to down buildings and achieve other goals," he says, and suburbs--especially inner-ring communities like Columbia Heights--have also sought to displace what are often referred to as "pockets of poverty." State and local policymakers, Goetz notes, have called for more affordable housing in the metro area, but the state law ostensibly designed to achieve that goal, the Livable Communities Act (LCA) of 1995, may actually lead to the opposite. In a new report published by CURA, Goetz and another researcher conclude that the Act "will actually result in a reduction in the proportion of affordable ownership and rental housing in the region by 2010."

When Columbia Heights police posted their notices on Stauch's properties, the bank called in his notes. His insurance company canceled his policies, and the federal Department of Housing and Urban Development revoked his ability to accept Section 8 rent payments. "His income went from $30,000 a month to practically nothing," says White. With no credit and no cash flow, White maintains, Stauch was forced to sell his properties to the city at a substantial loss--an average of $53,000 apiece for buildings which, according to tax records, were assessed at more than $70,000 each.

Meanwhile Stauch and his family battled the city's misdemeanor charges in Anoka County District Court, arguing that officials had improperly revoked their duplexes' licenses. City policies didn't require that a building pass inspection before license renewal, says White; they only called for an inspection to be performed. In addition, says White, the city singled out Stauch for punishment because he rented to minorities. "Landlords with white tenants had years to make their repairs," says White. He points to another Sheffield neighborhood property owner who was given two and a half years by the city to rid his buildings of lead paint. "That was a lot more hazardous [to tenants] than anything the city cited Lee for," says White.

But that's not the way the city sees it, says attorney Tom Malone, an attorney who has represented the city of Columbia Heights in the matter since 1994. "The fundamental dispute here is whether those properties were up to code and were something that people should live in," he says. "And the city decided they were neither." Anoka County District Court Judge Gabriel Giancola ruled in favor of the city on the misdemeanor charges, but his decision was overturned by the Minnesota Court of Appeals in 1994. Meanwhile the city had removed the buildings and sold the land to a private developer, who constructed the $110,000-to-$180,000 homes that now occupy the lots. In 1995, Stauch sued the city in federal district court; White says he plans to ask for $2 million in damages. The trial is set to begin January 7.

Malone, however, denies that Columbia Heights lowballed Stauch, adding that the landlord simply has an ax to grind. "The price of the properties was negotiated," says Malone, "and at the time, it wasn't an issue for Stauch. But now that the place has been cleared off, he's suddenly decided that it's worth more."

Correction published 1/27/99:
Because of an editing error, parts of the 1/6/99 City Beat story "On Closer Inspection" incorrectly identified the landlord who is suing the city of Columbia Heights. His name is Leland Stauch. The above version of the story reflects the corrected text. City Pages regrets the error.

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