How a patchwork inspection system is leaving low income renters vulnerable

NINA MOINI: Like most of the country, cities across Minnesota are facing severe housing shortages. Because of this, city's must strike an uncomfortable balance between keeping renters safe and keeping them housed.

Our Ellie Roth brings us a story about cities with dangerous buildings, vulnerable residents, and no good options.

ELLIE ROTH: In late June of 2023, Bemidji rental inspector Ben Hein faced an impossible choice. Engineers had found one of the few affordable housing buildings in the city to be structurally unsound.

An effort to fix a burst water pipe revealed critical floor joists that had been damaged for years. The building, Red Pine Estates, was unsafe, but inspector Hein knew, it was also home to 47 tenants. Many of whom were elderly, disabled, or low income.

BEN HEIN: As much as I don't want people to have to try and find a place to live, I definitely don't want to have to bury them.

ELLIE ROTH: Hein and the city condemned the building. Residents were given six days to pack up their homes and leave.

Bemidji has a severe affordable housing shortage, and Red Pine was the second affordable housing complex with closures in a year's time. Many tenants had to stay in a local hotel for months while they looked for new apartments.

Hein couldn't risk the building collapsing on 47 people. Still, I wondered how he felt about having to evict them all.

BEN HEIN: My logical brain says, as an inspector, I did exactly what I had to do. But the other side, my human side, says, was that the right choice? I mean, the building's still standing.

So, did I get it right? Did I get it wrong? Did I just evacuate 48 people for no reason? Uh-oh.

ELLIE ROTH: Hein's stops himself. Suddenly, he's choking up.

BEN HEIN: So yes, it weighs on me. Quite a bit. Sorry.

ELLIE ROTH: Many tenants of Red Pine can't speak about the building or landlord, because they signed an NDA in exchange for a small amount of money. But one tenant, Lynnette Rex, said the city should have done more to protect Them.

LYNNETTE REX: The inspection process that I've seen, they push your ground fault outlet, then they push your reset and make sure it comes back on, and they take a stick and push your smoke detector and make sure it beeps. Make sure the shower works. Turn on the sink faucet. That's your inspection.

So could they do better? Absolutely.

ELLIE ROTH: In fact, Red Pine had passed its most recent city inspection four years earlier. The city didn't find out about the structural damage until a tenant complained. That was 10 days after the company that owns Red Pine learned of the problem.

MPR News reached out to Tom Schuett, the president and CEO of the company that owns Red Pine Estates, multiple times for this story, and received no response.

As affordable housing gets harder to find, the power dynamic between government and landlords may be changing.

PETER LACOURSE: Having a flawed roof over your head is better than having no roof over your head at all.

ELLIE ROTH: That's legal aid attorney Peter LaCourse. Attorneys like him say some landlords are aware of problems in their buildings, but do little to fix them. And because of severe housing shortages in many areas of the state, city leaders are hesitant to hold those landlords accountable.

PETER LACOURSE: I've definitely seen housing inspectors give longer leashes than maybe they should, or they normally would, just because that they're really concerned about where these people are going to go.

ELLIE ROTH: Take the rental company Suite Liv'n, in Wilmer, a city in central Minnesota. For years, the city knew some of their buildings had standing water and mold. But the company owns a full quarter of rental housing in Wilmer, so enforcement came with risks for city leaders.

Here's how city attorney Robert Scott described the dilemma at a city council meeting back in September of 2023.

ROBERT SCOTT: I'm not recommending, in this case, or nor would I in any other, that the city ignore the criteria in this ordinance and issue a license for a building that doesn't comply. But compliance and re-licensure is better than forcing residents of these buildings to vacate their premises, which is what we're talking about.

ELLIE ROTH: For as much as a year, the city did withhold licenses from the company. But it allowed it to continue renting units that failed inspection.

Dean Zuleger, with Suite Liv'n, blamed the problems on a property management company, which Suite Liv'n has since cut ties with. He said the company has spent millions to bring everything up to code.

DEAN ZULEGER: I would say right now, my apartments are on par with just about every other apartment in Wilmer, and maybe better.

ELLIE ROTH: The city relicensed the buildings in 2023, but it paid a price for its attempts at enforcement. Last year, Suite Liv'n sued Wilmer, claiming unfair treatment. A lawyer for the city of Wilmer declined to comment on the pending lawsuit, but said he believes the city's rental code program is working.

JORGE PRINCE: So I called to order this meeting of the Bemidji City Council.

ELLIE ROTH: After the city of Bemidji evicted 47 people from Red Pine Estates, Mayor Jorge Prince said he couldn't trust landlord Schuett Companies to protect tenants.

JORGE PRINCE: Red Pine didn't get into the condition it was in a month or in a year. It was over time. I don't know whether or not, I can believe in Schuett properties.

ELLIE ROTH: But when Schuett proposed a plan to build a new low-income housing complex, the mayor and the rest of the city council voted to explore the possibility of giving Schuett a tax break.

GLORIA BEIGHLEY: I mean, seriously.

ELLIE ROTH: Gloria Beighley lived in Red Pine, and stayed in a hotel for four months after the building was evacuated. She couldn't find another apartment. Beighley didn't sign an NDA, so she can speak freely. She said she is furious that the city council approved Schuett's request.

GLORIA BEIGHLEY: They're giving him a break? Excuse me. The city didn't even give us people a break.

They weren't even there to help us, you know? Uh-uh. No. So I just think it's hogwash. I just-- Nope. I don't think he should ever be allowed to have a license to come in here and do that.

ELLIE ROTH: And yet, every member of the Bemidji City Council and the mayor agreed to support the tax break. The reasoning? There aren't many companies interested in developing affordable rental housing, and the need for housing is just too great.

For NPR News, I'm Ellie Roth, in Bemidji.

NINA MOINI: Minnesota Now producer Ellie Roth reported this story, and joins me now in the studio to share more about her investigation. Thank you for being here, Ellie.

ELLIE ROTH: Thanks for having me, Nina.

NINA MOINI: Wow, great story. And thank you for your work. It really reveals a lot of the different challenges that are happening at once. I know you've worked on this for several years, so thank you.

So there's two examples of cities that have these rental license ordinances that are really not protecting renters as much as one might hope. Does every city in Minnesota have a similar program?

ELLIE ROTH: Yeah. Well, I wanted to take a step back and just define what a rental license ordinance is.

So typically when a city has one of these, they require landlords to register a property, and then subject themselves to undergo routine rental inspections. But there's no type of statewide oversight, and cities aren't required to have this or inspect their rental properties.

This data didn't exist, so I reached out to cities all over Minnesota and asked them whether they inspected rental properties or not. Nearly 300 cities responded to this request, and of those-- of those cities that responded, more than 60% of cities said they do not inspect rental properties.

And you might think that all of these were in rural areas and greater Minnesota, but there were a lot of areas near the metro that also didn't inspect rental properties. For example, Arden Hills, Apple Valley, and Lakeville don't inspect rental properties.

NINA MOINI: That's interesting. So what happens to these tenants when a city doesn't inspect rental properties?

ELLIE ROTH: Yeah. So you can still file a complaint with the city. Then that's usually inspected by a fire department, a local fire department. The Minnesota Fire Safety Code and the International Property Maintenance Code are two things fire departments can use to try and work through the situation.

But no complaint means no inspection, so these things are completely reactionary. This can lead to problems.

I spoke to Thief River Falls chief Rick Beier. He's been doing research about this topic for two years. He's still working to get an ordinance passed. They didn't know how many properties in the city were rentals.

Here's one story he shared with me.

RICK BEIER: A couple years ago, we had a house fire. It was a rental where they were renting the upstairs, and they were renting out the basement and the middle floor. And there was two more extra beds set up in the kitchen. That's just a recipe for disaster. But you're searching a house, pretty much, blind anyway when there's smoke and fire conditions, and you don't expect to find a bed in a kitchen.

NINA MOINI: Certainly. Ellie, why are these rental issues coming up now? Has something changed?

ELLIE ROTH: Well, like every state in the US, Minnesota is facing a severe housing shortage. So part of this is that there's just more and more renters because homes are more expensive.

And there's also renters in areas where there weren't as many renters before, and cities aren't always prepared. There's this growing trend of companies and real estate investment firms that are purchasing tons of these rental units, and they don't-- these owners don't usually live-- they might not live in the city or even in the state sometimes.

And when this happens, cities have told me, it's really difficult to communicate to owners. It's really hard to get maintenance issues fixed and just have a face-to-face conversation.

In the past, it used to be a lot more individuals in a community that owned-- it was-- they were buying the house next door as a passive income. And there were more social incentives to be a good neighbor. So when that's a company, things just get a lot more complicated.

NINA MOINI: Yeah. So in recent years, state lawmakers have passed really a slew of renter protections. So don't tenants have those protections?

ELLIE ROTH: Yeah. There are new protections in state law, but a lot of these laws often require tenants to take their landlords to court to get relief. So there's a lot of incentives not to do this, right?

You need to know what to do. You need time and money. You might fear retaliation. And also on top of all of this, there's a housing shortage. So there's nowhere else to go if the landlord retaliates, or if you're trying to leave that apartment building.

NINA MOINI: Yeah. What are some cities where the rental licenses are working or are just stronger?

ELLIE ROTH: I looked at the Minneapolis Rental Code Program. In Minneapolis, they have 60 rental inspectors. There is a publicly available dashboard of these inspection reports that anyone can look at. They also have an office that actually helps tenants with complaints and file legal action.

And if there's really severe issues in some of these properties, Minneapolis can hire contractors to fix severe issues, and then bill the landlords. But of course, part of this whole thing is that Minneapolis has resources, and a lot of these smaller communities don't have that.

NINA MOINI: Yeah. So keeping all of this in mind, Ellie, what are you going to be keeping an eye out for?

ELLIE ROTH: Well, when I was talking to cities, when I was doing this survey, a lot of them were saying they don't have a rental inspection program on the books, but they are actually working to draft one. So as the housing shortage becomes more severe, I'll really be keeping an eye on how cities are adapting their codes to make sure vulnerable people are protected.

NINA MOINI: Ellie, thank you for your reporting and sharing it with us.

ELLIE ROTH: Thank you so much, Nina.

NINA MOINI: That's Ellie Roth, producer for Minnesota Now. You can read the full investigation at mprnews.org.