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As foreclosures and housing fraud were devastating north Minneapolis, one gray-haired flight attendant from the suburbs saw an opportunity. He bought ramshackle properties cheap. He took out loans to fix them. He rented them out to poor people.
Four years later, investor Mahmood Khan says he is losing money.
But he's winning no sympathy from Minneapolis officials and North Siders who contend he owns some of the city's worst-kept properties and consumes excessive city resources responding to crime and housing code violations at his roughly 50 buildings.
City records show Khan's houses have racked up at least $112,654 in citations and vacant-building fees that he has paid, been assessed for or has pending against him. Those buildings had 712 police calls in the last year and a half. Earlier this month, police rescued two runaway teens working as prostitutes in a house Khan owned.
"He's a fellow that will do what he's told, but we have to tell him what to do, and we're not in the business of managing people's properties. ... We're now looking at Mr. Khan far more seriously," city housing inspections director Tom Deegan said.
Khan said he works 60 to 70 hours a week to provide low-cost housing to those who, in many cases, have nowhere else to go, and rehabbing houses that otherwise would languish. Khan and city lawyers reached a settlement this month to lower the fines, a move subject to the approval of the City Council, but he said the city would rather tear down a building than work with its landlord.
"They just have their own agenda of destroy, demolish, destroy, always bringing people down," Khan said.
Controversy over Khan, a frequent target of local bloggers and neighborhood groups, comes as the city is trying to stabilize the North Side after years of disinvestment, crime, a tornado, population loss and the housing crisis. Some critics view him as an obstacle to the city's goals, saying he hurts the community-minded citizens that the North Side needs by enabling troublesome tenants and bringing down other people's property values.
But Khan views himself, instead, as a kind of benefactor, saying he has invested $3 million since 2008 in buying buildings, pulling permits and paying for contractors, inspections and taxes.
Khan, 59, lives with his wife and three children in Roseville. He immigrated to Minneapolis from Pakistan in 1979, after spending many years in India. He studied math for a few years but never earned a college degree. While working as a flight attendant, Khan said he entered the real estate business in the mid-1980s, after building an apartment complex at 315 NE. Buchanan St.
His dealings as a landlord grew in 2008, as a flood of foreclosed houses went on the market. He saw opportunity in some of Minneapolis' toughest neighborhoods and bought mostly single-family homes and duplexes, borrowing against several of his longtime apartment buildings.
One of those homes was 2722 Oliver Av. N. Last month, authorities arrested Meranda Warborg, 29, on suspicion of sex trafficking and promoting prostitution after discovering two teenage girls advertised on Backpage.com after running away from Eau Claire, Wis.
Khan said that Warborg was not on the lease for the house and that he knew nothing about crime occurring there.
It was no surprise to Megan Antonich, a mother of two who lives across the street. She said a stream of people visited all day and night, throwing garbage in her yard. One even urinated next to her house.
"I phoned the police as it was happening, and they said, 'What do you want us to do about it?'" she said.
Only a block away, neighbor Kenneth Kiser has been frustrated for years by another Khan property, a dilapidated vacant duplex with a dirty mattress propped against the second-floor balcony. The roof and chimney are still in shambles, more than a year after a tornado tore them apart.
Troubles date way back
Kiser said the house was a problem before Khan bought it in 2008, but the prostitutes, drug dealers and people pointing guns have continued passing through unabated.
He said Khan gave him his number and once brought over a new tenant to be introduced, but the woman was fiercely twitching, her pupils wide.
"She was so high she couldn't stand. ... He sounded like he wanted to be a nice guy, but time after time after time he just didn't care what kind of people lived here," Kiser said.
Landlord Steve Meldahl, who also battles the city frequently, said Khan's flaw is being too understanding.
"He really tries hard, he bends over backward," Meldahl said. "I think a lot of these tenants up there really know the ropes, and they definitely take advantage."
Khan said that he has a management company check tenants' backgrounds and rules out people with drug or other convictions but that he gives chances to people who have a few minor problems in their past.
Giving a second chance
He acknowledges that some create hassles, but that most are jobless or on welfare. "Who rents to these people? Nobody wants them. ... If you don't give anybody a second chance, then there is no chance of survival for anybody."
Deegan can't reconcile Khan's claim that he checks out his renters with the reality of what city inspectors and police encounter.
"Apparently you're not checking them well enough, because the other 99 percent of our other owners of rental properties do not have this problem," Deegan said.
Despite his friendly demeanor, Khan has aggressively contested the city's actions, last year unsuccessfully suing over the revocation of his rental license at 3223 Bryant Av. N. and challenging the fairness of the city's system of using hearing officers, who are paid by the city, to render judgments on property assessments.
One of the houses Khan purchased in 2008 was 2222 N. 4th St., which had been condemned by the city and was on its demolition list. The City Council agreed to stay the demolition on the condition that Khan enter into an agreement to restore the building in a few months. He did some work but did not finish it by the deadline. Khan argued that he could not afford a required $20,000 cash deposit in addition to the cost of completing repairs.
Taxes and fees piled up, and Khan wound up forfeiting the house to Hennepin County. On Aug. 6, the Minnesota Court of Appeals upheld the city's demolition order, deeming the home a nuisance. Standing outside the house last week, Khan said he hadn't paid the taxes and fees because he was not receiving any rental income. He said the city had missed an opportunity for a private investor to provide affordable housing.
Another troubled building: 1237 Knox Av. N. Khan bought the foreclosed house for about $5,000 last year and said he spent tens of thousands on siding, windows, plumbing and heating.
The house has since received $1,939 in housing citations and 31 police calls. In just two weeks in July, there were calls for a loud party, a shooting, an assault, an unwanted person and loud music -- each on a different day.
Still other houses are slumping in shoddy condition after Khan wrangled for months with his insurance company and the city over damage caused by the May 2011 tornado. One is an apartment building on Golden Valley Road that he bought in 2001; another is 2639 Oliver Av. N., the house that Kiser complained draws criminals.
A city nuisance panel last Thursday recommended that the Golden Valley apartments be demolished, even after Khan said he sunk $140,000 into fixing the roof and bricks and received assurances from inspectors that it was structurally sound. And the City Council voted in June for the Oliver Avenue building to be razed; Khan filed a court challenge against the city last week.
He also spends much of his time fighting tenants, filing more than 120 eviction cases in the past three years because the people he rents to regularly fall months and thousands of dollars behind.
Khan still works part-time as a flight attendant so he can keep up his health insurance, and despite his business woes, he has no intention of giving up. "I can't just walk away from it," he said. "I've invested all my life savings."
Maya Rao • 612-673-4210