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In the past two years, Steve Meldahl's properties racked up 595 housing violations.

Bruce Bisping, Star Tribune

Landlord Steve Meldahl is Minneapolis' biggest challenger

  • Article by: MAYA RAO
  • Star Tribune
  • May 26, 2014 - 10:07 AM

Minneapolis landlord Steve Meldahl was fighting City Hall — again.

In Room 310 of the city’s headquarters, he argued against a $275 levy for a table, chairs and bags of leaves that his tenants had left in the yard. He complained that he never received the order. He recited five sections of the housing code.

The hearing this month was over in minutes, but the city’s disputes with one of Minneapolis’ biggest landlords have pressed on for years.

Meldahl is Minneapolis’ single biggest challenger of assessments for nuisance violations at his properties for the last three years, appealing at least 66 assessments totaling $42,765.60, according to a Star Tribune analysis of municipal records.

He has persisted despite bankruptcy, an unfavorable ruling from a state appeals judge last year, and countless afternoons mired in municipal minutiae that take him away from his business of running investment properties, including more than 80 homes in Minneapolis valued at $3.3 million.

Such investors are drawing increasing scrutiny from Minneapolis inspectors, who are conducting an unprecedented analysis of thousands of rental licenses to pinpoint which landlords take up a disproportionate amount of municipal services. The city will send ­letters out next month to Meldahl and dozens of others saying it will not approve additional rental licenses until they settle disputes with regulators.

Not that it will daunt Meldahl. He’s sued the city many times to contest his fines, claiming that he was denied due process, that administrative hearing officers who hear special assessment appeals are biased, and that inspectors don’t follow the city’s own rules.

Indeed, records show that Minneapolis hearing officers upheld 80 percent of fines levied by inspectors in the 1,400 appeals of special assessments for vacant buildings, nuisance violations, and unpaid citations filed since the beginning of 2011.

Against Meldahl, they upheld even more: 86 percent.

“It’s a kangaroo court,” ­Meldahl said. So he keeps appealing, filing suits in Hennepin County District Court and sometimes continuing on to the Minnesota appeals court.

“If you don’t jump through [the city’s] hoops … you just get fined to death.”

His legal pad ledger

Like many north Minneapolis landlords, Meldahl lives in the suburbs, in a home with his wife in Eden Prairie. He eschews computer programs in favor of notes on a yellow legal pad to track which tenant paid rent when. Only half pay on time. The visors on his white pickup are crammed with coupons.

“I grew up poor as a church mouse,” explained Meldahl, the third of seven children, while driving through north Minneapolis on his way to clear out the home of his latest tenant to be evicted. “Believe me. I get the 8 cents, 7 cents off per ­gallon for gas at Holiday.”

Now 63, he began buying up houses in his early 20s. He scooped up half his portfolio during the subprime mortgage crisis, targeting short sales and houses in foreclosure.

Meldahl ran his rental empire with little controversy until the late 1990s, when two women he was evicting in south Minneapolis plugged the bathtub and left the water running on their way out. Water damaged the ceiling and leaked through to the downstairs tenants.

The city condemned the home, he said, even though he raced to fix everything in a few weeks. It was later torn down.

“This was the case that got me really ticked off with the city, and I said, ‘I’m not putting up with any of their guff anymore,’” said Meldahl.

He works out of a home at 25th and Humboldt Avenues N., where his appeals of fines topping $6,000 eventually resulted in the City Council to vote to cancel them.

The home is filled with boxes of documents chronicling his tug-of-war with the city. He is given to scrawling notes in the margins of his assessment notices, like, “No violations at this property!” and “need 1 subpoena for housing inspector.”

Notices flowed in for uncut grass and weeds hanging over alleys. Junked cars in the yard. Smoke detectors in need of repair. Exterior handrails needed on the rear stairs, along with repairs to a retaining wall, missing bricks on the chimney, and loose shingles on the roof.

In the last two years, his properties have racked up 595 housing violations and 245 police calls, though Meldahl attributes most of the problems to tenants or their visitors.

He also owns another half-million dollars worth of property in Florida, according to a federal court filing.

He said after the tornado that struck north Minneapolis in May 2011, damaging his properties, a bank called a rollover note due. Meldahl defaulted on the loan. He filed a voluntary Chapter 11 bankruptcy petition in December 2012.

Admitted Meldahl: “It’s the dumbest thing I’ve ever done.” As part of the reorganization, he is working out a deal to unload 11 of his Minneapolis houses.

The city is one of his largest unsecured creditors. At the time of the bankruptcy filing, according to court documents, Minneapolis claimed he owed more than $121,000.

‘Levied in full’

His lawsuits have claimed that hearing officers — private attorneys that the city hires to decide cases — “rubber stamp” city decisions, though the lawyers counter that they hear the cases fairly. He’s fought the city on the validity of vacant and boarded fees, claiming the nearly $7,000 fine is nowhere near the city’s annual cost for monitoring such buildings. And Meldahl accused the city in one instance of withholding hearing transcripts that forced him to construct from memory the events of dozens of appeal hearings.

The district court and City Council often wind up later approving settlements for Meldahl, though the city scored a victory after the state appeals court last fall upheld a series of fines against him. He lost because he hired outside lawyers for that case, he said. Next time, he’ll go back to representing himself.

JoAnn Velde, the city’s deputy director of housing inspections, said Meldahl is not proactive about maintaining his properties, “which requires a lot of city services.”

He complained to the hearing officer that the city’s notices were not coming in the mail, and that the matter at hand was the tenant’s responsibility, anyway.

“There’s a lack of due process here, your honor,” he said.

The officer, James Gurovitsch, listened to both him and a city representative. Then, he said, “If there’s nothing further, I will take the matter under advisement.”

He retrieved the decision in the mail Friday. It said the assessment “shall be levied in full.”

 

Maya Rao • 612-673-4210

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