Residents in 40 apartments in five south Minneapolis apartment buildings owned by a pair of embattled landlords got a reprieve on Wednesday that will keep CenterPoint Energy from shutting off their natural gas.
The utility company planned to turn off the gas Wednesday after the property owners, Stephen Frenz and Spiros Zorbalas, refused to pay the bills.
At a hearing in Hennepin County Housing Court, Assistant City Attorney Ivan Ludmer said that the city, using a special housing repair fund, will pay about $25,000 in back gas bills to CenterPoint to keep the gas on. The city would recoup the funds through a special assessment on the properties.
The payout was part of a deal forged Wednesday during a testy hearing in housing court, where Hennepin County housing referee Mark Labine appointed an administrator, Lighthouse Management, to oversee the five apartment buildings on the 3100 block of S. 22nd Avenue. They have been in limbo since Frenz had his rental licenses revoked for all 60 of his buildings by the city in December 2017. But Labine expressed exasperation, calling it an emergency short-term appointment.
"If I'm going to appoint an administrator, I have to have an exit strategy that makes sense," he said. That strategy, he said, must either be the sale of the properties or the tenants will have to leave. Besides collecting rent and making repairs, Lighthouse was ordered to produce a plan for how it will assist Frenz and Zorbalas in selling the property, and the city of Minneapolis must explain why it has not had the tenants evicted when the buildings are unlicensed.
Christopher Kalla, an attorney for Equity Residential, a company owned by Zorbalas and Frenz, lashed out at the tenants for failure to vacate and the city of Minneapolis for failing to order them out. He said the tenants had to leave in order for the properties to be renovated for resale.
Asked by Labine if Frenz would pay the $25,000 bill, Kalla said he would if tenants agreed to leave the properties by Aug. 31. However, the tenants have long fought to stay in the buildings.
The tenants sought an administrator in court not only to keep the gas on but to make repairs. Labine said those issues and the economic viability of selling the properties will need to be addressed at a July 25 hearing.
Zorbalas had his rental licenses revoked in 2011 for operating buildings in poor condition. Frenz announced he bought the buildings from him in 2012, but after it was discovered in 2016 that Zorbalas still had a large interest in them, the city revoked Frenz's licenses. Without licenses, the two could not collect rent.
The pair then sold off the buildings, many on contracts for deeds, but the city refused to grant rental licenses to the new owners, saying that under those contracts, ownership reverts to Zorbalas and Frenz if the buyers fall behind in payments.
Kalla asked Labine to issue an order Wednesday, barring tenant protesters from trespassing at Frenz's home when they hold a march on Sunday.
Michael Cockson of Faegre Baker Daniels, the tenants' pro bono attorney, said such an order would violate tenants' First Amendment rights.
"I don't have any authority over protests," Labine told Kalla.
Jennifer Arnold, of InquilinXs UnidXs por Justicia (United Renters for Justice), said after the hearing that protesters were marching to Our Lady of Peace Catholic Church, which Frenz attends, and had no plans to go to Frenz's home.
The tenants are also raising money in hopes of buying Frenz's properties to create tenant-run cooperatives. Arnold said Frenz wants more than tenants are willing to pay.