Landlord mogul Spiros Zorbalas, who was banned by the Minneapolis City Council from renting property in the city for five years, filed a defiant affidavit Friday saying he had every right to co-own apartment buildings with Stephen Frenz.
The document was filed in a licensing action brought by the city regulatory division against Frenz, one of the city's biggest landlords.
The city is attempting to similarly ban Frenz from holding rental licenses after discovering he and Zorbalas were joint owners of some 60 city apartment complexes.
Zorbalas, who lives in Florida, insisted in the affidavit that he had complied with city ordinances. He was to testify by phone at a hearing in City Hall on Tuesday but was unable to do so because of the aftermath of Hurricane Irma, Frenz's attorney, Douglass Turner, told hearing officer Danielle Mercurio. Instead, Zorbalas submitted an affidavit.
"The Minneapolis City Council nor the City of Minneapolis' Department of Regulatory Services banned me from owning real estate in the city of Minneapolis," Zorbalas wrote.
"There are repeated references that there is a Zorbalas ban, but there is no such ban, council decision or directive from the city of Minneapolis. The allegations that there is a 'ban' is false and without basis in law or fact. Discussions of a ban, is the city of Minneapolis' way to create a narrative that is simply false."
Zorbalas has had a history of confronting city officials. After three of his rental licenses were revoked for repeated violations, the council revoked all of his licenses in 2011 for five years under a new ordinance designed to rid the city of troublesome landlords.
Zorbalas lost his appeals in state courts, and the U.S. Supreme Court declined to hear his case. Frenz announced he had bought Zorbalas' properties in 2012, promising to repair them and bring them up to code, and was heralded by city officials.
But the violations continued and during a 2016 housing court case involving a south Minneapolis apartment house owned by Frenz, pro bono attorneys from Faegre Baker Daniels, representing tenants, uncovered evidence that Zorbalas continued to have an ownership in Frenz's property.
Council will decide case
The city launched its own inquiry, and the regulatory division revoked the licenses. Frenz appealed the case, which is now before Mercurio. She is expected to get final legal memorandums on Monday, then make a recommendation to the City Council on whether to uphold the revocations.
In his memorandum, Zorbalas wrote that when his licenses were revoked, he was informed by a hearing officer that he was "ineligible to hold or have an interest in a rental dwelling license … for a period of five … years."
Added Zorbalas, "I have complied with the [hearing officer's] recommendation and I have not had an interest in a rental dwelling license since Feb. 8, 2011. The license holder subject to this appeal hearing is Stephen Frenz."
Joseph Daly, an emeritus professor of law at Mitchell Hamline School of Law, who has been following the case, said the decision in Frenz's revocation will likely hinge on the claim that Zorbalas has no interest in the license.
"I think it's a bogus argument," said Daly. "He's a beneficiary of the rent and so is Stephen Frenz. Just because Frenz's name is on the license doesn't mean that Zorbalas doesn't have an interest in the rental dwelling license. He's making a profit directly from the rent."
Neither Frenz's attorney nor Zorbalas returned phone calls on Friday.
In an e-mail on Friday, Minneapolis City Attorney Susan Segal wrote, "While we will not comment on the [Zorbalas] affidavit, there have been court rulings already that undermine their claims. We believe the weight of evidence in this proceeding points in only one direction — in support of the city's revocation action."
Randy Furst • 612-673-4224