The city of Minneapolis was faced with a housing crisis partly of its own making last December after it revoked 40 rental licenses of Mahmood Khan, a North Side landlord with a record of rundown rental properties.

With some of the tenants facing imminent homelessness, the City Council voted in August to buy eight remodeled homes and a duplex for $2 million. They've rented them to former Khan tenants.

"Aside from the Minneapolis Public Housing Authority, which is a separate entity, this may be the first time in city history that the city is the landlord of residential rental housing," said Larry McDonough, who is pro bono counsel at the Dorsey & Whitney law firm and has been practicing tenant and landlord law for 35 years.

Efforts are also being made by a nonprofit to buy six Khan properties and renovate them so six other families who don't want to move can stay in their homes. About 20 other families have been relocated.

The city will be in the rental business for the nine properties for up to five years. The 10 families, along with other Khan tenants, will be helped along for the first year with a $500 per month subsidy from Minneapolis Public Housing and will have an option, with the city's help in obtaining financing, to buy the homes.

Andrea Brennan, the city's director of housing policy and development, said the city worked hard to acquire the properties by Aug. 31, the date by which tenants had to vacate Khan's homes under orders of Hennepin County Court Referee Mark Labine. He had ruled them uninhabitable and too expensive to repair.

"We intend to learn and see if this [project] is something the city should get involved in and expand," Brennan said.

The crisis over Khan's properties began last December after he exhausted appeals of a City Council decision to revoke all his rental licenses, mostly for single-family homes, after amassing thousands of housing violations. A court-appointed administrator took temporary control of the properties, and the city told tenants to find new housing. Tenants at first got only minimal help in finding alternative housing, a difficult task because many of them had spotty rental records, including past court-ordered evictions.

City officials credit pressure brought by tenants and United Renters for Justice in mounting a campaign, then working with the city to develop the project.

"Tenants stuck together, pressing for a solution to the crisis, realizing the situation they were in was out of their control," said Roberto de la Riva, the group's co-director. He said it showed that stripping bad landlords of their licenses is not enough. The city, he said, must have plans in place to assure that the tenants don't wind up the victims.

Angry tenants confronted city officials including Mayor Jacob Frey and City Council members. Frey vowed to come up with a solution.

Behind the scenes, the city swung into action. In August, the City Council voted to spend $2 million to fund the program, including buying refurbished homes to rent to 10 families who faced evictions as a result of revocations. While it didn't apply only to the Khan tenants, it was clearly focused on helping them. Of the $2 million, about $1.5 million came from Community Development Block Grant funds, federal money that is used to acquire, rehabilitate and preserve low- and moderate-income housing and related support services.

"The majority of homes were recently rehabilitated by other programs of ours," said Roxanne Young Kimball, a supervisor in the city Community Planning and Economic Development department.

It is also intended as a stabilization program, so the city is working with tenants on financial counseling, and the Minneapolis Employment and Training department will help tenants get better jobs.

Kevin and Tameca Woods, their four children and Kevin's mother moved into their new home on the 2100 block of Bryant Avenue N. this month, relocating from a rundown Khan property on Dupont Avenue N. Their old house "was a total wreck," said Kevin Woods, sitting in his renovated, freshly painted home. "This place looks like heaven compared to that."

Tameca Woods said there are additional aspects to appreciate. "It's clean, there are no mice, no fleas. I can leave my stuff and some creature won't come and get it," she said, smiling.

Not that it is in perfect condition. Facing the eviction deadline, workers rushed to complete renovations, and the Woods family pointed to wall molding that was not secure, other repair shortcuts and a door that fell off its hinges.

De la Riva told Kevin Woods to list the problems for city officials and said he was certain they'd be addressed.

Urban Homeworks, a nonprofit community development corporation with a solid reputation, is being paid up to $100,000 by the city to administer the pilot project for the next three years, which includes overseeing repairs and collecting rents. Getting Urban Homeworks on board was critical to making the plan work, said Brennan.

"It's a pretty radical step, a bold step, on the part of the city," said Urban Homeworks Executive Director Chad Schwitters. "I applaud they are going to try something. The bottom line is the residents I've talked to are really happy with the increased quality of their housing and happy to have a chance to move into them, recognizing the trauma that they've gone through."

Frey hailed the city's involvement. "This is a story about government getting things done for people who need help, and getting things done right," he said. "I've been working with many of the tenants since my earliest days in office and I'm glad people who have historically been denied safe, secure and affordable housing now have it."

Council Member Jeremiah Ellison, who represents the Fifth Ward, is a strong supporter of the pilot project.

"I think we have a moral obligation to put [abusive landlords] out of business, but as a consequence of doing the right thing we were going to displace tenants," he said. "It was a way for us to have our cake and eat it, too."

Randy Furst • 612-673-4224

Correction: The headline of a previous version incorrectly said that the city of Minneapolis bought nine houses from a problem landlord. The houses were bought from other sellers to house former tenants of the problem landlord.