MINNEAPOLIS, MN – The COVID-19 pandemic exposed a great many issues facing society today. Besides the obvious health crisis and the economic downturn, the pandemic revealed inequality and social injustice on many levels and as the New York Times reported on October 13, “the depths of the nation’s rental housing crisis” were also revealed.
With so many people out of work and facing eviction, the Times recounted the story of a group of renters in Minneapolis who joined together to take a stand and “evict” their landlord by buying the property he was intending to sell anyway. The article focused on the efforts of the renters along with Inquilinxs Unidxs por Justicia (United Renters for Justice), a tenants’ rights organization, abbreviated IX, and presented an alternative to eviction and gives renters the opportunity to become homeowners themselves.
For years, the residents of five buildings in Minneapolis’ Corcoran neighborhood “had been involved in a prolonged battle against their landlord, Stephen Frenz, and his business partner, Spiros Zorbalas,” the Times reported, adding that “the tenants had mobilized for better conditions, resisted evictions and participated in a rent strike.”
Joining together, they “pushed the City Council to revoke Frenz’s rental license,” and “it eventually did, stripping his ability to collect rent,” the Times reported, noting that however, “Frenz still owned the apartments where Chloe Jackson and Vanessa del Campo Chacón lived.”
“He wanted everybody out so he could renovate and sell to the highest bidder,” but the tenants “wanted Frenz to sell to them,” the Times reported.
“IX had brought a lawsuit against Frenz called an Emergency Tenant Remedies Action, or E.T.R.A., suing him for repairs and damages,” the Times reported, noting that it was “one of the first major actions the tenants’ organization had taken since Roberto de la Riva founded the group in 2015 with Jennifer Arnold.”
De la Riva explained that “after they filed suit, Frenz challenged whether IX had secured the cooperation of a majority of the building’s residents, as required by state law,” the Times reported, adding that “to prove it, Frenz submitted leases and a record of a noise complaint for units unaccounted for in IX’s lawsuit.”
Members of IX’s legal team “toured the building and were shown one unit with children’s shoes outside the door, but they noticed discrepancies in Frenz’s account,” the Times reported, noting that “inside that unit, there were no trappings of a lived-in home, like toys and books” and “some pest-control records listed certain apartments as vacant, but reissued invoices removed that designation.”
IX’s lawyers “also noticed that the building listed Spiros Zorbalas as the party responsible for the mortgage” and “that gave them pause,” the Times reported, noting that “Zorbalas had acquired a reputation as one of the city’s most infamous landlords, racking up a large number of housing-code violations.”
“A local paper had called him ‘the Slumlord of South Minneapolis,’ and in 2011 the city of Minneapolis revoked his rental license,” the Times reported.
“When Frenz appeared to purchase around 35 apartment buildings from Zorbalas in 2013, he assured city leaders that Zorbalas had no financial stake in his former properties, but now here was Zorbalas’ name on the mortgage records,” the Times reported, adding that “the tenants’ lawyers dug into stacks of public records and discovered that corporate entities owned by Zorbalas owned a majority stake in Equity Residential Holdings, which Frenz managed.”
“In other words, to get around the city’s sanctions, Zorbalas had effectively, as IX’s lead lawyer put it, ‘sold buildings to himself,’” the Times reported, noting that “Zorbalas had bought a considerable amount of troubled debt from Frenz, and without Frenz, Zorbalas might have had to liquidate his entire Minneapolis portfolio, comprising hundreds of units.”
“The money I was making, I was rolling,” Zorbalas told the Times, “I was taking rent from $500 to $695 a month as soon as I could without doing any renovations.”
The men were “in too deep to walk away when it became apparent that the city no longer approved of their partnership,” the times reported, noting that “ultimately, too, they thought the city was overstepping.”
“I had no reason to declare to the world that I was in business with Spiros,” Frenz told the Times, and when asked “if he had concealed his business partnership with Zorbalas in court,” he added, “Of course I did. But it wasn’t relevant at that time.”
Following “the revelation that Frenz was in business with Zorbalas,” the “tenants brought a class-action lawsuit against the two landlords, seeking the return of their rent,” the Times reported, adding that “in December 2017, the city revoked Frenz’s rental license, and with it, his legal ability to collect rent — which was why, de la Riva was explaining, Jackson and her neighbors should not pay Frenz anything.”
“In 2018, the Minneapolis tenants began working on an offer to buy the Corcoran Five,” the Times reported, noting that “IX approached Land Bank Twin Cities, a collection of real estate speculators whose goal is not to maximize profit but to preserve affordable housing.”
Months passed and “then in October, it was announced that Frenz and Zorbalas had settled the class-action lawsuit for $18.5 million, a historic sum,” the Times reported, adding that the “tenants were shocked” that “a lawsuit that began with a humble Emergency Tenant Remedies Action for basic repairs, filed by a pair of fledgling organizers, had ended in a huge payout… More than $13 million would be distributed to more than 4,400 tenants who had lived in the affected buildings since 2012. The rest would cover legal and administrative fees.”
“A few months later, the tenants received word that the Land Bank was willing to purchase the Five for $4.85 million and had agreed to sell the buildings back to the tenants at no interest,” the Times reported, noting that “the city of Minneapolis estimated the market value of the five apartment buildings to be $4.57 million that year.”
After Frenz declined the first offer on the Corcoran Five, a second was made, and finally in May 2018, Eddie Landenberger of Land Bank Twin Cities texted a simple message to the tenants, “We closed,” the Times reported.
Tenant Chloe Jackson thought of thanking Frenz, “He taught us how to stick together and stand with each other,” she told the Times, “There was a time when we were just neighbors, not really talking to each other. Now, we’re a family.”