The corporate neighbor

A growing corporate structure to the landlord model is outpacing some city and University tools used to keep an eye on rental property owners. As more homes in the University district become rental property, it might surprise you to find out who your neig

A plaque resides near Van Cleve Park on 15th Ave. in memory of three University students that died in a Sept. 2003 house fire.

A plaque resides near Van Cleve Park on 15th Ave. in memory of three University students that died in a Sept. 2003 house fire.

Alex Ebert

By most standards, 1231 8th Street SE doesnâÄôt look like a business. Signs of residential life âÄî furniture on the porch, a few beverage cans here and there âÄî point to this being an average student rental home. But this house and 1221 8th Street S.E., a duplex two doors down, are more corporate than what meets the eye. They are both registered in the name of two different corporations and run by two different people, but both are technically owned by Jim Eischens, whose business illustrates the complexity of the campus rental property system. Since a 2003 fire in Dinkytown killed three University of Minnesota students, off-campus housing has undergone revolutionary changes aimed at creating safer campus housing. City inspections swept through the University district, catching more than 100 code violations of poor property conditions and over-occupancy. Since then, many landlords have gone semi-corporate, complicating inspections and University policies. Forged in fire On Sept. 20, 2003, students Elizabeth Wencl, Amanda Speckien and Brian Heiden died when their 827 15th Ave S.E. duplex burst into flames. The only exit was through a double door on the porch where the fire started âÄî survivors jumped from the second story window; the three students died of smoke inhalation. Inspectors cleared property owner Eischens of negligence, but the fire left him, and the rest of the area landlords, in the center of a public outcry for safe rental housing. In 2003, Eischens owned more than 100 properties. At the time, he was the source of the most tenant complaints through University Student Legal Service (SLS). âÄúPublic officials became up-in-arms, and part of the problem was this level of hysteria,âÄù Patrick Burns, EischensâÄô lawyer said. âÄúNow what youâÄôve seen is the vigilance of the city and the University have increased livability standards.âÄù The city conducted a sweep of about 700 rental properties around the University, checking all properties with three units or more. Burns said that at one point city inspectors checked more than 80 of EischensâÄô properties in a month, but all violations were fixed and Eischens never lost a renters license. Dick Poppele, president of Prospect Park East River Road Improvement Association and 42-year area resident, said that since the sweeps roughly 2,000 problems have been fixed at properties around the University. Within the first few months of the sweep, the city found 180 code violations out of 250 houses. Of those, 61 violations dealt with over-occupancy, forcing students to relocate. St. Paul and Minneapolis city councils enacted new ordinances that could strip licenses from landlords if they found multiple code violations. The University also created a policy that delisted negligent landlords from their off-campus housing Web site. At the time, the University listed every licensed landlord in the area, totaling 3,166. But challenges arose when authorities tried to enforce their new policies because of the complicated structure typical of rental housing. A company neighborhood Under the guidance of attorneys, many mid-sized and larger landlords now create dozens of limited liability corporations (LLCs), then give their properties to the companies âÄî a common legal step in the industry. On some streets, Eischens owns up to seven different LLCs âÄî some blocks apart, others separated by less than 100 feet. This practice is a perfectly legal way to separate personal assets from company assets, University corporate law professor Brett McDonnell said. âÄúIf something goes bad in the building, if someone gets hurt and you have some big judgment against you, you donâÄôt want all of your business to be destroyed by it.âÄù But LLCs have created problems for the city inspectors, Ward 2 Council Member Cam Gordon said. âÄúWeâÄôve tried to get more clarity on who actually owns the property,âÄù he said. âÄúSome of these limited partnerships, we donâÄôt know who they are, and it makes it difficult to keep them accountable.âÄù The Minneapolis city Web site lists renter licenses for properties within the city limits, but doesnâÄôt list who owns each individual LLC. Most attorneys register the company for clients, a step that further limits risk for property owners. Several years of rental license information can also be lost on the Minneapolis property Web site. The glitch occurs when a property owner or LLC renews a rental license in a property managerâÄôs name. The result is that the Web site may wipe data showing who owned the license the years before it was renewed. But from a business standpoint, landlords and property managers praise the practice of creating LLCs and having property managers as a smart, legitimate business decision. âÄúYou do it for tax purposes, you do it for liability purposes,âÄù Burns said. Bill Dane, an attorney in the SLS, keeps tabs on several of EischensâÄô properties, and he gave a list of them to the Minnesota Daily. Through public documents, it was verified that Eischens has a vested interest in at least 41 LLCs, a practice Burns said helps Eischens minimize his risk and help with taxes. Daniel Oberpriller, who owns 22 rental properties around the University, said âÄúsmartâÄù landlords put their businesses into LLCs and then manage their properties through a third-party company because it minimizes the amount for which a person can sue. This is a common practice in the business world. Jason Klohs, secretary for the University Neighborhood Improvement Association and a local landlord who owns 15 properties, said he looks forward to when his business grows large enough to set his structure in LLCs. But Dane, who specializes in housing issues and is a resident of Southeast Como and member of the Southeast Como Improvement Association, said that property ownersâÄô use of LLCs is a serious issue. âÄúWe donâÄôt take the position that students shouldnâÄôt rent from any landlord,âÄù he said. âÄúBut we do think that students should be able to know who theyâÄôre renting from.âÄù Klohs said that many owners choose to put each house in a different LLC, but keep each house under one name, a practice he said he might try. But if properties are not under one ownerâÄôs name, the myriad of LLCs makes it difficult for the University to keep track of property owners. University of Minnesota Housing and Residential Life delists landlords who have three or more unresolved student complaints through SLS. But if SLS doesnâÄôt link offenses between different LLCs or property managers, then complaints against a property owner may never stack up. Right now there are only five names delisted from the off-campus housing Web site: Jim Eischens, his brother Richard Eischens, an Eischens property manager named Yolanda Wolfe, Michael Matejcek and Twin Cities Housing and Realty.] Eischens has never had a rental license pulled, and much of this scrutiny is because SLS has paid Eischens undue attention, Burns said. âÄúIf he was really as bad as they say he is, he would have been shut down.âÄù Mannix Clark, associate director of University Housing and Residential Life, said the delisting system was created to stop negligent landlords from having employees register properties for them. âÄúBut I wouldnâÄôt lie to you and tell you that some people havenâÄôt tried to do it,âÄù he said. In past Daily articles, Eischens was quoted saying that it was unfair for the University to create this list. If a landlord resolved a complaint in court, but the student wasnâÄôt pleased with the outcome, the landlord could still be punished by being delisted, he said. The community’s future In 2008, the city enacted an ordinance that strips a landlord of all rental licenses if the property owner doesnâÄôt pay court-ordered judgments against their businesses. This has helped keep owners accountable, Gordon said, because the city can deny all of the ownerâÄôs licenses if two are pulled at different locations, even for different LLCs. James De Sota, coordinator for the Southeast Como Improvement Association, said dealing with LLCs rather than people is frustrating because only half of students know their actual landlord. Though problems still persist due to the increasingly complex nature of area rental housing, landlords and community representatives say living conditions became slightly better for student renters after the fire-prompted inspections. Burns said his clients like city inspections and ordinances because the law keeps property safe and livable. âÄúI think itâÄôs getting better,âÄù he said. âÄúIâÄôve never had a landlord, never heard a client complain about housing code.âÄù Poppele and Dane said several property managers have lead to some negligent behavior by less attentive landlords âÄî an outcome of the corporate structure of housing. âÄúIf you are renting from an organization that rents one property, the stakes are a lot lower,âÄù Dane said. âÄúYou can just change the name of the [LLC].âÄù