Thomas Breen Photo
LCI vs. LLCs: Officials last week clear out a Newhallville hovel owned by a New Zealand slumlord through a N.Y. limited-liability corporation.
The city has the legal power to take slumlords to court — if it can find them, behind the veil of limited liability corporations.
That housing code enforcement conundrum emerged Thursday night over the course of a nearly two-hour public workshop about the concentration of large-scale landlords in the local affordable housing market.
LCI deputies Rafael Ramos and Frank D’Amore.
Held by the aldermanic City Services and Environmental Policy (CSEP) committee in the Aldermanic Chambers on the second floor of City Hall, the informational workshop was the first of two planned committee discussions of the topic, with the second scheduled to take place at CSEP’s next meeting on Nov. 14.
Livable City Initiative (LCI) Deputy Director of Housing Code Enforcement Rafael Ramos, LCI Deputy Director of Neighborhood and Property Services Frank D’Amore, and Fair Rent Commissioner Otis Johnson told the alders throughout the meeting that the city already has a fair number of enforcement mechanisms in place to protect tenants and punish landlords who fail to maintain their properties.
Those include housing code compliance orders and daily fines associated with the recently revamped residential licensing program, landlord-tenant complaint hearings and rent reduction orders that can be issued by the Fair Rent Commission, building condemnations and tenant relocations that result from the city identifying a property as structurally unsafe, and even arrest warrants for landlords who criminally endanger the lives of their tenants by violating local and state housing safety laws.
Ramos.
Ramos said that each month his department issues around 25 arrest warrants for housing code violations. Those warrants are subsequently passed along to and adjudicated by the state court system.
Ramos and D’Amore also said that, all too often, they struggle to issue said warrants because of how difficult it can be to figure exactly who owns any given property.
Large-scale landlords frequently own properties through holding companies, or limited liability companies (LLCs), Ramos said, which protect individual owners from business liabilities and shield individual landlord names from public view.
Although all business owners must register their LLCs with the Secretary of the State’s office, they can bury their names through such loopholes as listing a Delaware-based LLC as the Connecticut company’s official manager. Since Delaware doesn’t require businesses to make public the names of individual business managers, the actual people associated with a company can remain hidden from view.
“When it comes to code enforcement,” Ramos said, “I cannot arrest an LLC. I have to have a name. I have to have a principal.”
Business manager referrals to Delaware make it all but impossible for city officials to definitely identify a person responsible for a property-holding company, even if the city generally knows who that might be. “I know it’s you,” he said. “But I can’t arrest you.”
“Landlords in general are crafty,” D’Amore added. “A lot of them hide behind LLCs.”
In Connecticut, he said, businesses have to disclose information only about managers and “agents.” Simply owning a property does not trigger that disclosure requirement.
Furthermore, he said, the state does not require that businesses disclose up-to-date contact information for their managers. A years-old city law that is still on the books calls for landlords to provide phone numbers and other contact information to the city assessor’s office, he said. But, due to limited city resources, that law has never been fully enforced.
“It might be a question of lobbying at the state,” D’Amore suggested, in order to increase the transparency of local-landlord LLCs. “It’s a challenge for us constantly to find the actual person that owns the property.”
Prospect Hill/Newhallville Alder Steve Winter.
Is it possible to license the property managers and not just the property owners? Prospect Hill/Newhallville Alder Steve Winter asked. Since large-scale property management companies are often majority owners (or business partners) of the more obscure LLCs that legally own those properties, perhaps a broadened licensing program could lead to more accountability?
The city licenses properties, not property owners, Ramos clarified. All city housing records are organized by address, not landlord.
Even if the city could license property management companies, D’Amore said, those change so frequently for any given property that the city would likely spend a disproportionate amount of time and energy chasing down the latest management company for a particular address.
Fair Rent Commissioner Otis Johnson.
Johnson proposed a number of tenant-protection policies that he said he has been championing for years. The city should institute a “mandatory lease” policy, he said. So many tenants he meets and hears from have no written agreement at all with their landlords.
The city should implement some kind of law around rent payment late fees, he said, which he has seen range from $50 to $350.
And the city should require entrance and exit housing code inspections, so that landlords can’t blame tenants for problems with an apartment that existed well before that tenant moved in.
“Rental housing is extremely unregulated,” he said. “Extremely unregulated.”
“We Have A Crisis”
East Rock Alder Charles Decker.
While the workshop did shine a light on some of the city’s housing code enforcement tools and the challenges associated with using them, it offered little insight on the topic ostensibly at the center of the hearing: The role, breadth, and influence of large-scale private landlords in the existing affordable housing market.
The workshop stemmed from a communication submitted to the full Board of Alders by East Rock Alder Charles Decker, Hill Alder Ron Hurt, and Beaver Hills Alder Jill Marks calling for a public hearing about how much of the city’s existing low-income rental housing is owned by a relatively small set of large-scale private landlords, and about living conditions in those units.
At the beginning of Thursday’s hearing, Decker reiterated his primary motivation for calling for such a meeting. The Affordable Housing Task Force‘s final report, he said, found that “large-scale, industrial landlords that often own units through LLCs and other opaque ownership vehicles” are steadily buying up more and more properties in the city that were previously, and could still be, homeowner-occupied residences.
“It’s clear that we need a better understanding of the affordable rental market,” he said. And then he laid out a handful of questions he would like this workshop to address.
Who are the largest landlords currently in New Haven?
Are their holdings increasing?
Do the data on the landlords include LLCs and other subsidiary organizations?
How does the quality of the units owned by these industrial landlords compare to units in the same neighborhoods that are locally owned or owner-occupied?
When units are found to be unsafe or of poor quality, what tools does the city have to address these problems and what further tools could help the city improve these units?
East Rock Alder Anna Festa and Hill Alder Ron Hurt.
Only the last question was truly address during Thursday’s hearing. The first four were touched upon by committee alders expressing long-simmering frustrations with negative consequences they associate with large-scale landlords in their neighborhoods. At nearly every turn, Ramos, Da’Amore, and Johnson cautioned against any kind of selective enforcement of housing code regulations against one kind of landlord vs. another.
“We have these large company landlords,” Hill Alder Ron Hurt said. “They charge a great amount of money for rent, but are not doing the property or the tenants any justice by keeping up the property.” They take advantage of low-income tenants, he said, because the latter often have nowhere else to go and fear retribution or eviction if they speak out about dangerous conditions.
“We have a crisis in New Haven,” he said. “And it must be addressed.”
Newhallville Alder Delphine Clyburn.
Newhallville Alder Delphine Clyburn agreed. She was the only alder Thursday night to reference any specific landlords by name, singling out Mandy Management, Ocean Management and Pike International as contributing to poor conditions in her neighborhood’s rental market. “You wouldn’t believe the mountain of money these landlords get from our government” through participation in Section 8 federal housing subsidies, she said, “and they’re not willing to do anything.”
“I think we really have to go into their pockets,” she continued, “and let them know, ‘You are not getting this money.’”
Ramos cautioned that he has no evidence that those particular players are any worse offenders than smaller-scale landlords when it comes to housing code violations or tenant complaints. He implored Clyburn not to target one landlord over another without that data.
“I don’t think we can single out groups of landlords by how many units they own,” he said. “Whatever we impose on A, we have to impose on B.”
He also pushed back on Hurt’s description of large-scale landlord rental holdings in the Hill as a “crisis.”
“How can you say it’s a big crisis without the data?” he asked.
So that’s what Hurt asked for. The number of housing code compliance orders sent out by LCI over the past year, as broken out by neighborhood. Initially, he asked for that info by landlord too.
Ramos said that, based on the way the city keeps track of property violations, that latter request is simply not possible. Violations are tied to a particular address and that address’s unique landlord. With so many different shell companies masking the true names of landlords throughout this city, putting together a complete list of violations by landlord would be an extremely trying task.
In a four-page written statement submitted as public testimony to the committee, local attorney Ben Trachten criticized the very premise of the workshop, arguing that its focus on select large-scale landlords and not on housing conditions throughout the city was narrow to the point of being discriminatory.
The original letter from Decker, Hurt, and Marks calling for this public hearing singled out Mandy Management and Pike International by name.
“It is no secret that Mandy Management and Pike International are owned by observant Jewish local families,” he wrote. “By initiating a workshop that singles out two Jewish businesses you guarant[ee] that the outcome is tainted by claims of anti-Semitism.”
More importantly, he continued, in his extensive exposure to the New Haven housing market through his work as both a landlord attorney and as court-appointed conservator for some of the city’s most vulnerable citizens, he is not convinced at all that the big landlords are the source of dangerous housing conditions in New Haven. The fatal fire at 150 West St., for example, was owned by a single, out-of-state landlord.
“Start over,” he wrote. “Perpetuating an inquiry that in any way stems from an anti-Semitic place is contrary to the values we all share. Next, figure out if there really is a problem by soliciting testimony from LCI inspectors (not the Director), the Housing Court Prosecutor, and the Housing Court Chief clerk. These people are on the front lines and know what’s going on in the community. If there is a problem, bring in all the housing market participants including public and private landlords for discussion. Focus on facts and not the emotional pleas of a minority of tenants that have problems. Ignore the media.”
Click here to download Trachten’s full statement.
Thanks to the new slumlord protection law passed by State Representative Steve Stafstrom, Senator Gary Winfield, Senator Martin Looney, et al. (Public Act 19-181), it is a lot easier to hide behind these LLCs, especially financially. The law was signed by Lamont on July 1.
"It might be a question of lobbying at the state," D'Amore suggested, in order to increase the transparency of local-landlord LLCs. "It's a challenge for us constantly to find the actual person that owns the property."
Thanks to CT Senate Democrats & Connecticut House Democrats, we actually have even LESS accountability and transparency for slumlords! We have less accountability than we did last year. State Democrats, with a near super majority, passed this new law with no transparency, no public testimony, and no debate. No legislator has responded with a single defense of the law in writing except Stafstrom, who represents LLCs like this in court. His explanation was that it helps mom and pop stores, but couldn't give a single example of one with "nesting dolls" of LLCs like these slumlords.
Other legislators have only offered to "talk over the phone" or "talk in person" about it. No thanks, respond in writing!
Read more about the slumlord law Democrats don't want you to know about: https://www.facebook.com/ataubes/posts/10156676500201200