15 West Kellogg Blvd.  
Saint Paul, MN 55102  
City of Saint Paul  
Minutes - Final - Final  
Rent Stabilization Appeal Hearings  
Marcia Moermond, Legislative Hearing Officer  
Sonia Romero, Executive Assistant  
Thursday, July 13, 2023  
11:30 AM  
Room 330 City Hall & Court House  
11:30 a.m. Hearings  
Rent Stabilization Appeals  
Appeal of Geruth Buetow to a Rent Stabilization Determination at 250 SIXTH  
STREET EAST, Apt. 608.  
Deny the appeal.  
Moermond: What I'm looking at today is an appeal that you have filed, and that appeal  
is of the decision of the City of Saint Paul to allow an exception to the rent increase, or  
the rent cap of 3%. My job is to review your appeal and develop a recommendation for  
that to the City Council. I'm giving the City Council a recommendation. If you are OK  
with what that is and the landlord is OK with what that is, there will be no discussion of  
the matter, it will simply be adopted. If for any reason an interested party does want to  
discuss the matter, object to my recommendation, it will be pulled off the agenda and  
discussed by the City Council and they will take testimony. My practice here is to start  
with the staff report and have staff described the information that they have, the  
information that we've received since and give their analysis of that. Then we can talk  
and find out a little bit more about why you're appealing and what you're looking for  
today. I will also hear from other interested parties and that looks to be property  
management and ownership will also have something to say that will go on the record. I  
may or may not be able to come to a decision today, as I may need additional  
Buetow: The first step is that we will testify, and you will make a recommendation to  
this City Council. If we don't like your recommendation or have differences with that  
then we can ask for time on the agenda.  
Moermond: What we're doing is establishing a record right now. It’s findings and a  
recommendation, but we're just trying to put it together instead of going straight to the  
City Council. This allows for problem solving here. If it's not resolved, they have a  
hearing and this record helps get their conversation started.  
Buetow: You are going to hear from me and from the staff, who is the staff?  
Moermond: We have Lynn Ferkinhoff and Demetrius Sass and they're going to talk  
about the self-certification process and any additional analysis that they did. We will  
hear all of that and then talk with you a little bit more about your appeal and move  
forwardWhat are we looking at here 250 East 6th Street unit 260.  
Ferkinhoff: On March 27, 2023, the department received a self-certification application  
for an exception to the 3% rent increase cap per ordinance 193A. The application is  
for 250 6th Street East (the Cosmopolitan Apartments). The intake form is part of the  
record and Olga Trimmer from AEW Capital Management is listed as the applicant.  
Ms. Trimmer submitted the application on behalf of OLY IDA Cosmopolitan LLC, which  
is listed as the owner of the property. The application notes that it comprises a  
consistent increase of 8% for the entire building. The increase was proposed to take  
effect on April 1, 2023. The reasons for the increase listed in the application include an  
unavoidable increase in operating expenses and a decrease in rental income. For  
self-certification, applicants are required to provide 3 pieces of information from the  
worksheet used to calculate Maintenance of Net Operating Income or “MNOI.” These  
are 1) Current Year Gross Scheduled Rental Income (GSRI): $4,416,900; 2) Fair Net  
Operating Income: $3,618,029; and 3) Missed Fair Revenue: $1,231,635 The applicant  
calculated an Allowable Rent Increase of 27.88%, which is Missed Fair Revenue  
divided by Current Year Gross Scheduled Rental Income (GSRI). Per the  
self-certification process, the application was automatically approved. On April 12,  
2023, an approval letter was sent to Ms. Trimmer and letters were mailed to the units  
identified in the rent roll provided by the applicant during the application process.  
Please note that the actual Allowable Rent Increase in the self-certification process  
may not exceed 8.00% and may be less than 8.00%, depending on the financial  
information that was submitted. There are no known code violations for this property.  
Moermond: Ms. Buetow, can you tell me a little bit about why you're appealing? I have  
the statement that you wrote on your appeal, but if you want to maybe explain a little  
bit more about where you're coming from. That would be good.  
Buetow: Last year in August or September I had a rent renewal and found out that the  
company had put in an increase in our rent for utilities for air conditioning and heating  
that they had not done before. That was an additional at least $40 a unit to be put into  
rent. It went over the 3% allowable income for the rent and according to the rent  
stabilization ordinance it said, and Demetrious maybe you could help me with this  
because I think I got it form you, that with the housing services if it's put into the rent  
it's an additional fee that shouldn't have been in there before. After, the rent  
stabilization went through with the 3%, and in addition they added the heating and air  
conditioning to that rent and still increased by 3%. I think it was against the rent  
amendment to add those additional cost for the rent increase. That was one area.  
Demetrious could you help me?  
Sass: This was something that was prior to the self-certification application. This was  
a complaint dating back to last year, the addition of utility fees on Geruth unit. She felt  
it was in addition to the rent increase. We created a complaint letter that she could  
deliver to the landlords.  
Buetow: I think that I was speaking for not just myself, but for the residents of the  
entire building, because it happened across the board. It was a utility that none of us  
had paid before rent stabilization came through. It was sort of a back door to increase  
rent to avoid the 3% and to make it higher with the 3%. I didn't think that was in the  
Sass: I would just like to add that we do have that complaint on file and the first letter  
was sent on September 1st of last year.  
Moermond: Just to be clear on the record, you have a lease cycle that runs from  
September one through September one?  
Buetow: It is a 13 month.  
Moermond: It's a 13-month lease and the lease that you are on right now, what is the  
time period?  
Buetow: Until September 28th of 2023.  
Moermond: September 28th of 2023 is when your current lease expires?  
Buetow: Yes. I have to give credit to the management, they were very receptive to  
working with me on some other kinds of things. They're good management team, but it  
was not just for me that I appealed. It was because it went across for all of the tenants  
in the building.  
Moermond: I want to clarify some things and I'll ask Mr. Sass for follow-up information.  
You can only appeal on your own behalf, so you can't appeal and say it's going to apply  
to everybody, it can only be you. Next, under the former version of the ordinance, that  
was in effect through December 31st, it was possible for the landlord to move things  
into the rent or bill separately but the 3% cap applied. Could the landlord change the  
way the payment is configured and do different arrangements like bill separately? Yes,  
but we're looking at a total amount of money charged before and after to calculate the  
rent increase. I'm going to ask Mr. Sass, if he has done any investigation at all on that  
situation that isn't in front of me today. I'm going to take that as background  
information for how we go forward, and then I have one other comment after that. Mr.  
Sass, can you elaborate on the nature of the complaint and the kind of investigation  
that you did, that's not in the record today?  
Sass: I would say at that time DSI (Department of Safety and Inspection) was in a very  
educational point with Geruth's complaint being submitted. We sent out the letters to  
go to the responsible party listed for the property to make sure that they knew the  
ordinance was in effect and that complaint was necessary, but there was not any  
further investigation into other units in the building or what the overall utility change  
Moermond: Was it the type of letter which says “a tenant has reached out this about a  
particular concern and here's the rule that applies in these circumstances?”  
Sass: It was our form letter that we sent out with any complaint that comes through.  
Here are some common things an ordinance that are being breached, here is how to  
remedy it, here's the application process.  
Moermond: If that is your circumstance, you are not coming to that conclusion.  
Sass: Correct.  
Moermond: Last thing, as we're looking at an appeal of the determination that DSI  
made on an application, would that apply to future leases for Ms. Buetow, which would  
presumably take effect after September 28th? That would be the decision made here  
but leases are renewed in buildings throughout the year and this to be the  
determination for the forthcoming year.  
Sass: Correct.  
Moermond: You make a decision April 12th, the approval letter goes out, and that  
decision applies through April 11th of the following year.  
Sass: I will say at this time there is not a time limit on the implementation of the rent  
increase. They have been approved for 8% over the rents reported in the current year.  
They don't need to be put in that one-year period. If they were approved for 100% rent  
increase, we don't expect them to double the rents of every tenant, that is of their  
choosing to implement that increase.  
Moermond: So administratively, it is envisioned that this could be a multi-year increase  
based on the percent approved.  
Sass: Correct.  
Buetow: Could there be an increased every year?  
Moermond: Well, in theory, we're talking about if there is an increase approved and he  
was giving a hypothetical 100% increase, that it could be staggering over multiple  
years is how The City is interpreting the ordinance. This is how The City's  
administration's interpreting it now. Correct me if I'm wrong?  
Sass: Correct.  
Moermond: That it could not just apply to your next lease but it could apply to any  
future lease moving forward. That being said, have you seen Ms. Buetow’s lease? I  
don't see it as a part of the record in front of me about what the actual increase was  
last time when the complaint was filed did you get any materials?  
Sass: Not at that time.  
Moermond: So, just the statement that is here the way that it's configured.  
Sass: We had several phone conversations.  
Moermond: Tell me more Ms. Beutow, do you have other comments?  
Buetow: I do have other comments. I like this apartment and I like the management,  
but I don't see that there are a lot of improvements made to justify the increase in rent  
up to 8%. They say that we have a business center, but we do not. We do not have  
computers that are available. We have a counter and an area that has internet access  
and that's a business center. It really isn't a business center.  
Moermond: Tell me where it says that. Is it something that's in your lease?  
Buetow: It says that is one of the amenities. They did pay for new community patio  
furniture this last year, which was nice. But again, we're talking about over a million  
dollars and excess of that. We've got a new copy machine, and some new security out  
front. The parking lot in front was repaired and they also put in a garden. We only have  
one cleaner for the entire building, so it isn't really clean all the time. They did have to  
put a lot of work and money into the garage because it was old and it was going to  
have some code violation if it was not fixed. That was kind of inherent on some of the  
things that happen to an old building. We're not a condominium or a town house  
because we don't pay into a community fund that we should have to have our rent  
increased because the building owners have to fix the garage for safety and code  
violations. I think that the rent should be increasing as it always has, 3% but not 8 %  
because they will get less revenue. The reason that they have less revenue right now is  
because of somethings that are happening within the city. There are vacancies all  
over, so it's not just this building and if they keep increasing the rents then fewer  
people well live there. It will be a cycle of them pricing themselves out of people that  
can rent there. I am a senior and I live on a fixed income, so every year that's a big  
deal. That’s some of the things I have.  
Moermond: One question for staff here. It looks like in the MNOI some of the reasons  
listed for needing to increase the rent beyond 3% were an unavoidable increase in  
operating expenses and a decrease in rental income. Can you distinguish with those  
operating expenses look like versus say the capital improvements to the garage and  
how you would parse that out in evaluating this?  
Sass: Lets go back a little bit. In the reported numbers there is a decrease in rental  
income, not just based on vacancy but actively post and during the pandemic. The  
rent income did decrease and is now increasing at a slower rate than their operating  
expenses. Their operations have increased by roughly 15% over the last 3 years. This  
would be assessed on just the actual operation of the business, not adding capital  
projects. For example, improvements to the garage would be taken separately and  
aren’t a part of this calculation. This is just simply based on the actual income versus  
the cost to run the business.  
Moermond: Mr. Terry come on up and I invite anyone else who will be speaking with  
Terry: Myself and Ms. Nordine.  
Crawford: And me, Shannon Crawford.  
Terry: Two things I want to address. The first thing I want to address is Ms. Buetow’s  
assertion in her claim that her rent went above 3% because of the addition of the utility  
that were added in. We did a calculation and her rent was $2,073 a month, which had  
been her rental rate for 4 years and had not had an increase. Ms. Buetow had a $135  
monthly parking fee, and had around $45 a month bill for water, sewer, and trash.  
That's what she was paying before September 2022 lease. As of the September 2022  
lease her rent increased from $2,073 to $2,135 a month. Ms. Butow’s parking was  
reduced to $100 a month. She still had the same utilities that were around $45 a  
month, and there was the addition of the $30 per month on heating and cooling, which  
actually that's the highest amount that's been attributed. I think Ms. Nordine has the  
amounts that go from roughly $21.84, which was January to November, the highest  
was $30.26. The percent increase with those adjustments is actually 2.7%. Ms.  
Buetow actually put in her appeal as a complaint as she started out saying that her  
rent was increased over 3%. It wasn't, it was increased by 2.7% which included the  
addition of the fee. That's the first point I wanted to make with regard to the  
determination that her appeal involves the exception. As I mentioned in one of my  
emails we are sitting here today because it's not in her written appeal, and doesn’t  
know what she is objecting to. We don't know what the complaint was and there was  
nothing that was previously given to us. We are sitting here a little blind hearing what  
Ms. Buetow had to say and then trying to come up with a response to what that is. I  
don't have anything prepared for that other than what we just heard. I can let Ms.  
Nordine kind of comment on what we heard with regard to the increase. One thing that  
staff mentioned is that increased had nothing to do with capital improvements to the  
property, it was increase in operating costs and decrease in income.  
Moermond: Before we go further, I am separating out the increase which occurred last  
year, which has been discussed, but that isn't it all what's in front of me, that's just  
background information that is informing her comments. What is in front of me as that  
determination and how that impacts things moving forward. I appreciate that  
clarification on what had been. I would also say that I often receive appeals that are  
not exhaustive in their explanation. People are often not adept at engaging in this kind  
of process. We want to take people where they're coming from. The question becomes  
- do you have the right to appeal, even if you don't formulate a formal argument and  
kind of walk through it. I understand you haven't had a chance to reflect on this. I  
have not had a chance to reflect on this either. I welcome your comments that you  
have now, off the cuff, and take them as being just that.  
Terry: I raise my first points merely because that's literally what she wrote in her  
appeal. I don't think Miss Buetow did the math. She just saw an additional increase for  
the lease that went into effect on September 2022. With regard to the 8% exception, it  
doesn't have anything to do with capital improvements.  
Nordine: I want to say that she's appealing that her rent was increased over 3%. It was  
not. Then we have a separate thing in which is that we received approval on the  
exemptions of 3% to increase rent up to 8%. We received the approval on April 12th  
it's now July 13, and we have not been able to implement that approval because we are  
assuming that her appeal is on the 8%. But again, to Malcolm’s point, that's not what  
she's appealing. She's appealing that her rent was above 3%. It seems like they're 2  
separate things and we're being penalized because we are assuming that her appeal is  
on the 8%, but I don't see that anywhere.  
Terry: The only thing I would add to that, is that technically if she was bringing up her  
appealed related to the exception, it's not ripe yet because she hasn't been impacted  
by a lease that would increase her beyond a 3%. She could get another 3% increase,  
or she could get a less than a 3% increase or an 8%. We don't know, so her objection  
isn't right.  
Sass: I would just clarify that the timing that she has for the appeal is post a  
determination, not when she received her lease. She has 45 days from our decision to  
decide if she's going to appeal or not.  
Nordine: I understand that, but she's appealing that her rent exceeded 3%.  
Terry: Her objection to The City, as you stated earlier, came into play when she got her  
September 2022 lease not after the exception went into effect. Technically it's not even  
right for her to appeal.  
Nordine: To elaborate on the 3-8% exemption, we've now missed our peak on leasing  
season. If there was an opportunity to increase rent past 3% because 3% is generally  
the rent increase that that we see that. If there was an opportunity to increase rents  
above 3% that would be right now being that we have not been able to implement the  
approval that we received. We have now missed our opportunity for 2023. Based on the  
market based on seasonality in Minnesota we won't see that opportunity again until  
spring of next year.  
Moermond: You have heard her comments this morning, and some of them do apply  
towards leases moving forward. I haven't analyzed this, but a part of your operating  
expense is indeed paying the bills to do all the things related to the building and that  
has to do with the cleaning, maintaining parking lot, simple repairs, as well as complex  
repairs. The accountant could be charging more, or you as their lawyer could be  
charging more. Those are operational expenses that maybe a part of what she is  
saying and I need to listen to those things as well. The business center if that's a part  
of what we're talking about just kind of equalizing that in my own analysis, you all may  
have comments based on those particular things that I think could apply to future  
leases. I'm struggling with the question of ripeness because it does apply to future  
applications and the way the ordinance is constructed right now. There is a 45-day  
window to file an appeal, and the determination is not final until either 45 days passed  
without an appeal or when the Council makes a final determination. There have been  
delays and I believe they have been legitimate. Can we proceed expeditiously? We  
can do our best. What kind of time would you like to be able to reflect on this? I am  
assuming you would like to submit something in writing, rather than conduct another  
hearing. Do you have additional thoughts that you want to share based on what you've  
heard this morning?  
Terry: What I heard this morning is there's a business center that doesn't have  
computers but her lease in amenity addendum doesn't say it will have computers. It's a  
room that's available for that use with free Internet. The capital improvements to the  
parking lot was indicated by staff and myself isn't part of what resulted in the rent  
increase. In regard to the capital improvements to the parking ramp, those are capital  
improvements that need to be done that are outside the scope of what was looked at  
here. In regard to the cleaning services, the cleaning services are what they've always  
been.That's generally what I noted from what I heard that had been brought up with  
regard to Ms. Buetow’s discussion about the 8%. The way I see it is Ms. Buetow has a  
position to complain when she's affected by the 8% increase and that hasn't  
happened. It could happen in the future, but we don't know what her rent increase will  
be until the property sees where it's at in September, it could be 3%.  
Nordine: As far as the amenities that she mentioned, I'm not aware we have a  
business center advertise anywhere or that we tell anyone we have a business center.  
We make every year several improvements like new fitness equipment, new patio  
furniture we refresh our theater room, we added additional seasonal planters, and  
increase resident events. These are things of value to the residents in which part of the  
costs that the expenses increased because they are a reinvested into the property. We  
like to keep our community happy.  
Terry: You have to make it better so that it matches the communities that are around,  
including the newer communities. That's everything that we have based on what we've  
heard. If The City is reviewing everything and decides it wants more information, let me  
Moermond: I'm going to ask staff about their analysis. One of the things that was just  
brought up by Mr. Terry was the question if you need additional information for your  
analysis. Can you tell me about what you looked at the completeness of the  
Sass: Management supplied their historical accounting information, which was very  
clearly labeled, both in terms of their current market incomes, as well as the lost lease  
values. Using that, actual rents and operating expenses can be calculated in detail.  
Moermond: Ms. Buetow, do you have any comments based on what you've just heard?  
Buetow: I just want to add a couple things. I don't think I was aware that they were  
self-certified and I don’t think that it came through to all the residents. There was a  
piece of paper that said that you could appeal, I did that. The thing about the business  
center it is in the lease and the residents agree to use the business enter. It isn't a  
room it’s just a space, just as a simple clarification on that. Regarding my rent they  
have been more than generous in some ways. 3 years ago, there was a big moth  
infestation in my apartment. I had to get rid of a number of articles, including a couple  
rugs from Morocco, my wedding dress, and a couple of other things. My rent was  
reduced because of that. It was reduced and adding that 3% on top of that reduced  
rate it added up. I am very nervous about having the rent increase more and have an  
increased substantially more every year because I would like to live there until I die. I  
don't know if I can do that if they keep increasing the rent, especially if they increase it  
to 8%. It's an expensive building but I like living there. I garden in the park, and I am  
involved in some other community affairs. I do like the location, and I do like the  
building, but affordability is becoming an issue.  
Sass: I would like to add that if they are approved for this increase of up to 8% now,  
that only applies to your upcoming lease – not future leases  
Buetow: How’s the self-certification done? It seems like it was just automatically  
Sass: There's a financial form in the back side that they need to fill out and when it  
comes to us, we asked for a few specific pieces of information from the finance form.  
This information allows us to verify the rent increase of up to 8%. When theirs is  
analyzed further, they would technically qualify for more, but they only applied for up to  
Ferkinhoff: I would just add to that the notification in terms of the tenants, a post card  
was mailed to the tenants that were identified on the rent roll that was provided by the  
building management. That's where it would have said it was a self-certification  
Moermond: I need to look at the ordinance as it relates to the owner’s ability to seek  
and get a reasonable return on their investment. It is a private business venture with  
whom you have contracted for housing services. What those housing services are, how  
you negotiate that and how that fits together, that's really between you folks. I say this  
because changes in services are between you folks, and that would include what the  
business center looks like. What I'm going to concern myself with is the reasonable  
return on investment for ownership. There are factors in the ordinance which would  
allow for the reasonable return to be pushed up or down, such as property taxes,  
capital improvements, unavoidable increases in expenses, or decreases in rental  
income. Those are all things that would push up ownership’s ability to qualify for an  
increase (above the rent cap). Staff analyzed that information and determined they  
qualify for the 8% they applied for. Had they applied for more of an increase, a staff  
determination process would have been used. The math looks like they would qualify  
for almost 28% rent increase and that isn't what they applied for, they asked for 8%.  
However, it does inform my analysis. Do they qualify for that? Yes. What pushes down  
on their ability ask for those kinds of things would have to do with code violations that  
needed repairs: if they were to let the building linger in a very bad state not taking  
those things. However, I was not hearing those things exist from you or from staff.  
What I was hearing is that we have a Fire Certificate of Occupancy that show a good  
history and it’s a Class A building. Although there are other factors which would  
decrease the amount of increase they would be eligible for, none of them were  
mentioned by the appellant or staff. Importantly, if there were such adverse factors  
impacting the analysis, their impact would need to be huge in order to bridge the gap  
mathematically between what they qualify for and what they asked for. I'm hearing is  
information that says, yes, they qualify under the ordinance. I need to deny your  
appeal. I have sympathy for where you're at. I can't use my sympathy for your situation  
to interpret the code differently.  
Buetow: Why did the citizens pass the ordinance for 3%?  
Moermond: I would answer you this way, the 3% that was put in the ballot initiative was  
a number that was arrived at, because at the time it was the average rent increase. It  
is unfortunate for people who are advocates for the rent control situation that rent  
increased after the ballot initiative was adopted. As you know, inflation alone has been  
significant since the ballot initiative was adopted. I would hope that inflation and  
property taxes and other things that make up the costs that we all experience go  
downward again, so that 3% would be the average. It was well intentioned to have it at  
3%. When it was done, it was done on the history it wasn't done on what might happen  
moving forward. The pandemic happened and all of these things change that. That  
doesn't diminish the importance of the argument that's being made. The economy is  
so different now than what it was then and hopefully it will stabilize. I'm going to ask  
Mr. Sass, what is the CPI now? It is on a downward trajectory.  
Sass: It's slowing, I haven’t checked as of late but the increase in inflation is slowing  
down compared to the last 2 years.  
Moermond: it is likely that we're going to be looking at a significantly lower inflation  
from the beginning of this year to the end of this year than we saw in 2022. The rates  
that you are looking at now versus what you anticipate you'll be looking at when the  
2023 numbers are published, you're thinking it's going to go down a couple of  
percentage points?  
Sass: I would imagine that goes down the future.  
Moermond: That will impact the analysis that is done for anyone who applies for rent  
increases after January 1 of 2024. At this moment in time the numbers don't wash if  
we were back when the ballot initiative happened the numbers would look completely  
Buetow: As a citizen, I feel discouraged that there was a ballot initiative that was voted  
on by the people of the city, and now that has been changed without the people that  
voted for that ballot initiative.  
Moermond: I appreciate that and definitely the Council will be able to see that on the  
record. If you want to testify to that effect, you are welcome to do that as well.  
Nordine: For the approval does that start today? [inaudible]  
Moermond: That will start when a final determination is made by the City Council.  
Looking at the calendar, I think we could expedite and get you on for July, 26. We may  
not have complete minutes when we publish, but there will be complete minutes by the  
time that the council hears the case.  
Referred to the City Council due back on 7/26/2023