15 West Kellogg Blvd.  
Saint Paul, MN 55102  
City of Saint Paul  
Minutes - Final  
Rent Stabilization Appeal Hearings  
Marcia Moermond, Legislative Hearing Officer  
rentappeals@ci.stpaul.mn.us  
651-266-8568  
Monday, September 30, 2024  
10:00 AM  
Room 330 City Hall & Court House/Remote  
10:00 a.m. Hearings  
Rent Stabilization Appeals  
RLH RSA 24-7  
1
Appeal of Daniel Oberhauser, tenant, to a Rent Stabilization  
Determination at 296 BATES AVENUE, UNIT 8.  
Johnson  
Sponsors:  
10-21-24 Updated: Recommendation is to grant appeal.  
Lynne Ferkinhoff, DSI-Rent Stabilization, appeared.  
Ben Herding, Chief Operations Officer, Housing Hub, appeared.  
Ryan Harrison, Finance Manager, Housing Hub, appeared.  
Mathias Branton, Financial Associate, Housing Hub, appeared.  
Daniel Oberhauser, the Tenant in Apartment 8, appeared.  
[Marcia Moermond gives background of appeals process]  
Lynne Ferkinhoff: On August 14th, 2023, the Department of Safety & Inspections  
received a self-certification application for an exception to the 3% rent increase cap  
per Ordinance 193A. The application is for multiple residential rental units located in  
296 Bates Avenue. The intake form is part of the record and Andrea Enga is listed as  
the applicant. Ms. Enga worked for Housing Hub and submitted the application. Bates  
Conway, LLC - Dadders is listed on the intake form as the owner of the building. The  
application for 296 Bates Avenue was one of 26 applications that Housing Hub  
submitted between August 11th, 2023 and September 11th, 2023. At the time of  
application, Housing Hub received auto-generated emails from the City advising of next  
steps and requesting a rent roll for each property. When later completing a review of  
open applications, staff noticed that rent rolls had not been submitted for any of the  
properties and that some of the financial information provided seemed incorrect.  
Receipt of the rent roll comprises a completed application and starts the process for  
tenant notification and application review. Since the applications were not complete,  
staff took several steps to move the process forward by obtaining the rent rolls and  
updated financial information, including:  
•Reaching out to Ms. Enga (there was no response).  
•Sending an email to the Housing Hub general email address. Staff received a  
response and learned that Ms. Enga no longer worked for Housing Hub.  
•Arranging a meeting with Housing Hub leadership to review the Rent Stabilization  
Ordinance and rules, and the 4D Program. As a follow-up to the meeting which took  
place on March 12th, 2024, staff sent Housing Hub a spreadsheet listing the open  
applications and requesting rent rolls and updated financial information on March 13th,  
2024. To expedite the process, staff offered to amend the applications with the  
updated financial information, rather than to have Housing Hub submit new  
applications.  
If approved, the self-certification applications allow rent increases between 3% and  
8%. For 296 Bates Avenue, the applicant indicated on the intake form that the  
increases will not be the same for all units included in the application and the  
increases will be applied at renewal. The reason for the increases listed in the  
application is:  
•"An increase in real property taxes"  
•"An unavoidable increase in operating expenses"  
•"A capital improvement project"  
For self-certification, applicants are required to provide three pieces of financial  
information from the completed Maintenance of Net Operating Income worksheet or  
"MNOI" to calculate allowable rent increase percentage. The financial information  
originally submitted for 296 Bates Avenue was updated by Ryan Harrison, the Finance  
Manager at Housing Hub, as shown in the table below:  
Financial Information Provided From MNOI  
Current Year Gross Scheduled Rental Income $198,275.44  
Fair Net Operating Income  
Missed Fair Revenue  
Allowable Rent Increase Percentage  
Original  
Updated  
$162,924.00  
$96,553.26  
$19,042.51  
11.69%  
$113,550.04  
($11,119.30)  
($308.87)  
The application for 296 Bates Avenue was updated to show an Allowable Rent  
Increase of 11.69% based on the updated financials. Please note that the actual  
Allowable Rent Increase in the self-certification process may not exceed 8% and may  
be less than 8%, depending on the submitted financial information. Per the  
self-certification process, the rent increase exception was approved. On July 25th,  
2024, an approval letter was emailed to Mr. Harrison. A notice was mailed to all  
impacted residents of 296 Bates Avenue, including the tenants who live in Unit 8 and  
Unit 9. The last Fire Certificate of Occupancy inspection for 296 Bates Avenue  
occurred on December 7th, 2022. The property was given a Class B rating. There are  
no known code violations for this property.  
Marcia Moermond: I want to clarify that the rent increase application proposed a range  
between 3% and 8%. The analysis assumes the highest level (8%), but the increase  
could fall anywhere within that range or even lower (0-8%) if chosen. When you did the  
math, the allowable increase was calculated to be 11.69%, but this is not the  
percentage approved or allowed. Also, if there is no appeal, the effective date of a  
prospective rent increase would be the date the rent increase was approved, plus the  
required notice period under state law. However, the notice period given to the tenant is  
likely the more extended of the two time frames when both are considered together. Do  
we have a sense of the capital improvement costs in the MNOI worksheet? Or how did  
that happen?  
Lynne Ferkinhoff: The 11.69% figure would have been approved if they submitted a  
staff determination application. However, because a self-certification was submitted,  
which has an upper limit of 8%, the approval could only be for 8% or less. We would  
need to check with Demetrius Sass, a colleague responsible for financials, or look up  
records to find relevant information. For self-certification, certain forms aren't required  
to be sent, but the information is available in a staff note. I believe Demetrius used  
the original submission from the online intake form and asked for an update due to the  
time gap between the application and rent submission. Additionally, the tenant notice  
period typically involves adding 45 days to a notice, with the effective date being after  
that period if no appeal is made.  
Marcia Moermond: I want to clarify that the original determination by the team is not  
the starting point for calculating the final decision. Instead, the process starts from the  
original determination date plus 45 days to allow for any potential appeals. If no appeal  
is filed within 45 days, the determination becomes final. However, if an appeal is filed,  
the final decision will come from the City Council. I want this process to be transparent  
for the record.  
Lynne Ferkinhoff: Yes.  
Daniel Oberhauser: I am requesting information about the law that permits a rent  
increase after signing a lease. I have signed a lease for the upcoming year and want to  
know which part of the statute allows for a rent increase after the finalized legal  
agreement.  
Marcia Moermond: The rent increase isn't tied to the specific lease in question but  
rather to the building and a one-year grant period. It could be applied within 12 months  
from the date of the final determination. It may not affect the current lease but could  
apply to a future one.  
Daniel Oberhauser: Can I get the law that allows that? I should have the right to  
access all the relevant information.  
Marcia Moermond: Ordinance 193 A refers to the property, not the lease terms. The  
Saint Paul legislative code, specifically the Rent Stabilization Ordinance (rent control),  
governs rent-related matters. It is not a statute. I suggest you visit the Attorney  
General's website for tenant-landlord relationships and leases. I also recommend two  
organizations for legal assistance. Income-qualified individuals can seek help from  
Southern Minnesota Regional Legal Services, while anyone can contact Homeline for  
landlord-tenant issues. Do you have any questions?  
Daniel Oberhauser: Thank you, Ordinance 193 A. Given the poor state of their building  
and apartment, I am questioning the justification for a rent increase. They are  
sometimes allowed for capital improvements, but I argue that the building does not  
warrant one. The building has poor maintenance services, including infrequent  
cleaning, broken trash and recycling receptacles, and inadequate repairs. The building  
is managed by Housing Hub, which is owned by Thomas Gallagher, who also owns  
their building under Bates Conway LLC. This building has been designated as "low  
maintenance" by the owner, resulting in poor service. I've experienced these issues  
over five years, including multiple heating outages, a leaky tub, outdated electrical  
outlets, a lack of internet outlets, and a consistently broken back door. Despite these  
issues, I've always paid my rent on time and never had complaints against me. There's  
graffiti on the walls, it took over a week to be painted over, trash is frequently left  
around, wooden boards sat for over a year before being cleaned, and a storm window  
remained on the ground for a year. The Housing Hub, the building's management  
company, was sued by the Minnesota Attorney General in March 2023 for overcharging  
tenants after move-out and faced another lawsuit for a 49% rent increase. I recall an  
incident where Housing Hub attempted to charge them for a maintenance request, but  
they successfully appealed the charge.  
Marcia Moermond: I want to clarify that we cannot consider matters that have been  
separately litigated. We will focus on the individual's personal experience related to  
your unit.  
Daniel Oberhauser: That's fine. I want it on the record, and I'll also bring it to the City  
Council.  
Marcia Moermond Ok. But they cannot consider that. Do you have other questions?  
Daniel Oberhauser: Not now, but I may have questions as it goes on.  
Marcia Moermond: You may have questions as the meeting progresses because I will  
hear from the property owner and representatives. We have three people here, so let's  
rotate the chairs to allow each person a chance to speak. After the others have  
spoken, you will be invited back up. Please complete the sign-in sheet after speaking.  
Lynne Ferkinhoff: I just heard back from Demetrius about whether or not we got the  
MNOI. His response was no, which is consistent with the self-certification process.  
Marcia Moermond: OK. You've heard the staff report and listened to the comments. A  
previous staff member at Housing Hub had filed for this and other rent increases. I will  
ask for your names, left to right. [Mathias Branton, Ryan Harrison, and Ben Herding  
present]  
Ben Herding: I'm the CEO and Chief Operations Officer of Housing Hub. I work  
alongside Ryan, the Finance Manager, and Mathias, the Financial Associate. I have  
been managing rent control paperwork and compliance, and this process is a learning  
experience that involves various changes and iterations for everyone. Despite some  
requests and submissions, I want to clarify that no rent increase exceeding 3%  
occurred at any point during a tenant's stay, including during the requested exception  
period for renewal.  
Marcia Moermond: OK. What are the lease cycle's specific start and end dates,  
including the months and years involved?  
Ben Herding: August was always the renewal time frame.  
Marcia Moermond: OK. August 1st to July 30th.  
Ben Herding: August 1st, that's correct. Daniel has been a long-term tenant with  
Housing Hub since August 2019. There was no rent increase until August 2021; that  
increase was just a $9 admin charge due to software upgrades. The rent remained the  
same until August 2023, and although a rent credit was added at that time, there was  
effectively no change in the rent. We submitted the rent roll in August 2023 with a 3%  
increase and another 3% rent increase in August of this year.  
Marcia Moermond: OK, there was a 3% increase in August 2023 and a 3% increase in  
August 2024. If the lease cycle is August 1st through July 30th, the first potential rent  
increase that could be experienced if up to 8% is approved would be August 1st, 2025.  
To reiterate here, Daniel moved in in 2019. I'm assuming that in 2020 there was no rent  
increase, which I think is what you said, and that in 2021, a $9 administrative charge  
was added to the rent. There were then 3% increases in the two subsequent leases.  
Ben Herding: That's correct. While working through the ordinance, we acted cautiously.  
When no confirmation was received after submissions, we did not take further action.  
After collaborating with Demetrius and others to ensure proper paperwork, we  
implemented only a 3% rent increase a few months ago.  
Marcia Moermond: I'm sure you would have retained a copy of the MNOI for your  
records. That would be the background information for filing the rent increase. Can I  
get that from you?  
Ben Herding: I don't have the records here, but we can find them and email them to  
you.  
Marcia Moermond: OK. That's great. We will share it with the appellants so they have  
the same information. Is there anything else you want me to know?  
Ben Herding: Working with Lynne and Demetrius has been great, and our team has  
made significant progress since the start of this process. Despite initial backlogs, the  
team has developed a strong rhythm and works well together. With continued meetings  
and collaboration, we have steadily improved as a unit, which has been beneficial.  
Marcia Moermond: Thank you. Mr. Oberhauser, do those increases and that  
information sound consistent with your background?  
Daniel Oberhauser: Yes.  
Marcia Moermond: Have you looked at Chapter 193?  
Daniel Oberhauser: No.  
Marcia Moermond: On the city's web page, in the section of the Rent Stabilization  
Ordinance that provides for when exceptions can be made to the 3% rent control, does  
this sound familiar?  
Daniel Oberhauser: Yeah, I have read that part.  
Marcia Moermond: OK, so you're familiar. Based on your comments, I understand that  
you believe the property should not be eligible for a rent increase due to its condition.  
Daniel Oberhauser: Yes, that is part of it. I love the building. One of the things I truly  
appreciate about my apartment is its affordability. It has been very budget-friendly, and  
I'm grateful for that. I don't need anything fancy—just a safe, secure, and pleasant  
place, which this apartment provides. However, I deal with frequent maintenance  
issues and often have to call for repairs. While I appreciate that my rent wasn't raised  
for a couple of years, I don't believe I should be penalized simply because the property  
isn't generating enough income. Based on the information I received, my apartment is  
the most expensive in the building, and I think that's worth considering. I understand  
you'll also consider other arguments, but that's the core of mine. I've signed leases in  
good faith every year, and I believe requesting a rent increase beyond the rent control  
limit goes against that principle. The citizens voted for rent control to keep housing  
affordable—this was something we all wanted and supported. Despite voting for this  
ordinance, it feels unfair that the city continues to chip away at its protections. That  
doesn't seem just.  
Marcia Moermond: I can understand what you said. Were you initially tracking the  
politics and voting on the ballot measure? The city was given time to put together the  
implementation rules. Were you engaged in that process?  
Daniel Oberhauser: No.  
Marcia Moermond: In 2018 and 2019, the rent market was stable, with inflation having  
little impact on rent levels. The University of Minnesota's Center for Urban and  
Regional Affairs worked with community partners to determine that a 3% rent increase  
was a reasonable threshold. This percentage was then built into the rent control  
ordinance. If landlords want to increase rent beyond this limit, they must apply for an  
exception. However, the COVID-19 pandemic caused unforeseen inflation, leading to  
higher costs for supplies, labor, and operations. This misalignment with the original  
ordinance resulted in more landlords seeking exceptions than initially expected. This is  
background information, not an excuse, but it explains the current situation.  
Daniel Oberhauser: I understand the circumstances, but I didn't cause COVID, which  
doesn't change the fact that citizens voted for a 3% rent cap. My point is that I  
shouldn't be penalized for something beyond my control. Additionally, Mayor Carter's  
discussion of changes to the rent change due to slow development feels unjust. I earn  
a good salary and consider myself part of the middle class, yet I still can't afford to buy  
a house. For those of us in this position, renting needs to be affordable as well. I have  
a friend living in a Vivo village in Minneapolis because homeownership is out of reach  
for him, and that just doesn't feel right. It shouldn't sit right with anyone.  
Marcia Moermond: Thank you for highlighting the human aspect of the renter's  
experience, which is a significant issue not only in the Twin Cities but also nationally. I  
want to review the Maintenance and Net Operating Income (MNOI) statement to  
understand better the property's actual increases, property tax changes, and various  
expenses, including any capital improvements. This will help clarify the figures that  
staff provided, as the entire form wasn't thoroughly examined. Currently, the application  
is for a maximum increase of 8%, but the analysis suggests it could be closer to  
11.5% if a different application were submitted. I want to delve deeper into this  
information, and I believe you share the same interest. Additionally, I'd like to share  
these findings with your fellow appellant in unit 9 for their input.  
Daniel Oberhauser: Would that be 8% on top of 3%?  
Marcia Moermond: No, it would be a maximum of 8%. Anything greater than 3%  
requires an application. Do you have any other questions or comments?  
Daniel Oberhauser: This whole process feels incredibly anti-tenant.  
Marcia Moermond: I don't mean it to feel that way. I think the rescheduling made it feel  
that way, and I'm sorry about that.  
Daniel Oberhauser: It's not just the rescheduling; it's the fact that I came here without  
understanding the documents sent to me. And that's just what it is. I think that this is  
an anti-tenant process. I accept that. You make your recommendation. If I disagree,  
I'll take it to the City Council. I want a recording and minutes of this. I would appreciate  
that.  
Marcia Moermond: No, it's not anti-tenant. Once the record is finalized, we can send  
you a link to the full recording. I just want to clarify that I'm ensuring you receive all the  
information. However, it doesn't come with a specific explanation, as interpretation can  
be subjective. While I could provide an interpretation or have staff do so, different  
people, including appellants, may understand it differently based on their perspectives.  
Daniel Oberhauser: Well, I'm telling you it feels anti-tenant. That's my opinion, and I  
want to make sure I say that.  
Marcia Moermond: You've mentioned that several times now, and I know it will be part  
of the record. I see someone with their hand raised, so I'd like to invite Mr. Herding to  
the microphone.  
Ben Herding: Dan has been an ideal tenant, and I fully support his statement. I work  
for a property management company overseeing over 4,000 tenants, and the fact that I  
haven't had any issues with him speaks volumes. Typically, I deal with tenants who  
aren't as easy to manage, but both the building owner and I recognize Dan's value.  
The rent control ordinance meant to help tenants doesn't benefit ideal tenants like  
Dan. Before this ordinance, our annual rent increases averaged around 2.6% across  
our portfolio. With a cap in place, property owners are forced to spread the financial  
burden across even their best tenants because they can't raise rents in other areas.  
For years, tenants like Dan didn't face rent increases despite rising property taxes,  
insurance, wages, and building costs. Increased by 20%, 30%, or more were absorbed  
because owners valued good tenants who cared for the building and the community.  
It's unfortunate to hear ideal tenants say they might have to move out over a 3%  
increase when property costs have risen by 15-25% or more. A 3% increase is just a  
drop compared to what's needed to cover skyrocketing expenses, especially with  
insurance rates doubling or tripling in recent years and rising taxes and wages. From a  
property management perspective, it's tough to see tenants like Dan, who pay their  
rent on time and contribute positively to the building, feel like the system is working  
against them. While some may see the ordinance as anti-tenant, I understand how it  
can also feel anti-owner or anti-manager. The city has made progress since the  
ordinance was introduced, and we've worked hard to partner with them, but the reality is  
that this ordinance forces property owners to apply the same 3% increase to everyone.  
That's now the minimum any tenant in St. Paul will see. Ultimately, while the ordinance  
was created with good intentions, sometimes those it aims to help are negatively  
affected. I stand by tenants like Dan and share their sentiment that the system,  
though necessary in some ways, can inadvertently harm those it protects.  
Marcia Moermond: I appreciate you adding a landlord's perspective to round out the  
conversation. Does that impact Mr. Oberhauser's situation in particular?  
Ben Herding: I don't have the authority to make those decisions, as we work for the  
property owner and management group. However, I can say that many owners share  
the same sentiment. Owners want great, long-term tenants in their buildings, and it's a  
tough business decision to implement even minimum rent increases, knowing it could  
impact those good tenants. As you mentioned, when a tenant moves out, it's not  
always possible to raise the rent by 20-25% to meet market rates. Even if it is, the  
process is often lengthy and requires significant capital investment to justify such  
increases. This is more of a personal observation from speaking with the 312 owners  
we manage properties for—it's unfortunate when good tenants feel targeted. I want to  
emphasize that property managers and landlords aren't the "bad guys" in these  
situations. Owners are also navigating the challenges of the ordinance while trying to  
keep their properties, maintain payments, and continue providing quality housing.  
Marcia Moermond: Thank you. Mr. Oberhauser, you get the last word.  
Daniel Oberhauser: This reminds me of the Citizens United decision, where the  
Supreme Court allowed corporations to raise unlimited funds for politicians, which I  
believe has damaged our political system. I see corporate influence everywhere  
now—even a newly opened park in Minneapolis is named after a corporation. So, while  
I understand the gentleman's point that Housing Hub cares about its tenants, I'm  
cynical. It's unfortunate, but that's how I feel.  
Marcia Moermond: All right, let me set some dates. I expect Housing Hub to provide  
the MNOI within a day or two. Once I receive it, I'll review it and make a decision. We'll  
send the decision letter to djoberhauser@gmail.com. We can also send you the audio  
via express mail, though it may look different in your inbox. Please note that you'll  
need to download the file within two weeks, as the link will expire. This will be handled  
within the next few days. The minutes, however, usually take about a week, depending  
on the workload. As mentioned earlier, we haven't received anything in writing from Mr.  
Sosa yet, but he is welcome to submit information up until the public hearing.  
Daniel Oberhauser: Yes. When is the public hearing?  
Marcia Moermond: After reviewing my calendar, I believe the earliest possible date  
would be the 9th, but that might be rushing things, especially with Mr. Sosa working  
remotely. A more realistic time frame would be the 16th or 23rd; I'm leaning toward the  
23rd. Do you have any scheduling conflicts with either of those dates?  
Daniel Oberhauser: What time during the day? I can work out either day.  
Marcia Moermond: The public hearings are scheduled for 3:30 PM, and I will settle on  
the 23rd to give Mr. Sosa as much notice as possible. If something comes up, you  
can still register to testify by phone up until noon the day before the hearing. The  
hearing will be on Wednesday at 3:30 PM, but keep in mind that the exact start time  
can vary. While the Council convenes at 3:30 PM, the hearing could begin as early as  
3:40 PM or as late as 4:30 PM or 5:00 PM. Unfortunately, that's just how public  
hearings tend to go. With that said, you now have the same information as I do, and I'll  
follow up with something in writing.  
Daniel Oberhauser: That's understood. And do you think the decision will be in a few  
days?  
Marcia Moermond: No, my recommendations will be on the letter that will go out on  
Friday at the latest. The City Council will make the actual decision. If you don't object,  
it will go through with whatever my recommendation is. If you do, then they will consider  
the matter and hear your information and maybe come up with something else.  
Daniel Oberhauser: Ok. Will you explain your decision in detail so that it's easier for  
me to appeal it to the City Council if I disagree with it?  
Marcia Moermond: I will do my best. You've been sitting here hearing the same thing.  
Daniel Oberhauser: You will make your recommendation based on the ordinance.  
Marcia Moermond: I will do it in the best format. We have a pretty complete record.  
Daniel Oberhauser: I want a fair chance to argue my point. If I disagree with your  
recommendation, I want to make sure that it's fair.  
Marcia Moermond: OK. Have a good rest of your day, everybody.  
Recommendation forthcoming  
Referred to the City Council due back on 10/23/2024  
RLH RSA 24-8  
2
Appeal of Jorge Sosa, tenant, to a Rent Stabilization Determination at  
296 BATES AVENUE, UNIT 9.  
Johnson  
Sponsors:  
10-21-24 Updated: Recommendation is to grant appeal.  
Lynne Ferkinhoff, DSI-Rent Stabilization, appeared.  
Ben Herding, Chief Operations Officer, Housing Hub, appeared.  
Ryan Harrison, Finance Manager, Housing Hub, appeared.  
Mathias Branton, Financial Associate, Housing Hub, appeared.  
Daniel Oberhauser, the Tenant in Apartment 8, appeared.  
Jorge Sosa, the Tenant in Apartment 9 did not appear.  
[Marcia Moermond gives background of appeals process]  
Lynne Ferkinhoff: On August 14th, 2023, the Department of Safety & Inspections  
received a self-certification application for an exception to the 3% rent increase cap  
per Ordinance 193A. The application is for multiple residential rental units located in  
296 Bates Avenue.  
The intake form is part of the record and Andrea Enga is listed as the applicant. Ms.  
Enga worked for Housing Hub and submitted the application. Bates Conway, LLC -  
Dadders is listed on the intake form as the owner of the building. The application for  
296 Bates Avenue was one of 26 applications that Housing Hub submitted between  
August 11th, 2023 and September 11th, 2023. At the time of application, Housing Hub  
received autogenerated emails from the City advising of next steps and requesting a  
rent roll for each property. When later completing a review of open applications, staff  
noticed that rent rolls had not been submitted for any of the properties and that some  
of the financial information provided seemed incorrect. Receipt of the rent roll  
comprises a completed application and starts the process for tenant notification and  
application review. Since the applications were not complete, staff took several steps  
to move the process forward by obtaining the rent rolls and updated financial  
information, including:  
•Reaching out to Ms. Enga (there was no response).  
•Sending an email to the Housing Hub general email address. Staff received a  
response and learned that Ms. Enga no longer worked for Housing Hub.  
•Arranging a meeting with Housing Hub leadership to review the Rent Stabilization  
Ordinance and rules, and the 4D Program. As a follow-up to the meeting which took  
place on March 12th, 2024, staff sent Housing Hub a spreadsheet listing the open  
applications and requesting rent rolls and updated financial information on March 13th,  
2024. To expedite the process, staff offered to amend the applications with the  
updated financial information, rather than to have Housing Hub submit new  
applications.  
If approved, the self-certification applications allow rent increases between 3% and  
8%. For 296 Bates Avenue, the applicant indicated on the intake form that the  
increases will not be the same for all units included in the application and the  
increases will be applied at renewal. The reason for the increases listed in the  
application is:  
•"An increase in real property taxes"  
•"An unavoidable increase in operating expenses"  
•"A capital improvement project"  
For self-certification, applicants are required to provide three pieces of financial  
information from the completed Maintenance of Net Operating Income worksheet or  
"MNOI" to calculate allowable rent increase percentage. The financial information  
originally submitted for 296 Bates Avenue was updated by Ryan Harrison, the Finance  
Manager at Housing Hub, as shown in the table below:  
Financial Information Provided From MNOI  
Current Year Gross Scheduled Rental Income $198,275.44  
Fair Net Operating Income  
Missed Fair Revenue  
Allowable Rent Increase Percentage  
Original  
Updated  
$162,924.00  
$96,553.26  
$19,042.51  
11.69%  
$113,550.04  
($11,119.30)  
($308.87)  
The application for 296 Bates Avenue was updated to show an Allowable Rent  
Increase of 11.69% based on the updated financials. Please note that the actual  
Allowable Rent Increase in the self-certification process may not exceed 8% and may  
be less than 8%, depending on the submitted financial information. Per the  
self-certification process, the rent increase exception was approved. On July 25th,  
2024, an approval letter was emailed to Mr. Harrison. A notice was mailed to all  
impacted residents of 296 Bates Avenue, including the tenants who live in Unit 8 and  
Unit 9. The last Fire Certificate of Occupancy inspection for 296 Bates Avenue  
occurred on December 7th, 2022. The property was given a Class B rating. There are  
no known code violations for this property.  
Marcia Moermond: I want to clarify that the rent increase application proposed a range  
between 3% and 8%. The analysis assumes the highest level (8%), but the increase  
could fall anywhere within that range or even lower (0-8%) if chosen. When you did the  
math, the allowable increase was calculated to be 11.69%, but this is not the  
percentage approved or allowed. Also, if there is no appeal, the effective date of a  
prospective rent increase would be the date the rent increase was approved, plus the  
required notice period under state law. However, the notice period given to the tenant is  
likely the more extended of the two time frames when both are considered together. Do  
we have a sense of the capital improvement costs in the MNOI worksheet? Or how did  
that happen?  
Lynne Ferkinhoff: The 11.69% figure would have been approved if they submitted a  
staff determination application. However, because a self-certification was submitted,  
which has an upper limit of 8%, the approval could only be for 8% or less. We would  
need to check with Demetrius Sass, a colleague responsible for financials, or look up  
records to find relevant information. For self-certification, certain forms aren't required  
to be sent, but the information is available in a staff note. I believe Demetrius used  
the original submission from the online intake form and asked for an update due to the  
time gap between the application and rent submission. Additionally, the tenant notice  
period typically involves adding 45 days to a notice, with the effective date being after  
that period if no appeal is made.  
Marcia Moermond: I want to clarify that the original determination by the team is not  
the starting point for calculating the final decision. Instead, the process starts from the  
original determination date plus 45 days to allow for any potential appeals. If no appeal  
is filed within 45 days, the determination becomes final. However, if an appeal is filed,  
the final decision will come from the City Council. I want this process to be transparent  
for the record.  
Lynne Ferkinhoff: Yes.  
Daniel Oberhauser: I am requesting information about the law that permits a rent  
increase after signing a lease. I have signed a lease for the upcoming year and want to  
know which part of the statute allows for a rent increase after the finalized legal  
agreement.  
Marcia Moermond: The rent increase isn't tied to the specific lease in question but  
rather to the building and a one-year grant period. It could be applied within 12 months  
from the date of the final determination. It may not affect the current lease but could  
apply to a future one.  
Daniel Oberhauser: Can I get the law that allows that? I should have the right to  
access all the relevant information.  
Marcia Moermond: Ordinance 193 A refers to the property, not the lease terms. The  
Saint Paul legislative code, specifically the Rent Stabilization Ordinance (rent control),  
governs rent-related matters. It is not a statute. I suggest you visit the Attorney  
General's website for tenant-landlord relationships and leases. I also recommend two  
organizations for legal assistance. Income-qualified individuals can seek help from  
Southern Minnesota Regional Legal Services, while anyone can contact Homeline for  
landlord-tenant issues. Do you have any questions?  
Daniel Oberhauser: Thank you, Ordinance 193 A. Given the poor state of their building  
and apartment, I am questioning the justification for a rent increase. They are  
sometimes allowed for capital improvements, but I argue that the building does not  
warrant one. The building has poor maintenance services, including infrequent  
cleaning, broken trash and recycling receptacles, and inadequate repairs. The building  
is managed by Housing Hub, which is owned by Thomas Gallagher, who also owns  
their building under Bates Conway LLC. This building has been designated as "low  
maintenance" by the owner, resulting in poor service. I've experienced these issues  
over five years, including multiple heating outages, a leaky tub, outdated electrical  
outlets, a lack of internet outlets, and a consistently broken back door. Despite these  
issues, I've always paid my rent on time and never had complaints against me. There's  
graffiti on the walls, it took over a week to be painted over, trash is frequently left  
around, wooden boards sat for over a year before being cleaned, and a storm window  
remained on the ground for a year. The Housing Hub, the building's management  
company, was sued by the Minnesota Attorney General in March 2023 for overcharging  
tenants after move-out and faced another lawsuit for a 49% rent increase. I recall an  
incident where Housing Hub attempted to charge them for a maintenance request, but  
they successfully appealed the charge.  
Marcia Moermond: I want to clarify that we cannot consider matters that have been  
separately litigated. We will focus on the individual's personal experience related to  
your unit.  
Daniel Oberhauser: That's fine. I want it on the record, and I'll also bring it to the City  
Council.  
Marcia Moermond Ok. But they cannot consider that. Do you have other questions?  
Daniel Oberhauser: Not now, but I may have questions as it goes on.  
Marcia Moermond: You may have questions as the meeting progresses because I will  
hear from the property owner and representatives. We have three people here, so let's  
rotate the chairs to allow each person a chance to speak. After the others have  
spoken, you will be invited back up. Please complete the sign-in sheet after speaking.  
Lynne Ferkinhoff: I just heard back from Demetrius about whether or not we got the  
MNOI. His response was no, which is consistent with the self-certification process.  
Marcia Moermond: OK. You've heard the staff report and listened to the comments. A  
previous staff member at Housing Hub had filed for this and other rent increases. I will  
ask for your names, left to right. [Mathias Branton, Ryan Harrison, and Ben Herding  
present]  
Ben Herding: I'm the CEO and Chief Operations Officer of Housing Hub. I work  
alongside Ryan, the Finance Manager, and Mathias, the Financial Associate. I have  
been managing rent control paperwork and compliance, and this process is a learning  
experience that involves various changes and iterations for everyone. Despite some  
requests and submissions, I want to clarify that no rent increase exceeding 3%  
occurred at any point during a tenant's stay, including during the requested exception  
period for renewal.  
Marcia Moermond: OK. What are the lease cycle's specific start and end dates,  
including the months and years involved?  
Ben Herding: August was always the renewal time frame.  
Marcia Moermond: OK. August 1st to July 30th.  
Ben Herding: August 1st, that's correct. Daniel has been a long-term tenant with  
Housing Hub since August 2019. There was no rent increase until August 2021; that  
increase was just a $9 admin charge due to software upgrades. The rent remained the  
same until August 2023, and although a rent credit was added at that time, there was  
effectively no change in the rent. We submitted the rent roll in August 2023 with a 3%  
increase and another 3% rent increase in August of this year.  
Marcia Moermond: OK, there was a 3% increase in August 2023 and a 3% increase in  
August 2024. If the lease cycle is August 1st through July 30th, the first potential rent  
increase that could be experienced if up to 8% is approved would be August 1st, 2025.  
To reiterate here, Daniel moved in in 2019. I'm assuming that in 2020 there was no rent  
increase, which I think is what you said, and that in 2021, a $9 administrative charge  
was added to the rent. There were then 3% increases in the two subsequent leases.  
Ben Herding: That's correct. While working through the ordinance, we acted cautiously.  
When no confirmation was received after submissions, we did not take further action.  
After collaborating with Demetrius and others to ensure proper paperwork, we  
implemented only a 3% rent increase a few months ago.  
Marcia Moermond: I'm sure you would have retained a copy of the MNOI for your  
records. That would be the background information for filing the rent increase. Can I  
get that from you?  
Ben Herding: I don't have the records here, but we can find them and email them to  
you.  
Marcia Moermond: OK. That's great. We will share it with the appellants so they have  
the same information. Is there anything else you want me to know?  
Ben Herding: Working with Lynne and Demetrius has been great, and our team has  
made significant progress since the start of this process. Despite initial backlogs, the  
team has developed a strong rhythm and works well together. With continued meetings  
and collaboration, we have steadily improved as a unit, which has been beneficial.  
Marcia Moermond: Thank you. Mr. Oberhauser, do those increases and that  
information sound consistent with your background?  
Daniel Oberhauser: Yes.  
Marcia Moermond: Have you looked at Chapter 193?  
Daniel Oberhauser: No.  
Marcia Moermond: On the city's web page, in the section of the Rent Stabilization  
Ordinance that provides for when exceptions can be made to the 3% rent control, does  
this sound familiar?  
Daniel Oberhauser: Yeah, I have read that part.  
Marcia Moermond: OK, so you're familiar. Based on your comments, I understand that  
you believe the property should not be eligible for a rent increase due to its condition.  
Daniel Oberhauser: Yes, that is part of it. I love the building. One of the things I truly  
appreciate about my apartment is its affordability. It has been very budget-friendly, and  
I'm grateful for that. I don't need anything fancy—just a safe, secure, and pleasant  
place, which this apartment provides. However, I deal with frequent maintenance  
issues and often have to call for repairs. While I appreciate that my rent wasn't raised  
for a couple of years, I don't believe I should be penalized simply because the property  
isn't generating enough income. Based on the information I received, my apartment is  
the most expensive in the building, and I think that's worth considering. I understand  
you'll also consider other arguments, but that's the core of mine. I've signed leases in  
good faith every year, and I believe requesting a rent increase beyond the rent control  
limit goes against that principle. The citizens voted for rent control to keep housing  
affordable—this was something we all wanted and supported. Despite voting for this  
ordinance, it feels unfair that the city continues to chip away at its protections. That  
doesn't seem just.  
Marcia Moermond: I can understand what you said. Were you initially tracking the  
politics and voting on the ballot measure? The city was given time to put together the  
implementation rules. Were you engaged in that process?  
Daniel Oberhauser: No.  
Marcia Moermond: In 2018 and 2019, the rent market was stable, with inflation having  
little impact on rent levels. The University of Minnesota's Center for Urban and  
Regional Affairs worked with community partners to determine that a 3% rent increase  
was a reasonable threshold. This percentage was then built into the rent control  
ordinance. If landlords want to increase rent beyond this limit, they must apply for an  
exception. However, the COVID-19 pandemic caused unforeseen inflation, leading to  
higher costs for supplies, labor, and operations. This misalignment with the original  
ordinance resulted in more landlords seeking exceptions than initially expected. This is  
background information, not an excuse, but it explains the current situation.  
Daniel Oberhauser: I understand the circumstances, but I didn't cause COVID, which  
doesn't change the fact that citizens voted for a 3% rent cap. My point is that I  
shouldn't be penalized for something beyond my control. Additionally, Mayor Carter's  
discussion of changes to the rent change due to slow development feels unjust. I earn  
a good salary and consider myself part of the middle class, yet I still can't afford to buy  
a house. For those of us in this position, renting needs to be affordable as well. I have  
a friend living in a Vivo village in Minneapolis because homeownership is out of reach  
for him, and that just doesn't feel right. It shouldn't sit right with anyone.  
Marcia Moermond: Thank you for highlighting the human aspect of the renter's  
experience, which is a significant issue not only in the Twin Cities but also nationally. I  
want to review the Maintenance and Net Operating Income (MNOI) statement to  
understand better the property's actual increases, property tax changes, and various  
expenses, including any capital improvements. This will help clarify the figures that  
staff provided, as the entire form wasn't thoroughly examined. Currently, the application  
is for a maximum increase of 8%, but the analysis suggests it could be closer to  
11.5% if a different application were submitted. I want to delve deeper into this  
information, and I believe you share the same interest. Additionally, I'd like to share  
these findings with your fellow appellant in unit 9 for their input.  
Daniel Oberhauser: Would that be 8% on top of 3%?  
Marcia Moermond: No, it would be a maximum of 8%. Anything greater than 3%  
requires an application. Do you have any other questions or comments?  
Daniel Oberhauser: This whole process feels incredibly anti-tenant.  
Marcia Moermond: I don't mean it to feel that way. I think the rescheduling made it feel  
that way, and I'm sorry about that.  
Daniel Oberhauser: It's not just the rescheduling; it's the fact that I came here without  
understanding the documents sent to me. And that's just what it is. I think that this is  
an anti-tenant process. I accept that. You make your recommendation. If I disagree,  
I'll take it to the City Council. I want a recording and minutes of this. I would appreciate  
that.  
Marcia Moermond: No, it's not anti-tenant. Once the record is finalized, we can send  
you a link to the full recording. I just want to clarify that I'm ensuring you receive all the  
information. However, it doesn't come with a specific explanation, as interpretation can  
be subjective. While I could provide an interpretation or have staff do so, different  
people, including appellants, may understand it differently based on their perspectives.  
Daniel Oberhauser: Well, I'm telling you it feels anti-tenant. That's my opinion, and I  
want to make sure I say that.  
Marcia Moermond: You've mentioned that several times now, and I know it will be part  
of the record. I see someone with their hand raised, so I'd like to invite Mr. Herding to  
the microphone.  
Ben Herding: Dan has been an ideal tenant, and I fully support his statement. I work  
for a property management company overseeing over 4,000 tenants, and the fact that I  
haven't had any issues with him speaks volumes. Typically, I deal with tenants who  
aren't as easy to manage, but both the building owner and I recognize Dan's value.  
The rent control ordinance meant to help tenants doesn't benefit ideal tenants like  
Dan. Before this ordinance, our annual rent increases averaged around 2.6% across  
our portfolio. With a cap in place, property owners are forced to spread the financial  
burden across even their best tenants because they can't raise rents in other areas.  
For years, tenants like Dan didn't face rent increases despite rising property taxes,  
insurance, wages, and building costs. Increased by 20%, 30%, or more were absorbed  
because owners valued good tenants who cared for the building and the community.  
It's unfortunate to hear ideal tenants say they might have to move out over a 3%  
increase when property costs have risen by 15-25% or more. A 3% increase is just a  
drop compared to what's needed to cover skyrocketing expenses, especially with  
insurance rates doubling or tripling in recent years and rising taxes and wages. From a  
property management perspective, it's tough to see tenants like Dan, who pay their  
rent on time and contribute positively to the building, feel like the system is working  
against them. While some may see the ordinance as anti-tenant, I understand how it  
can also feel anti-owner or anti-manager. The city has made progress since the  
ordinance was introduced, and we've worked hard to partner with them, but the reality is  
that this ordinance forces property owners to apply the same 3% increase to everyone.  
That's now the minimum any tenant in St. Paul will see. Ultimately, while the ordinance  
was created with good intentions, sometimes those it aims to help are negatively  
affected. I stand by tenants like Dan and share their sentiment that the system,  
though necessary in some ways, can inadvertently harm those it protects.  
Marcia Moermond: I appreciate you adding a landlord's perspective to round out the  
conversation. Does that impact Mr. Oberhauser's situation in particular?  
Ben Herding: I don't have the authority to make those decisions, as we work for the  
property owner and management group. However, I can say that many owners share  
the same sentiment. Owners want great, long-term tenants in their buildings, and it's a  
tough business decision to implement even minimum rent increases, knowing it could  
impact those good tenants. As you mentioned, when a tenant moves out, it's not  
always possible to raise the rent by 20-25% to meet market rates. Even if it is, the  
process is often lengthy and requires significant capital investment to justify such  
increases. This is more of a personal observation from speaking with the 312 owners  
we manage properties for—it's unfortunate when good tenants feel targeted. I want to  
emphasize that property managers and landlords aren't the "bad guys" in these  
situations. Owners are also navigating the challenges of the ordinance while trying to  
keep their properties, maintain payments, and continue providing quality housing.  
Marcia Moermond: Thank you. Mr. Oberhauser, you get the last word.  
Daniel Oberhauser: This reminds me of the Citizens United decision, where the  
Supreme Court allowed corporations to raise unlimited funds for politicians, which I  
believe has damaged our political system. I see corporate influence everywhere  
now—even a newly opened park in Minneapolis is named after a corporation. So, while  
I understand the gentleman's point that Housing Hub cares about its tenants, I'm  
cynical. It's unfortunate, but that's how I feel.  
Marcia Moermond: All right, let me set some dates. I expect Housing Hub to provide  
the MNOI within a day or two. Once I receive it, I'll review it and make a decision. We'll  
send the decision letter to djoberhauser@gmail.com. We can also send you the audio  
via express mail, though it may look different in your inbox. Please note that you'll  
need to download the file within two weeks, as the link will expire. This will be handled  
within the next few days. The minutes, however, usually take about a week, depending  
on the workload. As mentioned earlier, we haven't received anything in writing from Mr.  
Sosa yet, but he is welcome to submit information up until the public hearing.  
Daniel Oberhauser: Yes. When is the public hearing?  
Marcia Moermond: After reviewing my calendar, I believe the earliest possible date  
would be the 9th, but that might be rushing things, especially with Mr. Sosa working  
remotely. A more realistic time frame would be the 16th or 23rd; I'm leaning toward the  
23rd. Do you have any scheduling conflicts with either of those dates?  
Daniel Oberhauser: What time during the day? I can work out either day.  
Marcia Moermond: The public hearings are scheduled for 3:30 PM, and I will settle on  
the 23rd to give Mr. Sosa as much notice as possible. If something comes up, you  
can still register to testify by phone up until noon the day before the hearing. The  
hearing will be on Wednesday at 3:30 PM, but keep in mind that the exact start time  
can vary. While the Council convenes at 3:30 PM, the hearing could begin as early as  
3:40 PM or as late as 4:30 PM or 5:00 PM. Unfortunately, that's just how public  
hearings tend to go. With that said, you now have the same information as I do, and I'll  
follow up with something in writing.  
Daniel Oberhauser: That's understood. And do you think the decision will be in a few  
days?  
Marcia Moermond: No, my recommendations will be on the letter that will go out on  
Friday at the latest. The City Council will make the actual decision. If you don't object,  
it will go through with whatever my recommendation is. If you do, then they will consider  
the matter and hear your information and maybe come up with something else.  
Daniel Oberhauser: Ok. Will you explain your decision in detail so that it's easier for  
me to appeal it to the City Council if I disagree with it?  
Marcia Moermond: I will do my best. You've been sitting here hearing the same thing.  
Daniel Oberhauser: You will make your recommendation based on the ordinance.  
Marcia Moermond: I will do it in the best format. We have a pretty complete record.  
Daniel Oberhauser: I want a fair chance to argue my point. If I disagree with your  
recommendation, I want to make sure that it's fair.  
Marcia Moermond: OK. Have a good rest of your day, everybody.  
Referred to the City Council due back on 10/23/2024