Lindquist: it doesn’t. From my understanding full ownership has been transferred from
the trust. I can do some follow-up on that.
Moermond: that would be helpful. That was based on the twin cities IMAP system.
$1,320,000 for a trustee deed of Norbert Winter of 2009. There was an application to
increase the rent under the rent stabilization ordinance. That was asking for a 15%
increase in the rent. DSI reviewed it. I’ll turn it over to Director Angie Weise to walk us
through how they came to that conclusion.
Staff report by Director Angie Wiese: On May 18th, the department received an intake
form for a request for exception to the 3% increase on rent per ordinance 193A. The
application is part of the record and James and Matthew Lindquist were listed as the
applicants for 1029 Raymond. They were requesting a 15% increase on rent utilizing
the staff determination method. The reasons listed in the application were: 1) An
unavoidable increase in operating expense. A capital improvement project, 2) An
increase in tenants occupying the rental unit and 3) An increase in living space,
furniture, or equipment On May 22nd, the Department received the supporting
documentation for the increase. These documents are also part of the record and
include the MNOI/Capital Improvement worksheet, a unit by unit increase worksheet,
and Increase in tenant’s worksheet. Upon reviewing the documents, I determined there
was some missing and inconsistent information. I set up an appointment to meet Mr.
Matthew Lindquist via Teams for May 31st. At this meeting we went over the allowance
for increase in rent based on an increase in tenants. The application was too vague,
and I wanted to make sure the applicant was aware that an increase is not allowed
when the parties are related. We also discussed the discrepancy between the
maintenance costs between the two years. One is around $6,500 and the other is
around $40,000. I inquired as the reason behind the increase and was told there is
little to no data available as the applicant recently purchased the building. I informed
the applicant that without further information, the best route would likely be to have me
deny the application and appeal to the hearing officer. The denial letter was emailed to
the applicant noting 3 elements for the denial:
1. The increase in normal repair expenditures, compared to base year, lack detail for
justification. Line 12 of Section IX on MNOI Worksheet
2. As stated in the application, previous detailed income and expenditure data is not
available to the owner. This lack of data prevents a determination on a staff level.
3. Rent increase based on the number of tenants shall clearly indicate the conditions
under which rent would be increased, by unit. Item 18 on Increase in Tenants
Worksheet
With the appeal application, more income and expense data were provided. I
transcribed this information to our MNOI/Capital Improvement worksheet. This is now
added to the record. This new data uses an alternate base year of 2020, which is
acceptable. In both 2020 and 2021, the worksheet indicates the building is operating
at a loss. The premise of MNOI is that an owner is entitled to the same rate of return
on investment in the current year as they received in the base year. This premise
assumes there is some profit margin obtained that is allowed to remain. The MNOI
worksheet clearly was not meant to address a building operating at a loss in the base
year. The calculations indicate, even when utilizing the formula, the building would be
operating at a loss, just not as large of a loss. Part of staff review is a warranty of
habitability. Its last Fire Certificate of Occupancy inspection was April 2021 as an A
property and no complaints since then.
Moermond: acquisition happened April 11 and application for a rent increase of 15% on
May 18, with a May 31 decision, and a June 6 appeal. We have some additional
information provided—
Wiese: the application came in May 18 and the documents came in May 22. The
additional documentation of 2 PDFS of income and expenses came in and were