Despite St. Paul rent control, Dominium hikes rents nearly

For Jeffrey Swanson, the long, snake-like grease stain that travels half the length of the outer hallway carpet along his floor is more symbolic than inconvenient. A poor paint job on the outer door of a neighbor’s apartment is equally telling, much like the two community rooms on the building’s ground level, both of which have been locked and off-limits to residents for the better part of a year during Dominium’s building-wide remodel of 808 Berry Place in St. Paul.

Then there’s the new wheelchair-access sign that points up a flight of granite outer steps toward the courtyard. And the requirement, rolled out in early June, that all tenants carry renter’s insurance within two weeks or face daily fines. And the parking spot no longer covered by rent payments.

A 7.97 percent rent increase notice just came in the mail, more than double the 3 percent limit imposed by St. Paul’s new rent-control ordinance.

The rent letter from Plymouth-based housing provider Dominium to Swanson and other tenants at 808 Berry Place indicates their rent is governed by federal regulations, as the building was constructed with low-income housing tax credits through U.S. Housing and Urban Development’s Section 42 program. The implication seems to be that Dominium is exempt from the city’s new rent cap of 3 percent a year.

Swanson said he doesn’t live in a subsidized unit. He lives in one of 808 Berry’s market-rate lofts, where he and his wife pay more than $2,200 monthly.

Swanson, an information technology professional, has his share of grievances over this or that failing within his apartment building, which bills itself as luxury living just off the Green Line. He said most of the patio furniture at his building has been taken away without replacement.

Jeff Swanson, who lives at 808 Berry Place in St. Paul, says this community room was shut down for a year and when it opened up it had "de-provements." For example, there is no longer a stove in the community kitchen and the air conditioning is not working. 808 Berry Place, which bills itself as a luxury apartment and townhome community, is managed by Dominium, a Plymouth-based provider of affordable and market-rate housing. Some residents here feel Dominium botched a remodeling effort in order to get around the city's new rent control rules. (Scott Takushi / Pioneer Press)
Jeff Swanson, who lives at 808 Berry Place in St. Paul, says this community room was shut down for a year and when it opened up it had “de-provements.” For example, there is no longer a stove in the community kitchen and the air conditioning is not working.(Scott Takushi / Pioneer Press)

“They said, ‘supply chain issues.’ I said, ‘Well, how about you leave the old stuff until the new stuff is ready?’ And they wouldn’t do that,” Swanson recalled.

When Dominium did building renovations and then informed tenants their rent would increase just under 8 percent, Swanson said he was taken aback. The city of St. Paul allows property owners to go above the 3 percent rent cap imposed by the city’s new voter-backed rent-control ordinance provided they self-certify increases with documentation of remodeling efforts or other reasons to grant a hardship exemption.

Also, any increase above 8 percent would trigger a review hearing and Dominium’s proposed rent increase hovers just below that limit.

DOMINIUM: IMPROVEMENTS PLANNED FOR YEARS

Khayree Duckett, a spokesman for Dominium, said the improvements at 808 Berry had been planned for years and were unrelated to the city’s rent-control ordinance, which took effect May 1.

Dominium closed on financing for the improvements in the spring of 2021. Duckett confirmed that Dominium would seek exemptions to the city’s rent cap at all eight of its St. Paul properties, and even higher increases at its west metro properties in reaction to rising inflation, construction costs, property taxes and other factors.

“Each of our communities in St. Paul has some element of financing through the low-income housing tax credit financing program — LIHTC — and those rent restrictions were put in place through an agreement with the city of St. Paul,” said Duckett. “They were parties to that agreement when we developed those communities. We believe they’re already rent-controlled.”

He added, “You’re building market-rate quality housing but you’re only receiving rents affordable to residents at lower incomes. If these properties were created outside of the low-income housing tax credit program, some of them would be paying hundreds of dollars more per month.”

Swanson and other tenants have said the renovations seemed focused on market-rate units like his own, rather than the federally subsidized Section 42 units in his building. Those units were installed with housing tax credits for low-income residents, and federal rules require parity in upkeep between the affordable and market-rate housing.

Swanson, who is nearing an early retirement, said he found himself advocating with management for the less fortunate in his building. His concerns are shared by other tenants throughout 808 Berry.

Barbara Marine, a Section 42 tenant, said crews came into her apartment two months ago and removed her refrigerator, which was working fine. The new unit — which lacked an ice maker or butter compartment — was a downgrade in her mind. Other than that, there’s been no significant improvements in her apartment.

“I said, ‘I don’t need a new refrigerator. It’s perfect,’ ” she recalled telling a property manager. “His response was he would check into that. Of course, I haven’t heard anything since. It’s my understanding that Section 42 is supposed to be maintained at the same level as the market-rate is. And it’s not.”

“I’ve been here six years,” she added. “I’m on my sixth manager.”

Barbra Marine, a resident at 808 Berry Place in St. Paul on Thursday, July 7, 2022. 808 Berry Place, which bills itself as a luxury apartment and townhome community, is managed by Dominium, a Plymouth-based provider of affordable and market-rate housing. Some residents here feel Dominium botched a remodeling effort in order to get around the city's new rent control rules. Marine lives in a subsidized apartment and says her unit received none of the remodeling that other units received. She says her refrigerator with an icemaker was downgraded to a smaller unit without an icemaker against her wishes. (Scott Takushi / Pioneer Press)
Resident Barbara Marine, who lives in a subsidized apartment at 808 Berry, says her unit didn’t receive the remodeling that was done to market-rate apartments there.(Scott Takushi / Pioneer Press)

PREVIOUS CLASS-ACTION LAWSUIT OVER PARKING FEES, DOUBLE-DIGIT RENT HIKES

Questions about how Dominium treats its low-income tenants aren’t entirely new. On June 22, KARE-TV aired an investigative report about 12.5 percent rent increases at multiple Dominium buildings in the west metro, including the company’s federally-backed senior housing units in Crystal and Coon Rapids. In the report, both state Sen. Jim Abeler, a Republican, state Sen. John Hoffman, a DFLer, called Dominium’s tactics unethical.

On Wednesday evening, tenants from multiple Dominium properties picketed outside of River North Senior Apartments in Coon Rapids before meeting with lawmakers and attorneys from the St. Paul-based Housing Justice Center.

Among them was Katherine Banbury, a resident of Dominium’s Cambric apartments on East Seventh Street in St. Paul, who has filed an appeal with the city against a scheduled rent increase of just less than 8 percent on behalf of all the tenants in her building, as well as on behalf of tenants at the Union Flats, another Dominium property on Hampden Avenue.

David Blessing, from left, Katherine Banbury and Marvaleen Atlas join protestors from 11 different living facilities owned by Dominium, a Plymouth-based housing provider, who gathered at River North apartments in Coon Rapids on July 6, 2022 to protest rents being raised by up to 12.5% by Dominium. (Bryson Rosell / Pioneer Press)
From left, David Blessing, Katherine Banbury and Marvaleen Atlas join protestors from 11 different living facilities owned by Dominium at River North apartments in Coon Rapids on July 6, 2022 to protest rent increases. (Bryson Rosell / Pioneer Press)

An appeal hearing is scheduled for July 19 at St. Paul City Hall.

“In all eight Dominium buildings in St. Paul, they’re asking for an 8 percent increase, and that’s crazy,” said Banbury.

In March 2021, a class-action lawsuit filed against Dominium in Hennepin County District Court alleged the housing provider effectively double charges for parking fees.

The lawsuit, filed by the Housing Justice Center and the Minneapolis law firm of Faegre Drinker, claims Dominium is guilty of “double-dipping” — accepting HUD funds for parking improvements while also charging tenants for those improvements, which is prohibited by the federal agency.

The lawsuit was filed on behalf of eight Dominium tenants and the Minnesota HOME Line, a housing nonprofit based in Bloomington. Dominium attempted to remove the case to federal court, but it was recently returned to Hennepin County, where a judge rebuffed the company’s efforts to get the case dismissed. A legal fact-finding process called discovery is underway, according to attorneys with Faegre Drinker.

NEW PARKING, RENTER’S INSURANCE FEES AT 808 BERRY

At 808 Berry, Swanson said his 8 percent rent increase isn’t the only surprise. He’s now been notified that his parking spot will no longer be included in his lease, adding a new monthly fee that brings his total increase to around 12 percent.

In the first few days of June, the building instituted a requirement that all tenants carry renter’s insurance. Tenants said building management announced the new requirement by posting written letters on each apartment door with a notation that if insurance was not secured within two weeks, a daily fee would accrue.

“We never got an email or a phone call, and having only two weeks’ notice in the middle of summer when a lot of people are traveling seemed problematic,” said a resident of a market-rate unit. “Simply put, if we had been away, we wouldn’t have known.”

Pat Johnson was among the representatives from 11 different living facilities owned by Dominium, a Plymouth- based housing provider, who gathered at River North apartments in Coon Rapids on July 6, 2022 to protest rents being raised by up to 12.5% by Dominium. (Bryson Rosell / Pioneer Press)
Pat Johnson was among the representatives from 11 different living facilities owned by Dominium, a Plymouth- based housing provider, who gathered at River North apartments in Coon Rapids on July 6, 2022 to protest rents being raised by up to 12.5% by Dominium. (Bryson Rosell / Pioneer Press)
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