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Questions raised over Detroit’s ability to hold landlords accountable for properties left blighted

The city's decision to drop an "invest-and-neglect" suit underscores a history of continued leeway and flexibility for large-scale property owners
Posted: 5:28 PM, Jul 02, 2020
Updated: 2020-07-10 13:49:11-04
Property
Left: The east side home owned by Vivian Gray. Right: The property next door to Gray owned Sam Jaser.

Vivian Gray spent a lot of time thinking about ways to improve her yard. To hide cracks in the front walkway, she installed a path of cobalt blue carpet. Her lawn, always crisply cropped, featured not one but two mini-sculpture gardens. Free time was spent crisscrossing the city looking for discarded trinkets that could be added to the mix.

"I emphasize to my young people, it doesn’t matter where you’re at: Take pride," the 55-year-old said on a balmy Monday in May, explaining that just because she and many of her neighbors were considered "low-income," it didn’t mean they didn’t care about creating a safe and welcoming environment.

"Your home represents you," she said, averting her eyes from the one thing she couldn’t upgrade and refine, but seemed to define her — and everyone else on the block — all the same: The eyesore next door.

Purchased by an LLC at the 2019 Wayne County Tax Auction for $5,400, the house to Gray’s right provided an unmistakable foil to her precise and meticulous landscaping.

Ivy zig-zagged across the front steps. An oversized bush inched towards the second floor. It was the cliche people imagined when talking about Detroit’s neighborhoods. It was also — for nearly a month this winter — poised to represent a turning point in how the city handled large-scale property owners.

On Feb. 6 the city of Detroit filed a trio of highly-publicized “invest-and-neglect” suits against four of its largest landowners: Michael Kelly, father-son duo Steve and Stephen Hagerman, and Salameh (Sam) Jaser, the owner of the property next to Gray.

While the Kelly and Hagerman suits are still pending, on Mar. 3 the city dropped the case against Jaser stating that it was an error.

"Mr. Jaser was the only one to step forward and try to say: Wait a minute you got the wrong guy. He went to great lengths to demonstrate that he has invested a lot of money in a lot of his properties and that he is on a road to compliance with the law," said top city attorney Lawrence Garcia.

According to Garcia, Jaser, who owns over 350 properties in the city, presented him with a photo album with examples of rehabs he had completed to make the case that he wasn’t a slumlord or a speculator as the suit implied. Garcia could not remember how many examples were in the album. Jaser later shared it was 10.

"I was convinced," said Garcia, who later added: "Rather than going tough on him, we decided to work with him."

Documents obtained by 7 Action News, however, reveal that this is not the first time the City of Detroit decided to work with Jaser to bring his buildings into compliance. And a previous attempt had spotty follow through.

This coupled with the evidence that led to the dismissal — photographs showing rehab work on less than 3% of Jaser’s portfolio — and the manner in which it was done — without a written agreement from Jaser OKing new stipulations for getting his properties into compliance — raise questions about the city’s commitment, as well as ability, to follow through with its promise to hold large scale landowners accountable.

A 7 Action News review of internal agreements, property lists, and interviews with Jaser, city officials, and neighbors highlights a series of choices over the last two years that have allowed the property owner’s portfolio to grow, while mechanisms for accountability have been often cushioned. We found:

  • A previous attempt to work with Jaser had mixed results: The city agreed to release Jaser from the suit despite him failing to follow stipulations within a June 2019 compliance agreement that asked him to get "roughly" 10 rental properties into compliance with city code per month. Data obtained from the city on Jun. 4 indicated that only 6 of Jaser’s properties have obtained rental certifications of compliance since he began purchasing in 2018.
  • Reliance on verbal agreements: The city released Jaser from the Feb. 6 suit on Mar. 3, nine days before they received a written response from the property owner conceding to the requirements of the dismissal. Garcia explained that the city dropped the suit based on a "gentleman's agreement" and then decided to "ratify" it in writing afterward.
  • Despite shortcomings getting compliance certifications, Jaser was able to amass more properties: The city allowed Jaser to continue to purchase real estate — 150 properties in the 2019 Wayne County Tax Auction — even as his portfolio was in violation of city code and subject to a compliance agreement.
  • Spotty data make it difficult to track a property owner’s progress: After failing to track Jaser’s properties using the city’s online rental database — a tool that is meant to be an aid for tenants and housing advocates — 7 Action News learned the site was not up to date. Additionally, data the city sent over in regards to Jaser’s progress did not match the data Jaser shared, highlighting document-collection blind spots that undermine even the best efforts to monitor large-scale property owners.

    Jaser — who is a member of a larger real estate group that began buying properties in Tennessee and Georgia following the 2007 mortgage crisis, and turned to Detroit in 2018 — maintains that he and his partners are not speculators or slumlords.

    "I want to be a part of rebuilding Detroit," he said. "I want to be a part of it aesthetically, socially. I want to be the guy that you guys can say: Hey, here’s the role model landlord."

    The city also maintains Jaser shouldn’t have been sued to begin with.

    "He was one of the largest property holders and I think we wanted to start with the big fish in this effort. So he checked that box. But we really didn’t know as much about the investments he made until we filed the complaint, he brought that information forward," said Garcia, who could not give an exact dollar amount regarding Jaser’s investments.

    He remained, however, confident about the future based on conversations and the photos he saw.

    "The question to me is: How do you do the most good for the greatest number of people relative to Sam Jaser’s portfolio?" asked Garcia. "I think, trying to get him to voluntarily do the right thing because of how much effort he’s been able to demonstrate that he’s put forward, that was the best bet and I’m still liking my odds in making that bet on Sam Jaser."

    For housing advocates and researchers who had been encouraged by the invest-and-neglect suits — after years of warning the City about the damage caused by bulk buyers, specifically those who purchase land via the Wayne County Tax Auction — the decision to drop the suit is viewed as a step backward, however. While the line between "overzealous property buyer" and "speculator" can be blurry, the city, they say, has a responsibility to hold landowners accountable based on their actions and current community impact, not intentions.

    "To turn without really saying much and without much fanfare and go back to the prior ways of doing it and in fact codifying it in these agreements is just counterproductive," said Joshua Akers, an assistant professor of Geography and Urban Region Studies at the University of Michigan-Dearborn.

    "It makes clear the city does not have the capacity or political will to hold large landlords accountable for not providing safe housing that meets basic minimum standards," he continued, noting that while the city may view Jaser as a "better actor" because a portion of his properties are vacant — and therefore not putting tenants in harms way — blight via speculation has ramifications that residents in the neighborhoods, like Gray, end up shouldering mentally and physically with daily maintenance and security. But also financially. As was "the ask" this past fall when Mayor Mike Duggan, unsuccessfully, implored Detroit City Council to support his $250 million blight demo bond.

    "These companies are essentially buying penny stocks. You lose, you lose," said Akers. "The people who actually bear the brunt of it are the people who live around these houses, the people who live in these houses, and then the public at large who has to pay to remediate or demolish these houses."

    Vivian and Aulton Gray, who got married on July 14, 2019 and threw a wedding reception at their east side home in Detroit. They put mirrors on the blighted home next to them to disguise the deterioration.

    A COMPLIANCE AGREEMENT AND A GENTLEMAN'S AGREEMENT
    When the "invest and neglect" suit was first announced in February, housing advocates and researchers cheered what seemed to be a drastic shift in the city's approach to dealing with large-scale landlords.

    "This kind of commitment from the city, at least in the last decade, is unprecedented," Akers, said at the time.

    Previously the city of Detroit had sued landlords. But there was often little follow thru. Kelly, for example, had seen over $2 million in property tax debt and blight fines dismissed in 2018 and 2019 in exchange for land the city was interested in procuring for development.

    The "invest and neglect" suit, however, would be different, Garcia explained in February.

    "People resolve legal disputes in all different kinds of ways, and I would never close off the door to a resolution of any kind. But this is not about enabling development in the city of Detroit. This is not about bringing money into the coffers of city government," he said at the time, explaining that the goal was quite simply: compliance. And finding the best route to making sure that happened.

    For Jaser, who had been in talks with the city around compliance for over half-a-year by the time the suit dropped, the idea of him evading his responsibilities was, he said, confusing.

    "They were telling me how great of a job I was doing and then this lawsuit dropped and I was just kind of blindsided," said Jaser, explaining that he got in touch with the city as soon as he learned of the complaint. "Of course they told me 'Oh, we don’t know what happened.'"

    While Jaser indicated that the city had been supportive and effusive of his progress, a 7 Action News review of his efforts found shortfalls in what was promised and what was accomplished.

    In June 2019 after accruing at least two dozen blight tickets, Jaser and a City of Detroit Buildings, Safety, Engineering and Environmental Department compliance manager hammered out an agreement aiming to get his inventory — what he self-reported as being 239 properties — into compliance.

    At the time Jaser told the city, 65% of his inventory were rentals. And while the agreement gave him two years — until June 2021 — to bring these rentals into compliance with city code, it also stated that he had to get rental certificates of compliance "at the average rate of 10 properties a month."

    Sam Jaser June 2019 Compliance Agreement by Allie Gross on Scribd

    This requisite should have resulted in roughly 70 rentals getting into compliance between June 2019 and the time of the February suit.

    Data from the city reviewed by 7 Action News last month, however, indicated that Jaser obtained only four rental certificates of compliance during this time frame. He currently, according to city data, has only six rental certificates of compliance.

    When questioned about the lack of rental certificates of compliance Jaser said the city's data was incorrect.

    "That’s not right, that’s definitely not right," Jaser said in a FaceTime interview last month. "I even have some of the certificates here, and it’s way more." 7 Action News followed up via email for evidence of the higher number of rental certificates of compliance. He did not respond to the request.

    Despite these unfulfilled expectations, the city moved to have the suit dropped. Notably, they did so without any formal, written document binding Jaser to a new set of stipulations.

    E-mails obtained by 7 Action News show that a city attorney emailed Jaser on Feb. 26 detailing the improvements he’d need to commit to in order to have the case dropped. The case, however, was dismissed Mar. 3, before he replied in writing.

    "We’ve had a lot of communication, we have an open channel of communication with Mr. Jaser," said Garcia, explaining that the decision to drop the suit before getting back a written response was based on a "gentleman's agreement."

    "It just took a reminder by telephone to get him to send back that responsive email, which we thought was good to have for the file,” said Garcia. “Get it in writing is what lawyers say."

    Ultimately, Jaser responded affirmatively via email on Mar. 12. Nine days after the suit was dismissed. One day after 7 Action News checked in about the status of the suits.

    Feb. 26, 2020 email to Sam Jaser with dismissal stipulations.
    Sam Jaser Mar. 12, 2020 response to the city of Detroit.

    Under the now-ratified stipulations Jaser "is poised to obtain" 100 certificates of compliance within 120 days — which would have been the end of June. Garcia, however, noted this was flexible due to COVID-19.

    Still keeping track of the work Jaser has done has proven difficult.

    When 7 Action News interviewed Garcia on Jun. 2, he stated that Jaser had told him that he had completed 144 lead inspections — a requisite for a rental certificate of compliance — since the suit had been dismissed.

    "The jury is still out, but I’ve seen enough evidence that I think he may prove his case," said Garcia. "He has until October, he’s chipping away, we’re verifying the claims that he’s making, double-checking the evidence that he’s presenting, but I think it’s a real possibility that Mr. Jaser might be one of those good landlords who is bringing property into compliance. That is our first priority."

    Data provided by the city after the interview, however, showed Jaser completed a total of 81 lead inspections between Fall 2018 and May 18, 2020. Within the data set, 34 occurred after the suit was dismissed.

    Jaser, for his part, disputed the city's data. His lead inspector, Hani Yaqo, sent 7 Action News a spreadsheet with dates and addresses where he said inspections had been completed over the years. The document indicated that there had been 143 lead inspections between Fall 2018 and May 18, 2020; 43 of which occurred after the suit was dismissed.

    5915 Vancourt, a property purchased by Sam Jaser at the 2018 Wayne County Tax Auction for $500, on May 27, 2020.

    While both figures are far less than the 144 inspections Garcia was under the impression had been done since March, their lack of continuity flick at a far bigger issue with accountability: the city is reliant on Jaser to self-report how many properties he owns, and they currently couldn’t give 7 Action News a hard figure of what that was.

    While the February lawsuit connected Jaser to 339 properties, the city's assessor's office showed that there are 407 properties owned by LLCs tied to him and his partners.

    When 7 Action News asked Jaser how many properties he owned in the city, we got different answers.

    Originally he said "a couple hundred, like 260 or something like that” but when we pointed out that the city was under the impression he had around 400 he revised his answer.

    "I don’t have the exact number but it’s close 400," he said, "it’s maybe 353, 363 something like that."

    THE FUTURE
    Under the recently agreed-upon stipulations Jaser can’t purchase additional properties before October 2020. The rules, however, do not make clear if there are certain benchmarks he must meet in order to buy once that date rolls around. Without requirements, this would have allowed him to buy in the 2020 Wayne County Tax Auction if it hadn’t been canceled due to COVID-19.

    The hazy prerequisites are particularly concerning to housing researchers and advocates as the state gears up to lift its eviction moratorium on July 15. While safe and secure housing has always been a fragile commodity in Detroit, the health crisis, they warn, only exacerbates the situation.

    "Now is the time for the city to really ramp up its actions around housing and health, not to weaken its stance against bad actors and large scale property owners and speculators,” said Alexa Eisenberg, a doctoral candidate at the University of Michigan’s School of Public Health, who co-authored a forthcoming paper with Akers, which found that children living in homes purchased by investors at the Wayne County tax auction were 1.6 times more likely to exhibit lead poisoning than children living in other types of housing.

    "There’s really no evidence or reason to believe, that these actors will come into compliance outside of legal action," she continued. "They’ve already flagrantly denied the city’s rental code, and they’ve already not stuck to their agreements, which they made prior to the lawsuit, so dropping this lawsuit is basically a guarantee that these types of conditions will persist for renters and residents in Detroit."

    A recently busted in side-door at the house next to Vivian Gray owned by Sam Jaser.

    Back on the east side, Gray continues to wait for the compliance rate to catch up with the purchases.

    "Regardless of how much I may try to keep up my property, it’s just a reflection," she said, noting that whenever the chaos got too out of control she made her teenage son mow the lawn.

    "Our grass is enough, but in order to make us look good, we have to make them look good," her husband Aulton Gray chimed in.

    It was a point of contention that caused a lot of fighting within her household — namely Gray's son not always wanting to take on the burden. But it was also an issue she refused to retreat on.

    The block, as she repeated, was her. It was her family. It was something to be proud of. It was now more a question of getting her "neighbors" — not just the ones who lived on the street — to understand this too.

    "I don’t have a problem with someone purchasing property," she said, "but to purchase property and not take care of it, that’s totally different."