After 2,000 violations, landlord sells properties

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January 24, 2013
By: Dylan Thomas
Dylan Thomas
Under pressure from the city, Spiros Zorbalas sold his 38 Minneapolis rental properties to Steve Frenz

A major Minneapolis property owner who last year lost a court battle with the city has sold his entire portfolio of rental properties, including apartment buildings in Stevens Square, Lyndale and Kingfield.

The 38 rental properties Spiros Zorbalas owned were purchased by Steve Frenz, whose The Apartment Shop property management company operates out of a Whittier neighborhood office. The deal, which includes 752 apartment units and roughly doubles Frenz’s portfolio, was finalized Dec. 18, Frenz said.

Zorbalas racked up 2,131 violations over five years, said City Council Member Gary Schiff [Ward 9], who hailed the sale as a victory for the city.

“He was hands down the worst landlord who had accumulated the most violations in the city,” Schiff said.

Schiff described the sale as a direct result of city action against Zorbalas, beginning in April 2011 with the revocation of his rental licenses for three properties where inspectors found multiple housing code violations: 905 Franklin Ave., 3725 Cedar Ave. and 1830 Stevens Ave. That triggered the city’s “two strikes and you’re out” rule.

“If you’ve had two licenses revoked in a five-year period, you lose all your licenses for five years,” Schiff explained.

Zorbalas sued, but an appeals court took the city’s side in March.

Steve Gallagher, executive director of the Stevens Square Community Orgnization, said he’d heard complaints from residents of every Zorbalas building in the neighborhood. Common complaints had to do with a lack of heat and the condition of the buildings and units, Gallagher said.

He welcomed the news of the sale, citing a solid relationship with Frenz and The Apartment Shop.

“We have a real good relationship with Steve,” Gallagher said. “… We’re going from a landlord that we’ve had zero contact with to one we can call up any time.”

Frenz, who would not say how much he paid for the former Zorbalas buildings, downplayed the role of the city in assembling the deal. Frenz said he contacted Zorbalas looking for a “strategic partner” after he ran into trouble during the Great Recession.

“One, I like a challenge,” he said. “But, two, the guy was out of state and having some issues with the city because of his remote management style.”

Zorbalas lives in Florida. Frenz initially intended to keep him on as a minority partner, but the city objected.

Frenz’s maintenance crews began working in Zorbalas’ buildings in the fall, when it appeared likely the deal would go through. They were mostly preparing the boilers for the heating season, Frenz said.

He said he discovered “a lot of deferred maintenance” issues with the properties, and will set crews to work repainting common areas and making other improvements. Frenz hired 10 of Zorbalas’ staff members, including two maintenance technicians, four painters and several cleaners.

Rents are likely to go up, he acknowledged. Apartments at some of the properties, including brownstones in popular neighborhoods, were renting at below market rate, he said.

Megan Gamble has lived in one of those brownstone apartments in the Stevens Square neighborhood for two years.

“I’m not going to lie, it’s been a trying two years,” Gamble said. “I’ve been a very squeaky wheel when it comes to issues with the building.”

Her main complaint was the slow response to maintenance issues. This fall, she called the city when her heat wasn’t turned on after days of cold weather.

Gamble said she was on a first-name basis with the inspector who came to her aid, “Joe,” because of her frequent calls for help. Still, she said, she enjoys living in her building, and appreciates her one-bedroom’s wooden floors and claw-foot tub.

“That’s why I put up with so much, because I love my apartment,” she said.