Repairs to notorious landlords properties near a half million dollars and the meter is still running

Cary Spivak | Milwaukee Journal Sentinel

About a half of million dollars has been spent to bring properties owned by notorious landlord Elijah Mohammad Rashaed's companies into decent, livable condition and more needs to be spent, according to a new report filed in court Tuesday.

Since April the Rashaed properties have been managed by Peter Ogden, president of Ogden & Co., who was appointed property manager — a job that made him a de facto receiver — by Milwaukee County Circuit Judge Glenn Yamahiro.

"Since his appointment, the property manager has faced huge challenges," Joseph Newbold, Ogden's attorney, wrote in a 26-page report to the court. In April alone, Ogden spent $19,000 on emergency maintenance to fix "substantially dangerous conditions," Newbold wrote.

"There are many properties that lack basic needs, making the units nearly uninhabitable or extremely dangerous for the tenants," Newbold wrote, noting that 15 of the 157 properties are partially or completely boarded up "because of extreme health and safety concerns." Four of those properties have tenants.

"Of the remaining 11 placarded and uninhabited properties, the property manager has yet to determine whether it is economically viable to make the needed repairs to bring the properties up to code or whether it is better practice to simply raze the structures."

The report lists an array of other problems in properties owned by Rashaed or his limited liability companies, including rodents, bed bugs, structural damage, sewage leaks, problems with wiring and plumbing, and water damage.

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Ogden has spent $443,779 for operating expenses, a figure that includes management fees, plus another $45,684 for serious repairs, such as fixing heating systems, for a total of $489,463, Newbold wrote.

Yamahiro stripped Rashaed of control of his properties in April after the city sued him, charging he markets his rental units "to individuals who are desperate for or struggle to find housing because they have income limitations, criminal or eviction records, or need to move quickly." The rental units were often dilapidated and in disrepair.

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Disputes with Rashaed have continued since Yamahiro issued his order.

Newbold's report notes that Rashaed has not given Ogden all of the records of leases and other information to the management company that he was ordered to turn over.

Ogden "has yet to receive any security deposits or even an accounting of security deposits from Rashaed," Newbold wrote. "Many of the existing leases state that a security deposit was in fact paid to Rashaed."

Ogden is being paid about $25,000 a month in management fees. The cash to cover repair costs is coming from the rent revenue. Newbold said legal fees are $88,141.

From April through July the firm has collected $434,265 in rent, though it contends the figure should be higher.

Interference from Rashaed, who Ogden and the city attorneys contend have told tenants not to pay rent to them, has kept the rent revenue down.

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"Rashaed has communicated with a multitude of tenants, directing them to not pay rent to the property management or to not cooperate with the property manager's home inspections," Newbold wrote. "This has led to claims from tenants that rent was timely paid to Rashaed, thus inhibiting the property manager from collecting rent from some tenants."

Charges that Rashaed is continuing to collect rent or striking rent-to-own deals with tenants are at the heart of contempt motions filed by the city and Ogden asking the court to order an immediate sale of the properties and to fine and/or jail the landlord.

During a hearing Tuesday, Milwaukee County Circuit Judge Jeffrey Conen, who just inherited the case as part of a routine rotation of judge, set hearing dates for the contempt motions and urged the attorneys to work together to sell the Rashaed properties and to quit sniping at each other.

The city and court must approve any property sales arranged by Rashaed to ensure he is not secretly attempting to control the rental units after they are sold.

When David Halbrooks, Rashaed's attorney, said he was working on a deal "worth millions" the judge told him to work with Kail Decker, the assistant city attorney on the case. Halbrooks pointed to Decker's back and snapped: "You can't take anything up with him."

"Just stop it," Conen told Halbrooks " Otherwise everybody is going to be wearing jail orange."

Halbrooks did not provide details of the sale he was working on.

Newbold's report notes many severe, structural problems in the properties that presumably would hold down the amount a buyer might be willing to pay.

"Many of the properties have terrible structural issues that are severe, but perhaps fall short of being categorized as needing emergency repairs," Newbold wrote. "Properties have severe damage to their exterior, ranging from literal holes in the roofs or walls, allowing direct exposure, to decrepit, crumbling or rotting infrastructure."

In addition, Newbold wrote that "a majority of the properties will require substantial work on the exterior structure" including the replacement of shingles, siding, gutters, drainage pipes and windows. Ogden has repaired six roofs and plans call for repairing more.

Halbrooks, Rashaed's attorney, said he had not yet read the report though he said Ogden needs to provide additional details about the repairs that have been made.