A blueprint for taking action against Detroit’s ‘rogue’ landlords

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Gastón Muñoz owns hundreds of rental properties across the city and has racked up hundreds of blight tickets to go with them. Tenants have complained about a lack of care for years, and some have turned to Detroit City Council for help. In a report last week, councilmembers were given a series of steps they can use as a blueprint for dealing with landlords who let violations pile up.

Dozens of Muñoz’s properties sit in Gabriela Santiago-Romero’s council district, and she asked the city’s Legislative Policy Division (LPD) to help her understand what actions City Council can take. The LPD responded on Feb. 7 with a succinct report that called out gaps in the city’s current efforts to enforce its own rules against landlords with a history of violations and detailed action items that might make a difference. Santiago-Romero told Outlier Media she intends to act upon the recommendations.

The LPD report is refreshing in how seriously it engages with the problem of landlords who have built business models on ignoring property conditions and tenants.

LPD Director David Whitaker emphasized that the report is a series of recommendations — not an investigation — that relied on information about Muñoz’s blight tickets given to City Council in 2022 by the city’s Buildings, Safety Engineering, and Environmental Department (BSEED) as fact.

The report does however call out “rogue” landlords “who flout the law and disregard their tenants’ health, safety and rights” and encourages the council to investigate why BSEED has not dealt with these landlords effectively.

Muñoz said he would refer Outlier’s questions to his lawyer, but then did not respond to a request for comment.

The LPD report lays out a few lessons for City Council with a few pointed questions the council should compel BSEED to answer.

Muñoz’s record

The memo from the LPD encourages City Council to send questions to BSEED seeking more information on Muñoz’s properties. The request asks how many rentals Muñoz or his LLCs own in Detroit, the number of blight tickets, what BSEED has done in each of those cases and whether the city has ever denied Muñoz a rental certificate of compliance. LPD also encourages council to ask BSEED how Muñoz stacks up against other landlords in the city and what the city’s strategy is for dealing with landlords who flout existing rules.

BSEED told Outlier that Muñoz has 556 properties in the city and that 371 of them have a certificate of compliance. Outlier’s independent review of 103 residential properties owned by entities linked to Muñoz found more than 70% had received at least one blight ticket in the last five years.

Actions Detroit City Council can take to deal with ‘rogue landlords,’ recommended by its Legislative Policy Division:

Put BSEED on notice: Press the Buildings, Safety Engineering, and Environmental Department — combatively, if necessary — for detailed info about landlords and enforcement, because the city department is required to respond.
Bring the budget hammer: Use the council’s budget approval powers to influence city action.
Lay down the law: Strengthen penalties and enforcement — for example, not allowing violators to certify rental properties — or possibly amend the Right to Counsel Ordinance.

Lesson one: Put BSEED on notice

The LPD report makes it clear that City Council has limited authority when it comes to enforcing rules for landlords. Enforcement is up to Mayor Mike Duggan’s administration — in this case, that is largely through BSEED.

BSEED is in charge of handing out blight tickets for violations of the city’s property code.

It is also responsible for enforcing the rental registration ordinance City Council updated in 2017. That rule requires landlords to pass inspections to get a certificate of compliance or risk not being able to collect rent.

In its report, the LPD is harsh in its assessment of BSEED, saying it has not responded to City Council’s many requests for information other than sending “unhelpful generalities,” though it doesn’t go into detail about what these responses have been.

BSEED Director David Bell wrote in a statement to Outlier that the agency has been responsive, saying it provided “the information requested regarding the number of properties registered as rental and the number of certificate of compliance that were issued to Mr. Munoz” and the amount he owed in blight ticket fines.

The LPD cites those hundreds of blight tickets issued to Muñoz as a particular problem. The division says in its report, “Council is not required or authorized to passively accept nonresponsive information and statements from the administration, and take no action for the benefit of the City and residents in such contexts.”

The division instead encouraged councilmembers to use their investigatory power, which includes issuing subpoenas and compelling testimony in front of City Council. LPD’s advice is to treat BSEED like “an adversary in litigation” to get answers.

“I plan to submit detailed questions to BSEED to gather more facts and go where the answers lead me,” Santiago-Romero said in a written statement to Outlier. “Ultimately, it’s my hope that City Council and the Administration will work together to hold landlords and property owners accountable.”

Lesson two: Bring the budget hammer

City Council’s bread and butter is enacting ordinances, but LPD said it’s too early to consider creating new rules. First, it needs answers on whether BSEED is simply not enforcing the rules already in place.

City Council can instead use its budgeting power as a carrot or stick, the LPD reminds council in the report. Every city department, including BSEED, relies on City Council to approve their budgets, and therefore these departments can be sensitive to the council’s priorities.

The LPD also leaves open the possibility that addressing these kinds of landlords might require more resources. It encouraged City Council to develop a “nuanced understanding of the resources and authorities the administration may need to deal with a rogue landlord, and include such strategies in future budget proceedings.”

Lesson three: The rental registration ordinance should work

BSEED has stumbled when trying to enforce the rental registration ordinance, and the rule is, for now, an empty threat.

The research group Detroit Future City estimated in 2022 that the city had 137,346 occupied rental units. As of this month, BSEED’s record shows just about 6% of those units — or 8,918 — have a certificate of compliance.

“The City has made a major, years-long push to increase compliance with rental property requirements that raised the number of compliant properties,” said Bell, adding that “the City’s current rental housing ordinance creates a complex, multi-step, time-intensive, and expensive process, ultimately resulting in low compliance and low effectiveness.”

Even if the rental registration ordinance worked better, the LPD admitted it wasn’t necessarily conceived of as a rule that could address “the kind of situation represented by Munoz as an alleged rogue landlord with multiple violations and poor responsiveness to tenant complaints.” The division said after more research, City Council might want to consider amending it.

Lesson four: Right to counsel might do more

City Council passed the Detroit Right to Counsel Ordinance to help low-income residents facing eviction by guaranteeing access to lawyers for them. Some of these tenants are facing eviction because they hold back their rent in hopes of forcing their landlord to make repairs. At least one person living in a property owned by Muñoz in 2022 was in this situation when interviewed by the Detroit Free Press.

The LPD report says City Council can always amend the ordinance to help tenants dealing with “rogue landlords with dozens or hundreds of violations” if these tenants can’t fully litigate these issues in an eviction hearing.