From Lease to TIF

What do we do with a bad landlord? What measures can local governments take to assure residents receive safe, dignified housing? Those questions have been asked lately in Omaha, as news media focus on property owner and businessman David Paladino, who some have pegged as a “slumlord” – someone more interested in profits than the wellbeing of his tenants. Yet, the search for answers by the public and office holders is bogged down by delay.

Past renters of Paladino and his company stepped forward to provide witness and testimony concerning unfair and pernicious treatment.

Christina LeCompte described conditions in a property at 22nd and Jones to WOWT Channel 6, "One minute the water won't work and the next minute it will.” She spoke of hazardous neglect in the apartment unit,"I took the baseboard off, it was full of mold, put the blanket under that and left for maybe 45 minutes, came back, and the blanket was soaked." An inspection report listed code violations from deteriorating kitchen and bathroom sink cabinets to unlicensed outlet installation.

(Exposé by WOWT Woman Withstands Code Violations in Apartment)

Ella Gamblin, right, and her 8 children.

Ella Gamblin, right, and her 8 children.

Ella Gamblin, a mother of 8 who recently moved to Omaha, currently rents from Paladino. She was motivated to speak out with support of Omaha Tenants United (OTU), a community group dedicated to protecting renters rights. “I had a parking sticker on my vehicle. He towed it. I had to pay extra money. The money that I have saved for my kids’ Christmas was taken away when my vehicle was taken. I work. I don’t sit on my butt and get assistance. I work full-time to take care of my kids. I don’t ask for no handouts. I don’t ask for no favor. I truly, truly work hard every day. That man took my kids’ Christmas money,” she said. Gamblin explained the extent of misdeeds against her also included receiving charges for a broken security door that she says her kids did not break.

AGENDA ITEM #19

The prevalent sense among community groups is that certain landlords are disconnected with fair treatment and customer service, and that something has to change, that requests be met. An organizing effort by OTU brought Gamblin and other concerned renters and activists to Omaha City Council.

Graph from the City of Omaha Planning Department. Tax Increment Financing is an important revitalization tool used by the City of Omaha. TIF is used to help finance the redevelopment costs of certain projects within a community redevelopment area (CRA), typically older areas within the city.

Graph from the City of Omaha Planning Department. Tax Increment Financing is an important revitalization tool used by the City of Omaha. TIF is used to help finance the redevelopment costs of certain projects within a community redevelopment area (CRA), typically older areas within the city.

On the agenda Tuesday, January 8th, was a Tax Increment Financing request application for a construction project submitted by David Paladino. For the activists, the argument was concise. No TIF for bad landlords, that is, until past hardships have been addressed.

Paladino’s involvement in the redevelopment project is through a partnership separate from his other companies and real estate business. The council considered a resolution for Ainsworth and Beverly Apartments Tax Increment Financing (TIF) Redevelopment Project Plan, a site located at 2230 and 2236 Jones Street. The request was recommended for approval by the TIF committee.

(For more details on how TIF works visit CITY OF OMAHA PLANNING.)

PUBLIC HEARING

Public testimony before council was orderly on the TIF item. The proponents of the project focused on legality and purpose, while the opponents adamantly contended that Paladino’s history and behavior towards his tenants be considered in the council’s decision to approve.

Appearing on behalf of the city was Don Seten from Planning Department. “The development team intends to preserve this historic property through a complete renovation, resulting in a total of 33 one bedroom market-rate apartment units. These will be 450 to 550 square feet in size, and are intended to rent for about $625 to $675 per month. Historic preservation tax credits will be used to assist project financing.” Don Seten asked for council approval.

Paladino spoke in favor as the developer/contractor, the property owner and manager, doing the financial accounting and as analyst, fully invested in the project, “My name is David J. Paladino. My address is 2702 Douglas Street and I’m here to answer any questions you might have.”

The opposition, on the other hand, consisted of fifteen individuals and their comments lasted for 54 minutes.

Mark Vondrasek took the lead and outlined points of outrage. “My work with my organization Omaha Tenants United has brought me into extreme contact with Paladino in the last six months. It must be said clearly and plainly that Mr. Paladino is a profiteer. He makes excessive profit on the services that he provides to his tenants, and being a profiteer is the textbook definition of what we would call a slumlord.” Vondrasek helped coordinate the opposition prior to the meeting, and was later given the last word by council before a motion was made on the matter.

Former tenant, Sabir Rashad, presented himself as a key witness.“I am happy to be where I am and having not to deal with what I call a predatorial [sic] landlord, meaning that [Paladino] has taken advantage of those who are less fortunate,” he opened.

Rashad recounted a broken railing in the stairwell leading to his apartment and how it was not fixed despite his requests, “I ended up falling down that. I ended up going to the hospital, not once, not twice, not three times. Four times...I feel because of my complaining about his irresponsibility and not being accountable was the reason I received a letter stating ‘you must move’. Mind you, I never been late on my rent.” Rashad also recalled not having a stove when he moved into Paladino’s rental unit, which took 4 months to replace and install.

A litany of injury was retold. Opponents said that Paladino does not clean apartments before he rents to new tenants, that he charges fees on false damage claims to withhold rental deposits, and that many of his units had significant cockroach, bed bug, mouse and rat infestations.

Ella Gamblin’s testimony resonated, “I’m still trying to recover from what these people did to me. I’m still in their house. I’m still looking for a place to go. I like Omaha. My kids like Omaha. We just don’t like our home.

Paladino was given rebuttal time. “I can tell you, I’ll talk to every person behind me, individually, about what their concern is. Some of them I’ve talk to before,” he said. He then went on to defend why his request should receive approval.

David J. Paladino

David J. Paladino

“We think we should be granted the TIF application because the property meets the need. And we think we are the best one to develop the property. We own the rest of the properties in the neighborhood. It’s a long vacant building. Because of the parking situation, none of the other developers have been able to make sense of it. Because I own a lot of the other parking lots in the neighborhood, it makes more sense for me to do that than anybody else. It also is a good use of funds because that’s what TIF is. We’re using the public’s funds to encourage developers to make sense of projects that previously don’t make sense,” said Paladino.

He also mentioned the building in question will have elevators to increase accessibility. “That is not required in the TIF application, but it gives us a lot of flexibility who to rent to,” he said. “I am very sorry that these people feel this way about me. It’s very, obviously hard to listen to and I’m sure you’ll have questions.”

TWO DIFFERENT ISSUES

Council procedure allowed for a vote on Paladino’s TIF application. Six council members spoke. The seventh, Vinny Palermo representing most of South Omaha, did not comment on the agenda item.

“I normally allow council members to go first. In this particular instance, I have a few things I need to say,”Council President Ben Gray began, and he made clear he was not supportive of the TIF application as it stood. Nor was he  impressed with Paladino’s capacities as a property manager and owner. “There is going to be a discussion about a landlord registry on a future agenda. And it’s not going to be very long from now. I can promise you that.”

Gray continued, “I don’t disagree with those who said there ought to be some strings on this money, if we’re going to approve this. So for me, and I’m just talking for me right now. If we had to vote today, my vote would be no.”

Councilman Chris Jerram showed concern and sympathy with opponents who felt mistreated by Paladino or his businesses. He did give consideration for a positive outcome. “There are developers who have had some amazing turnarounds in their own histories in terms of code enforcement problems and issues, particularly in district 3, some of whom are now winners of landlord awards by neighborhoods.”

Omaha City Council.  From left, back : Rich Pahls, Chris Jerram, Vinny Palermo, Ben Gray.  From front:  Pete Festersen, Amie Melton, Brinker Harding.

Omaha City Council. From left, back: Rich Pahls, Chris Jerram, Vinny Palermo, Ben Gray. From front: Pete Festersen, Amie Melton, Brinker Harding.

Council member Aimee Melton, of northwest Omaha, assured the injured tenants that folks withstanding code violations or dealing with improper landlord conduct, that they can report it. Anyone can, but it needs to be a matter of record so that the city officials can act on it and that people reporting need to provide name and address. It was mentioned however, that the reporter does not need to live at the residence in question.

For his part, Councilman Rich Pahls, representing the Millard area and southwest Omaha, encouraged key players to work together. Pahls summoned David Paladino, Hannah Wyble of Restoring Dignity, and Scott Lane of the Planning Department, and pressed them to work together. As the three stood at the center of the chamber, Pahls said, “To me this could be the tipping point of how we are going to try to change some of what we think are bad actors out there. We’re going to have all three of you work together. That’s my intent. I know TIF is over here.” Pahls, a former state legislator, looked for common ground. “If I’m not played by any of the three of you up there, this could be the beginning of something that flips us around.”

With further discussion, the council members began to coalesce around a layover on the matter to look at the different aspects of the issue presented by the public.

City attorney Paul Kratz advised that council members should accept the arrangements as presented, per Nebraska state statute and said additional considerations when granting TIF requests would require changes to Nebraska’s Community Development Law.

“And that’s the TIF committee,” assured Councilman Pete Festersen, “but I don’t disagree with testimony that when something comes to city council there can be broader consideration about what those things are and how we deem it appropriate.” Festersen is the chair of the council’s planning committee, which is looking at a possible landlord registry. He gave the remaining discussion time to Mark Vondrasek.

Vondrasek implored the council, “What will happen if you vote no today on this TIF application? What’s going to happen? Is the sky going to fall if you vote no today? Break the law.” Vondrasek repeated the suggestion: break the law.

Festersen moved to layover to January 29. Gray seconded. Motion carried 6-1. Brinker Harding voted no.

The public filed out of legislative chambers immediately.

As policy-making goes in the metro-area, this could be the last time the public may speak to the issues, on the record.

SIDE NOTE: IT ENDS WITH DELAY

What is the course to a solution? A possibility may reside in waiting it out. City council alluded that Paladino’s approval was incumbent upon legislative action and discussion that includes Legislative Bill 85 introduced by state senator Justin Wayne who represents northeast Douglas County.

LB85 directs that the cities of Lincoln and Omaha adopt rental housing inspection programs to enforce relevant provisions of local building or construction codes for all residential rental property within the corporate limits of the respective cities.

Omaha City Council members intend to keep issues different by maintaining decision-making on TIF, thus granting Paladino the application request, but on the other hand, do monitor a possible state inspections program, and an eye on TIF changes.

Whatever the possibilities, even those with the city lobbyist, senator Wayne may hold the posturing of representatives representing working people. Consider: Omaha city council is a nonpartisan body, but it is occupied by four Democrats, a majority. The Nebraska state legislature is a nonpartisan body, enacting laws that also affect Omahans, still 61% of state senators identify as Republican. That dynamic and many other considerations are at play.

Much like how Paladino demurred Tuesday after agenda item #19 was laid over to January 29, seated stickled in a bench on Farnam level inside the Civic Center, further action remains in delay.


This coverage was written by Luis E. Jimenez. He is the civic contributor in our NOISE team and regularly attends Omaha City Council meetings and follows Nebraska politics.