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Are your tax dollars being used to subsidise unsafe housing?

LANSING, Mich. (WLNS) – As the City of Lansing continues to grapple with a shortage of affordable, safe housing, tens of thousands of dollars from federal and state governments are pouring into properties owned and managed by landlords who are under scrutiny by the city government for evading or blatantly violating city housing codes.

The Lansing Housing Commission oversees more than 1,700 housing certificates, commonly referred to as Section 8. In addition, the agency manages more than 650 more under a contract with the Michigan State Housing Development Authority (MSHDA).

And although both voucher programs are funded from the same federal budget, they are not subject to the same rules and regulations, says Doug Fleming, executive director of the LHC.

Jason Harris, HQS inspector for the Lansing Housing Commission, inspects a basement Wednesday morning. (WLNS)

Under the Housing Voucher program, tenants are not allowed to spend more than 40% of their net gross income on rent and utilities. The remainder of the market rental costs is financed from federal funds.

For the vouchers issued by LHC, LHC inspector Jason Harris is allowed to check the City of Lansing’s property records and consider the property’s status as a registered, certified rental property. If the property is not registered or does not meet the standards of the city’s housing laws, Harris will not even inspect it. It will be rejected.

However, for the vouchers issued by the MSHDA, he cannot rely on the city’s rental laws and must rely on the results of an inspection conducted by the federal Department of Housing and Urban Development, known as Housing Quality Standards (HQS).

Jason Harris, HQS inspector for the Lansing Housing Commission, inspects a railing Wednesday morning. (WLNS)

“I also know some differences between HQS and MSHDA. I know that at some point we should come to an agreement on the city ordinance as well and all move forward on the same page. I’m not sure when that will be, but hopefully pretty soon,” Harris tells 6 News. “We all need to be on the same page for our citizens.”

Katie Bach is the communications director for MSHDA. In an email to 6 News, she says local housing authorities like LHC can enact their own rules and regulations — as long as they “meet or exceed” the Federal Housing Inspectorate’s requirements.

However, the agency cannot do this nationwide.

“MSHDA is a statewide PHA serving 83 counties and several municipalities within those counties and therefore does not have the ability to directly enforce a broad range of local building codes,” Bach wrote in an email to 6 News. “Instead, MSHDA notifies all participating landlords that they are expected to comply with locally applicable building codes in addition to the HUD HQS inspection requirements.”

As federal officials at HUD told 6 News, all local and federal requirements must be met to obtain occupancy permits.

“It is important to clarify that HUD-assisted properties must comply with both federal and local housing codes,” wrote HUD spokeswoman Ashlee Strong. “NSPIRE (National Standards for the Physical Inspection of Real Estate) inspection protocols do not replace local housing codes.”

But Fleming tells 6 News that the difference between HUD HQS standards and city ordinance compliance checks is significant.

In an interview a few weeks ago, Fleming used an example of an apartment building. While the building may be red-tagged — or deemed uninhabitable — if an apartment in that building passes an HQS inspection, LHC, on behalf of state housing authorities, must allow the person to rent there. The same is true if the building is pink-tagged — meaning it is not certified or registered as a rental property and still needs inspections and possibly repairs before it can legally be rented under Lansing’s housing laws.

In Lansing, when a property is red-tagged, anyone living there must move out immediately. When a property is pink-tagged, the person renting the property can stay, but if that person moves out, Lansing’s housing laws prohibit the landlord from renting the property until the pink tag is cleared with the city.

Fleming tells 6 News that there are currently “some participants” with MSHDA-issued vouchers at the properties managed by East Lansing-based landlord Christian Nwobu under the name Manfred Woelfel, LLC.

A 6 New investigation Last month, Nwobu found 25 properties in the city of Lansing, while Manfred Woelfel LLC owned and managed 17 other properties.

Manfred Woelfel LLC is a limited liability company registered as “not in good condition“ from the state of Michigan since February 2021.

This investigation revealed that at least 20 of the 42 properties under Nwobu’s control are red-tagged. In some cases, the status of the red-tagged property was not recorded in publicly available municipal land records.

The grass was often growing on the properties. 6 News crews discovered bags of rotting items on one property, tarps on the roof of another, and crime scene tape attached to a staircase on the side of the house. In some cases, the buildings were partially boarded up, although the doors behind the boards were not closed or were missing. On some properties, team members had grass up to their mid-thighs. On one property, a broken window was protected from the elements with a paper certificate and tape.

During the investigation, it was also discovered that the properties controlled by Nwobu owed hundreds of thousands of dollars in back taxes.

Tenants told 6 News they pay between $850 and $1,200 per month for these properties.

However, documents submitted by the Ingham County Treasurer show that Nwobu is behind on property taxes.

Ingham County Treasurer Alan Fox told 6 News that Nwobu would have to pay the county $306,092.44 beginning May 12, 2024, to fully pay off his tax debt to the city of Lansing.

There is currently no “tax reduction” planned for any of the properties currently supported by housing vouchers, says Fleming.

The door of a townhouse at Sycamore Townhomes and Apartments was apparently kicked in. (WLN)

Abatement means that LHC withholds its share of the rent payments because the landlord has not carried out the required remedial actions as determined by an HQS inspection of the property.

“Once a landlord is notified of a corrective action (failed HQS), they have 28 days to either self-certify that they have corrected the deficiencies or, if it is a major issue, we may require a re-inspection,” Fleming wrote in an email to 6 News on Wednesday. “If they do not provide the required information within the 28 days, the rent due on the first of the following month will be reduced (withheld) by LHC until they come back into compliance. For example, anyone notified today would have until July 10 to correct the deficiencies. If they do not, our August rent will be withheld. The tenant may withhold their share as well.”

And that is the case for some customers who live in the Sycamore Townhomes in southwest Lansing. The property has been non-compliant for years, and in Court with the city for almost a year. New Jersey property owners, Woodside Meadows, have Tens of thousands of dollars in court fines accumulated – and on 31 May the city applied for insolvency administration for the property.

The City of Lansing has filed a motion to appoint a receiver for Sycamore Townhomes in southwest Lansing. (WLNS)

The complaint notes that the company has failed to pay $33,500 in fines imposed on it late last month by Judge Anthony Flores of District 54-A Court, as well as $14,250 that was required to be deposited into an escrow account in April. In addition, Flores imposed another $15,000 in fines and fees on the company for failing to comply with previous orders to clean up the property. That’s $65,750 in court fines and fees that have not yet been paid, city officials claim.

In addition, the Lansing Board of Water and Light threatened to shut off water and electricity to the complex because the property’s bills were not paid. According to court documents, LBWL is owed more than $84,000.

The property owners succeeded last week in convincing an Eaton County District Court judge to transfer the case to federal court in Grand Rapids.

“We have participants in Woodside Meadows with LHC and MSHDA vouchers,” Fleming wrote in an email to 6 News on Wednesday. “MSHDA does not currently have active tax abatements on this property, but they are not allowing anyone new to move into the property. LHC has three people in tax abatement on this property that we are working with to move into new units. We are also not allowing anyone new to move into the property.”

UPDATE: This story has been updated to provide the correct words for the acronym HQS (Housing Quality Standards).

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