A large Minnesota housing developer
whose massive rent hikes on low income
seniors prompted outrage is now accused
of a scheme to overcharge seniors.
Housing advocates say they're illegally
charging those residents for parking
while also getting tax credits.
Lauren Lee Mancheck investigates
allegations of double dipping that
could add up to millions of tax dollars.
It's outrageous.
These senior citizens never
wanted to be activists.
We need help. Ridiculous.
But this summer on a hot day.
Where they were it's really
scary holding signs outside the
Plymouth headquarters of Dominion
Properties protesting a 12 1/2%
rent hike, the Max allowed under
the low Income housing law
that might be homeless.
They don't care. We're just old.
And they say that's not
the only way. Dominium, whose business
relies on federal low income housing
tax credits, is soaking seniors
80 bucks to park your car down the garage. It
may not sound like a lot of money,
but for someone on a fixed income like
Don Cordes, who pays $75 for this spot
at River North Apartments, and the
extra $75 means a lot, you know it's
enough to take care of some utilities.
As a necessity during a
Minnesota winter, I've had
three hip replacements and
I cannot afford to fall
now. She believes those
charges could be illegal.
Tenants at her building have joined
residents at 24 other Dominion
properties in a lawsuit which claims
the company uses accounting tricks
to double dip on parking costs.
Margaret Kaplan is one of the
attorneys bringing the suit.
They are charging residents for
something that the government.
Is already paying for
and the lawsuit alleges it's cheating tenants
and taxpayers out of millions of dollars.
So this really does add up.
Dominium is huge, the 4th largest low
income housing developer in the country.
In exchange for Federal Housing tax credits,
they agreed to cap rents and renters
have to meet strict income limits.
But there are a lot of other rules too,
like dominium can't charge renters extra
for something they got tax credits for.
They could charge. For parking.
Or they could include the cost
of building parking in the bases.
And what they appear to be doing is both.
When dominium applies for tax credits,
it excludes parking,
so in theory they could charge extra.
But Kaplan thinks the company
is cooking the books.
Cost shifting, the lawsuit calls it.
Here's why building underground
parking is expensive.
Industry experts say up to $30,000 per spot,
and records show similar developments.
Estimated costs like these trail
point Ridge in Eden Prairie,
24,700 per stall, peregrine apartments
in north Minneapolis 11,000 per stall,
and Prospect Park 13,800 per stall.
But Dominium's estimates are way lower,
for instance at river North just
under 2200 per spot, the suit alleges.
What they're really doing is
shifting the true parking expenses,
hiding them.
In general,
construction costs a kind
of financial shell game,
allowing them to get tax credit
reimbursement and still charge residents.
Would that be double dipping?
Yes, it's a different way of
gaming the system, so to speak.
Marco Segura is an expert in tax
credit law, and to be clear,
he doesn't know enough from just reading
the lawsuit to say for certain whether
the double dipping charges are true.
But if they are, how big a deal
is it if a developer of that size?
Is doing something like this?
Significant in the aggregate,
you're talking about millions of dollars
that were taken from low income tenants
in order to pad the pockets of of
this particular developer. Allegedly,
we asked Dominium for an interview.
They refused. In court filings,
Dominium vehemently denies the
allegations and they argue the tenants
don't have a case because they do
not have a right to free parking.
A judge denied their request
to dismiss the lawsuit.
We also wondered what about the state
agency that would have approved
these tax credit applications?
How would something like this
have slipped through the cracks?
Those allegations are true.
Um, you know, number one,
I think the state agency
perhaps dropped the ball.
Minnesota Housing Finance Agency
wouldn't do an interview either.
For seniors like Don,
Relief could be a long way off court.
Cases can take years, so they'll
keep paying as long as they can.
And it's kind of stressful with
the money situation, you know,
just how long can I stay
here and what will I do next?
But they won't give up.
I call us senior warriors.
The fights bigger than them.
They aren't just taking
on dominium, but a system
that's left them vulnerable for care
11 Investigates, I'm Lauren Lemanczyk.
Well, for years, the federal
Government Accountability Office
has been warning about LAX oversight
and possible fraud in the low income
Tax credit program nationwide.
You can find out more about that
in our story on care11.com.