Code Enforcement has opened an investigation into a property owned by the city’s largest and most notorious developer after real estate websites showed the number of units in a rent controlled building mysteriously increased.
Documents confirm Neil Shekhter, the owner of NMS Properties, is the owner of the 1238 and 1242 Tenth Street apartment complex. The complex has been the subject of a multitude of complaints and audits in multiple City departments since renovations began in early 2016.
Amid the sound of jackhammers from an ever-present construction crew, more than a dozen tenants took buyout offers to leave the 20-unit property over the last two years, according to city records. The property manager has paid four remaining tenants to live elsewhere during the massive remodel. Some tenants have been out of their homes since September 2016.
NMS Properties does not manage or own the building. Instead, the manager is My Suite, LLC, a company formed earlier this year by Shekhter’s son, Adam. It is estimated Shekhter’s family controls more than 2,000 apartments on the West Side.
On Monday, the first of the four long-term tenants, Rick Strom, was told he could move back home. He will soon have neighbors. Just how many is now the subject of the investigation.
Between reconfigured walls and sleek modern furnishings, a leasing agent is showing apartments at the newly-branded “My Suite at Swell” apartments. Historical records show the property had 14 one-bedroom apartments and six two-bedroom apartments. But the website for the complex, swellapartments.com, also lists “junior suite” units, which do not contain a kitchen, according to floor plans.
“If a unit without a kitchen is being listed, that would not be a legally permissible unit,” said Constance Farrell, Public Information Officer for the city. “The code enforcement case is open and active.”
A spokesman for NMS Properties and My Suite told the Daily Press there are still only 20 units in the building, even though website move.com listed floor plans for 34 available apartments, some of which are as small as 206 square feet.
“We have no control over move.com or any other website,” Eric Rose said. “Some sites put information out without even asking us.”
Rose told the Daily Press to ask the city for building plans and refused to give a tour to the Daily Press. A leasing agent on the property said tours were by appointment only and there was no availability this week.
Plans for the building changed significantly during construction, according to an August 2017 Rent Control Board Report that awarded the four long-term tenants a total of $100,000 in combined rent decreases after finding “the owner’s failure to adequately test for asbestos and to consistently use safe work practices put the tenants at risk of significant health conditions.”
“Documents from City officials establish that the owner has not complied with required procedures or cooperated with the City and other governing agencies,” the report said, citing conduct that led to “unprecedented action by the city.”
At the time of the report, Interim Building Official Jack Leonard said building plans added a bathroom to each unit and a wall would be added to separate the bedroom into “two little compartment areas.”
Just months before the tenants were awarded their reduction, the city completed a four-month multi-departmental review of NMS Properties and found NMS and its affiliates were in full compliance with all contracts, agreements and affordable housing requirements set by the City. Councilmembers Kevin McKeown and Sue Himmelrich asked for the audit after a judge found Shekhter engaged in “coordinated, intentional, widespread destruction of evidence” in a separate legal dispute with a private hedge fund. An appeals court recently affirmed the judge’s finding.
A My Suite leasing document obtained by the Daily Press Monday offered an addendum to the rental agreement for “rental by the suite.” In the document, a resident would have exclusive use of an area as well as “shared use space” that could include hallways, common area doors, a mailbox, washer and dryer, kitchen and bathroom.
“Shared Use Space that will be shared with the occupants (“Suitemates”) of the other Suites(s) in the Residence. Resident’s Suitemates will have exclusive use of their own Suites in the unit. Owner complies with all fair housing laws in the leasing of Suites,” the document said.
The Rent Control Board is not currently investigating the apartment complex, but its executive director said the addendum sounded problematic.
“It would be a problem for an owner to lease a unit to a tenant and then tell them they have restricted access to the unit,” Tracy Condon said. She said the building’s management is not allowed to break up rent-controlled units into multiple apartments, however, they can add bathrooms and bedrooms to a unit. “It is concerning, what’s happened, but we do not approve the plans. The plans are submitted to the Planning Department.”
My Suite’s leasing packet also includes a “corporate application for rental form” and apartments are available fully furnished. Pictures advertising the apartments on Trulia.com show models rolling in with suitcases and hanging suits in a closet. Condon said there is nothing illegal about leasing a rent-controlled apartment to a corporation. Tenants are also allowed to sublease their units, as long as it is not prohibited in their lease and the rent does not exceed rent control caps.
“Once a sub-tenant moves in, they have all the same protections as a rent-controlled tenant,” Condon said.
The NMS Properties website includes a blog post citing Shekhter as a proponent of micro-units as a solution to the region’s housing shortage.
“While micro-units are not for everyone they are the perfect solution for demanding jobs where the tenant simply needs a place to sleep, shower and store their belongings,” the blog post said.