Did City Gift $128,000 To Slumlord?

A series of well-intentioned city programs may have ended up gifting a duplex to a landlord that is creating issues for neighbors and drawing the ire of area Alderman Robert Bauman.

The city, through its Housing Infrastructure Preservation Fund, invested $128,000 in repairing the exterior of the former “Packers House” at 2807 W. State St. before selling the house to Hosea Bates in May 2018.

The preservation fund, used on approximately 50 homes in the last 10 years, is designed to improve neighborhoods by rehabilitating city-owned properties acquired through property tax foreclosure and selling them to owner-occupants who become stabilizing influences in the neighborhood. The program is often used where market-based home prices wouldn’t justify the investment requirement.

Bates, who paid $7,500 for the home, is required to live in one of the two units for a period of five years per terms of the sale agreement.

But according to multiple city inspections, and the report of neighbors, Bates does not live there.

“This is borderline criminal. This is borderline theft. $128,000 invested, we sell it for $7,500 and it’s back to a rental,” said Bauman.

Doing some quick math before the Joint Committee on Redevelopment of Abandoned and Foreclosed Homes, Bauman said at $750 per month per unit Bates would make his money back in a couple of months. “People are laughing at us,” said Bauman.

“Unfortunately people sign our agreements, they talk to us directly and they say they’re going to comply with what our legal documents are requiring and they’re not,” said Department of City Development real estate analyst Yves LaPierre. The DCD representative said he had personally met with Bates on the sale and received assurances that he would move in. “He passed all the background checks.”

But Bauman contends it should have been obvious Bates never was going to move in.

“The deed for this property shows the buyer’s address as 6971 N. Beech Tree Drive, Glendale. A 20-second Google Street View search turned up a very nice sprawling suburban home on a corner lot at this address,” said Bauman via email to other city officials. “This raises the question of why someone would be relocating from 6971 N. Beech Tree Drive to 2807 W. State to satisfy the owner-occupant requirement. Does no one ask from where someone is moving who is purportedly purchasing one of our properties that require owner occupancy?” The Glendale property is assessed at $170,500.

Assistant City Attorney Jeremy McKenzie said that if Bates was found not to live in the property he would be subject to a fine of the purchase price of the house or $25,000, whichever is greater.

“This guy will gladly pay us $25,000,” said Bauman.

“He probably would,” said McKenzie, who noted that interest would also apply.

“And to the neighbors, it’s right back to where we started 10 years ago,” concluded Bauman.

One of those neighbors is Democratic State Representative Evan Goyke, who brought the issue to the attention of city officials. Goyke noted in an email to Bauman that in discussions with neighbors there were concerns with drug activity, a potential unlicensed rooming house and Bates’ violation of the terms of the sale.

A Department of Neighborhood Services (DNS) interior inspection, for which Bates was present, did not find that the property was used as a rooming house. City ordinance permits three unrelated persons per unit, meaning the house could have six unrelated occupants.

“Do you guys see a problem here? People scamming us like this. Why have any programs? Let’s tear everything down,” said Bauman of the city’s homes acquired through property tax foreclosure. The alderman, a historic preservation advocate, has long been the council’s biggest advocate for the preservation fund and other neighborhood stabilization projects.

“We’re not happy with this,” responded LaPierre. “I guess they’re intent on breaking the law.”

“If I was City Attorney, my intent would be to make an example out of these people, spare no expense,” said Bauman who lives only a couple blocks from the house.

The city is considering legal remedies against Bates. But as Bauman’s back-of-the-envelope math shows, a $25,000 fine will be quickly offset by the $18,000 annually Bauman estimates he can earn in rental income.

As part of the preservation fund, Bates is expected to invest an additional $90,000, based on a 2012 estimate, in the house to make it code compliant. If the house isn’t made fully code compliant by November 2019, the city could pursue reversing the sale. A recent inspection did result in a series of work orders being issued to Bates.

Bates, 50, did not respond to a request for comment via text message or voicemail.

Bates, who goes by the name Hosea LaMont on Facebook, is listed as a hairstylist, cosmetology instructor at MATC and pastor at Bethesda Church of God in Christ (2810 W. Highland Blvd.) on his Facebook page.

The house, located in the city’s Concordia neighborhood, is currently assessed for $73,700. It was known as the “Packers House” because it was painted in Green Bay Packers-themed green and yellow colors for years. City records indicate it was built in 1895.

Support for Housing Preservation Program

Despite frustrations with the outcome at the Packers House, Goyke and Bauman both still support the preservation fund.

“You can’t tear down neighborhoods to save them,” said Goyke in an interview with Urban Milwaukee. “The program can work, it just needs some accountability.”

Goyke cited a successful effort just a block away where the city supported the rehab of a Victorian “mini Mansion.” That house, profiled in the New York Times, got an extensive review by Urban Milwaukee’s Michael Horne.

Goyke, who said he would be happy to introduce legislation at the state level to empower municipalities to deal with problem buyers, said things have improved since his July email to Bauman.

“It seems to have at least shaken up the status quo,” said Goyke of the resulting debate at City Hall. “I think the city has clamped down a bit.” But he noted he still hasn’t seen any evidence that Bates lives in the house.

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