The Housing FixListen
Raney Aronson: I’m Raney Aronson, executive producer of the PBS series Frontline. And you’re listening to The Frontline Dispatch. This time, The Housing Fix, a collaboration with our colleagues at NPR. This episode was reported by Laura Sullivan, an NPR investigative correspondent who's worked with us at Frontline over the years. Hi Laura.
Laura Sullivan: Hi Raney. So I'm really excited to be here and talk about this story, but first I really want to play you this piece of tape. This is from a community meeting in West Dallas. This is a room full of tenants and their landlord.
Khraish Khraish: The mayor wanted me to give him access to my houses!
Unidentified Tenants: Why didn't you come and talk to us and tell us what was going on? Why didn't you fix all our stuff like we asked you to so now, look where we at!
Khraish Khraish: 50,000 units in Dallas...
Raney Aronson: That's a lot of angry people. Tell us who they are and why they're so upset.
Laura Sullivan: So this is a landlord that you're going to hear a lot from in this story, and it's the people who live in his houses. And really this is something that's happening in cities all across the country. You've got rents soaring, you've got bad conditions, and fewer and fewer places where people can even afford to live. Um, people are really being pushed to the breaking point.
Raney Aronson: So you came across the story last year, right? When you were working on a film with us?
Laura Sullivan: That's right. It was while we were working on the film Poverty, Politics and Profit with producer Rick Young. And we spent months investigating the billions that government spends housing the poor, I mean programs like Section 8 vouchers, but here's the thing about these programs... They're only reaching a quarter of the people who need help. I mean, the vast majority of people get no government help at all. And that number is rising.
Raney Aronson: So if it's only reaching a quarter of the people, what happens to the rest of them?
Laura Sullivan: The rest of the people end up in what’s called the unassisted market. We're talking about millions of people... They wind up in the poorest neighborhoods in communities all across the country.
Raney Aronson: So I understand you spent a lot of time in Dallas, specifically West Dallas. Tell me what you found there.
Laura Sullivan: Honestly, we found a complicated story in a place with a long and deep history. It's going to be a lot harder than you think figuring out who the good guys are and who the bad guys are. NPR Producer Meg Anderson and I spent a lot of time there over the past few months. It's your typical place of cheap rent and often terrible conditions. But then one day, wealth starts to return. And the choices get difficult. And that's where this story begins.
Laura Sullivan: Let's get one thing out of the way right off the bat. There are two ways people describe the man called Khraish Khraish in West Dallas. He's either a landlord saving the poor from homelessness… Or, he's one of the city's worst slumlords.
Laura Sullivan: Hey Khraish.
Khraish Khraish: So sorry I'm late.
Laura Sullivan: No problem.
Khraish Khraish: Have my staff been telling you what a great boss I am?
Laura Sullivan: Amazing, she said only the best things.
Khraish Khraish: Okay good. Or else they're all fired. Just kidding. Come on in.
Laura Sullivan: We first met Khraish, whose father made his first name the same as his last name, almost a year ago. He's owns so much of West Dallas, there are blocks where he owns almost every home on it. And by home, what we mean are 1940s one-story wooden houses. They look like they might fall over if you leaned on them. They're all just a few blocks from this office, which is in shabby shape too. It’s dark, drab, straight out of the 1960s. Khraish doesn't seem to notice. He wears nice suits, but he drives a 10-year-old Toyota and lives in a pleasant, middle class Dallas neighborhood.
Khraish Khraish: Dad and I entered the scene in Christmas 2003.
Laura Sullivan: How old were you?
Khraish Khraish: At that time I was 27 years old.
Laura Sullivan: You were young.
Khraish Khraish: I was young.
Laura Sullivan: Khraish and his dad bought around 400 West Dallas homes, 100 commercial properties and this office from another father son duo who had owned them for decades. They've sold a few over the years.
Khraish Khraish: And when we purchased them, they had over a million dollars of liens and back taxes on the property.
Laura Sullivan: They had a million dollars --
Khraish Khraish: Of liens and back taxes
Laura Sullivan: What were the liens for? Just unpaid taxes or are we talking about code citations?
Khraish Khraish: Code citations! And, you know, mowing liens. Securing liens. They were on the verge of collapse. I mean, I'm not exaggerating when I say I estimate that the properties were neglected for 30 years.
Laura Sullivan: Khraish and his dad, Hannah Khraish, got to work.
Khraish Khraish: My father and I went into every single home, cleaned up drugs and needles and human waste, and let me tell you, you know I'd walk in there with basically a hazmat suit on and my dad would walk there, with just, you know, bare hands and everything and, you know, we'd do the clean-up.
Laura Sullivan: You cleaned up these houses?
Khraish Khraish: You bet. At the very beginning, my dad and I would go in there and clean up ourselves, we’d help. I worked not only in the office at the beginning but out in the field.
Laura Sullivan: And for the next decade and a half, Khraish and his dad managed the properties. They rented most of the houses for four or five hundred dollars a month. Khraish recently took over the business — his dad's health took a turn. Khraish says he and his dad have both felt a kinship with their renters, about half of whom are Latino immigrants. Because theirs is also an immigrant story. A successful one. His dad grew up poor in Lebanon but eventually moved the family to the United States on an investor's visa. Khraish was just four at the time.
Khraish Khraish: I mean I remember I think maybe three or four Lebanese families in Dallas. And so the community was minuscule. And you know, you just didn't meet anybody who was from Lebanon. At home all we heard was Arabic from my mom and my dad. My mom only cooks Lebanese food. So, it was strange because I would come home to one culture and go to school in another culture.
Laura Sullivan: Was it in a mostly white school?
Khraish Khraish: It was. It was. And you know, I ended up spending a lot of time with my Dad growing up. He would take me to the family farm. We would work on equipment together. And I learned a lot. I learned a tremendous amount from my dad. Primarily, a work ethic. He didn't give me advice about girls. It was work hard, study hard, and your word is everything you have.
Laura Sullivan: Which made what happened next all the more confusing.
Khraish Khraish: I remember one evening sitting with my wife and you know, I’d just come home from work and it was very intense and we were watching the 6 o'clock news and the broadcaster literally opened up the newscast saying, like this, he goes, "They call him the most unpopular man in the city of Dallas."
WFAA News 8: Well, he could be the most unpopular man in the city tonight, the…
Khraish Khraish: ...I looked at my wife and I said, “They're talking about me.”
WFAA News 8: What is he telling tenants who he’s trying to evict by the end of the month…
Khraish Khraish: …And then we watched the newscast and it was just this horrible story about me and the business. And I was, I just couldn't believe what I was hearing. I mean, my life became surreal. I've been proud of what I've done in providing housing to the most vulnerable and the lowest income households in Dallas, and I thought honorably, and now I was getting this smear campaign about what a horrible person I was.
Laura Sullivan: Khraish's turn in the spotlight of this West Dallas neighborhood is just the latest development in a place that's always been full of larger than life characters — some good, some bad, some maybe both. Buried in the archives of city hall are descriptions of a place full of gamblers, bar hustlers, cowboys, and rail workers. The drought of the 1920s brought this area to its knees, but gave rise to its most famous characters of all, former residents Bonnie and Clyde
Archival tape: Thousands attend the homecoming of Clyde Barrow, in this Dallas funeral home...
Laura Sullivan: Clyde Barrow and his brother are buried in a cemetery not far from here...
Archival tape: …for a fleeting glimpse of the boy who had wrought so much death and destruction.
Laura Sullivan: West Dallas never really recovered. And in the classic story of so many areas next to city centers, white residents fled and the place became home to a lead smelter yard, a chemical company, an EPA superfund site, and for the most recent half century, abject poverty. Until now. Because as much as this story is about housing, it is also a story about a bridge. The Margaret Hunt Hill Bridge. It opened five years ago in 2012, and for the first time it connected West Dallas directly into the center of the city. You can be in the heart of Dallas in under 10 minutes. And now for the first time in decades, West Dallas has started looking like a very desirable place to live after all....
Laura Sullivan: Look at all this construction.
Meg Anderson: Look at they've already got like the stakes in for water lines.
Laura Sullivan: And they've already razed all the ground.
Laura Sullivan: NPR producer Meg Anderson and I took a drive around West Dallas. Change had already arrived. Huge apartment complexes were coming up across from a row of hip new restaurants.
Laura Sullivan: This is two blocks from her house.
Laura Sullivan: Many of Khraish's older tenants have lived in this neighborhood their entire lives. And Meg and I were looking for one woman in particular, one of Khraish's oldest and most dependable tenants, 81-year-old Pearlie Mae Brown.
Laura Sullivan: Oh is that it?
Laura Sullivan: Just behind the construction site of a new apartment building, the street quickly turns to chain link fences, broken cars, and box frame houses.
Meg Anderson: Here, found it.
Laura Sullivan: This is her house?
Meg Anderson: Yeah.
Laura Sullivan: Oh my god. Okay.
Laura Sullivan: Brown's house is in bad shape.
Laura Sullivan: The screen door is broken and one of the windows has another screen door nailed sideways over it.
Meg Anderson: Hi Pearlie Mae, I'm Meg.
Pearlie Mae Brown: Hi. Okay.
Laura Sullivan: So nice to meet you.
Laura Sullivan: Inside it’s crowded and sweltering in the Texas sun. A small air conditioner is on full blast.
Laura Sullivan: From a room off to the side, Brown's 46-year-old granddaughter is calling out to her.
Pearlie Mae Brown: She's just taken her medicine.
Laura Sullivan: Has she been here the whole time with you?
Pearlie Mae Brown: I raised her from three-years-old.
Pearlie Mae Brown: Well, it'll be okay. Just lay back.
Laura Sullivan: She's been with you since she was three?
Pearlie Mae Brown: Mmhmm. She got hit by a car when she was three.
Laura Sullivan: And you've taken care of her all these years?
Pearlie Mae Brown: Mmhmm.
Laura Sullivan: Without this house, Brown would not be able to care for her granddaughter. If the yellowed walls once had paint, it's hard to know what color they might have been. In the kitchen, Brown peels back a piece of cardboard on the floor hiding a large hole down to the dirt below the house.
Laura Sullivan: What kind of a floor is this?
Pearlie Mae Brown: It's supposed to be a wooden floor.
Laura Sullivan: Many of the outlets don't work. Brown has plugged her refrigerator and electric stove into a string of extension cords leading to an outlet three rooms away. Cockroaches run across the floor.
Laura Sullivan: Still Pearlie Mae Brown's house is constantly bustling.
Pearlie Mae Brown: There it go again...
Laura Sullivan: … neighbors stop by. And so does her daughter.
Laura Sullivan: Hello!
Pearline Brown: Hi, how ya doing?
Laura Sullivan: Pearline Brown wastes no time when I ask her about Khraish.
Pearline Brown: Ugh. It shouldn't come out of anybody's mouth, what I think about him.
Laura Sullivan: Really?
Pearline Brown: Yeah. He didn't come fix nothing. He just allowed everything to be the same and he told the tenants that they would have to take care of stuff their selves. He's just a slumlord. And these people out here have made him the, you know, rich man that he is. But he's not caring anything about the people. He says that he does but he don't.
Laura Sullivan: Pearline Brown is right about at least one thing. Khraish and his father's homes have brought in a lot of money. Consider Pearlie Mae's situation. She gets 770 dollars a month from her deceased husband’s social security and disability. She pays 430 dollars a month to Khraish in rent. With three or four hundred houses, basic math says Khraish should be collecting as much as 180 thousand dollars a month or a couple million a year. Khraish and his attorney say it's been a good business, but their biggest profits will come when they sell the properties. And don’t think Khraish is the only person to see this kind of investment potential. Across the country Mom and Pop landlords are on the decline, studies show. And owners with dozens or hundreds of properties are on the rise. These days nearly a fifth of all rental properties nationwide are owned by out-of-state investors. In Indianapolis, the city's public housing authority recently noted in a report that out-of-state and foreign companies were scooping up quote "entire blocks" of low-income properties to use as investments. It's the same in Dallas. City records show half a dozen landlords like Khraish own the vast majority of the city's low-income rental properties. And the less a landlord or an investor has to spend on repairs, the more money he or she stands to make. In Pearlie Mae's house, a neighbor pops in to see what's going on.
Benny Kilson: Hello.
Laura Sullivan: Hi there, I'm Laura Sullivan.
Bennie Kilson: Okay I'm Bennie Kilson.
Laura Sullivan: The news, nice to meet you.
Laura Sullivan: Bennie Kilson is 71. She says her house is in bad shape too. She does all the repairs.
Bennie Kilson: I paint up in there, I put tiles down in there, I put linoleum down in there, you know, I do everything. I paint the outside of the house.
Bennie Kilson: Mmhmm and he told me a while back that he wasn't going to come out there and do nothing for the house no more.
Laura Sullivan: He said that?
Bennie Kilson: He told me — yeah, five years ago. And everything then been did to the house I've been done.
Laura Sullivan: Like what? What have you had to do?
Bennie Kilson: Like I bought a hot water heater, I bought a bath tub, I bought a commode.
Laura Sullivan: And right now, leaning against Pearlie Mae's broken screen door, Bennie Kilson is about to put her finger on the root of the entire problem.
Bennie Kilson: Okay. My husband died back there in 2008. My husband didn't have no whole lot of social security. What I get now is 600 and some dollars. 632 dollars. Now, where in the world can I move with that? You can't.
Laura Sullivan: And she's right. Not just here in West Dallas, but in cities all across the country… There's nowhere to live. Median rent has increased 70 percent over the past two decades, while housing conditions haven't improved. And the research shows the majority of poor families are spending more than half of their already small incomes just to cover rent. Now, here's where you're probably looking for the hero of this story, someone who's going to step in and make sure people are living in decent conditions while still being able to afford their rent. We can try, but this probably isn't going to end the way you're hoping. Let us introduce you to Melissa Miles.
Melissa Miles: I'm an executive assistant city attorney here for Dallas and I'm the chief of the code compliance litigation section for the city attorney's office.
Laura Sullivan: For almost two years now, Miles and the city of Dallas have gone after Khraish and other landlords to improve the conditions of their homes. Now the city has always written some tickets, citing a home for not being up to code. Small things, like the grass is too high. Or big things, like this house is a danger to the health and safety of its occupants. This time though, Dallas meant business. The city sent teams of inspectors to hundreds of homes.
Melissa Miles: Houses falling off their foundations, I mean literally. Walls that don't connect anymore. Rooms where you look through in the seams of the walls, you could see light from the outside. Water coming in through ceilings, water everywhere, um, and these houses, a lot of the conditions just don't provide shelter like you and, like most people would like to think that everybody living in this country has access to.
Laura Sullivan: Khraish remembers it well.
Khraish Khraish: The city of Dallas one Saturday barges into 72 of my houses. And they said they said we've been in 72 of them, here is your book of the violations, and we want to go see the rest of your properties.
Laura Sullivan: How bad was the book?
Khraish Khraish: Oh it was devastating. I mean, it was just bankruptcy. And they want me to bring them to a standard these houses cannot attain. These were built in a time without code. It's like, how do you make a 1930s engine meet modern day emission standards? You cannot.
Laura Sullivan: But from the city's standpoint, and Melissa Miles’, that was Khraish's problem.
Melissa Miles: I don't have a ton of sympathy for someone who got away with something, to their benefit, to the detriment of other people who weren't in a good negotiating position. I don't have a lot of sympathy for those folks who say, but I've gotten away with it all this time, why are you changing the rules on me now? To that, I would say we haven't changed any rules.
Laura Sullivan: But the bigger question looming over all of this is not why the city intervened, but why they intervened now. Why for the first time in maybe a century did the city of Dallas care so deeply about the living conditions of the people in West Dallas — enough to take Khraish and other landlords to court? And Khraish had a theory.
Khraish Khraish: The city of Dallas does not want low income households in the city.
Laura Sullivan: His theory goes like this: The city wants him to renovate his homes because if he renovates, he'll have to charge tenants more to recoup the costs. His tenants can't pay more so they'll go live somewhere else. And he may have a point. Dallas, like most American cities, cannot raise property taxes without going to the state legislature. So, to get more money for things like streets and police and parks, a city has to wait for property values to go up. Then the houses bring in more money. Best way to make values go up is by having nicer houses. Khraish says he believes that is what the city is after.
Khraish Khraish: Their affordable housing policy is not to have one.
Laura Sullivan: So we went to city hall to ask the mayor if that was true. Dallas Mayor Mike Rawlings said of course not.
Mayor Rawlings: We improve a street, values go up. We don’t, the values go down. I think you have to make those decisions based on principles, and that is the principles of making sure that people live in safe environments. Mm’kay? Safe and clean environments is not asking too much.
Laura Sullivan: It took the city decades to ask that much, but Rawlings says now they have, and the idea is for poor people, middle class people and wealthy people to all live together in the new West Dallas.
Mayor Rawlings: You cannot solve this problem that you're reporting on throughout the nation with one paint stroke and say this is the answer. But the main thing is to say we are going to have people live in good housing and we're going to keep pushing this thing so we’re going to find better and better answers.
Laura Sullivan: But the answer Khraish came up with was not what the city or his tenants were expecting. In the fall of last year, after months of battling the city over code violations, Khraish announced he had his own plan. He wasn't going to repair the houses or bring them up to code. Instead he was going to tear most of them down and evict the tenants.
WFAA News: The largest junk property landlord in the city is threatening to evict most of his tenants...
Laura Sullivan: Suddenly, Pearlie Mae Brown and her disabled granddaughter and Benny Kilson and hundreds of others — people who had lived in the neighborhood for decades — were facing homelessness. Everyone was angry. The tenants were angry, Khraish was angry, the city was angry You remember the tape of everyone screaming in the beginning? That was right about this time.
Khraish Khraish: When I shut down my rental business and 300 households were facing imminent displacement, you know what real panic was? It wasn't that they had to leave, it was that there was no place to go to! There was not 300 units in the city of Dallas, affordable housing units in the entire city of Dallas.
Laura Sullivan: Khraish's rents have always been some of the cheapest in the city.
Khraish Khraish: Mind you there are 5,000 apartment units being built directly across the street from my office. Not one of my tenants or the greater community of West Dallas could afford those units because they start at 1,200 dollars a month.
Laura Sullivan: The assistant city attorney Melissa Miles could only throw up her hands in frustration. She said the city's goal was to get the residents in better conditions, not make them homeless. But there was nothing she could do.
Melissa Miles: I understand there's blame to go around. There's blame for the city. I think there's blame right up the ladder of government and sort of everyone in between, from national policy to the owner of a particular property not caring enough, not being humane enough, not being willing to be a little less personally greedy to do something about it.
Laura Sullivan: We asked the mayor if at this point Khraish had the city over a barrel. He didn't seem to love the question.
Mayor Rawlings: He didn't have the city over the barrel -- he had those poor families over a barrel. And that broke my heart, and broke the city's heart.
Laura Sullivan: So what is a city to do? Enforce code, force landlords to pay for repairs and proper upkeep sothat people live in decent conditions, but know that rents could go up and the poor may have no place to live? Or let the properties go and face a reality that in 2017, in the wealthiest country in the world, some of its most vulnerable residents live in squalor. The research on this is pretty minimal. A recent paper out of Harvard University from housing expert Matthew Desmond finds there's no real consensus on whether enforcing code is a good thing or a bad thing for poor people. But what we couldn't figure out is why this problem hasn't been solved by now. It's been going on for 150 years.
Laura Sullivan: So Meg and I went to the place where many of our modern building codes began: New York City.
New York City Subway: This is Delancey Street, Essex Street.
Laura Sullivan: The lower east side, where once tens of thousands of immigrants crammed into giant fire traps with little air or light, because anything was better than sleeping on the street. Today, there's even a museum.
David Favaloro: So you've never been?
Laura Sullivan: Never, never. Brand new.
David Favaloro: Ok, great. Cool. Cool.
Laura Sullivan: That’s David Favaloro, he’s the director of curatorial affairs at the Tenement Museum. He opens the door into a dimly lit hall with a wooden staircase. Wallpaper is peeling in large chunks.
David Favaloro: We find upwards of about 20 to 22 layers of wallpaper on these walls, right so..
Laura Sullivan: 22 layers of wallpaper?
David Favaloro: Yeah. It's much less expensive to put up wallpaper rather than paint or fix the plaster and so on.
Laura Sullivan: The building was home to nearly 7,000 tenants from 1863 until the 1930s, when it was sealed off for half a century. It's like an accidental time capsule.
David Favaloro: We can go up into this room right here
Laura Sullivan: We squeeze past a tour group into the narrow hallway. It was these crowded, often impoverished conditions of New York's tenement buildings that brought about some of the country's very first laws mandating baseline living conditions. At the time, cholera and other diseases were rampant in the buildings.
David Favaloro: These interior windows here, which is between the parlor and the kitchen, they're not original to this building. They're cut here in 1895.
Laura Sullivan: Why?
David Favaloro: Largely to provide some measure of light and air into the interior rooms that didn't have it.
Laura Sullivan: The city kept raising the bar. In fact in 1935 the city ordered the owner to replace the central wooden staircase to comply with a new code. It was an expensive prospect.
Laura Sullivan: So what did he do?
David Favaloro: He instead evicted all of the residents of the building.
Laura Sullivan: You heard that right. Even here in the nation's museum honoring the history of building codes, the owner of this tenement house kicked everyone out in 1935 rather than make repairs. Except for the businesses on the first floor.
David Favaloro: Are you going to undertake this expensive repair to comply with the law, if you can't necessarily recoup the costs of doing so, right?
Laura Sullivan: Yeah, sounds familiar.
Laura Sullivan: Nearly a century later in West Dallas, Khraish made the same call, and no one seems any closer to solving this.
David Favaloro: What you're talking about is providing housing to people of lesser means and providing adequate housing at a price that folks of lesser means can afford. And so landlords and building owners cut corners in order to try to make money. I mean, some of that's greed and some of that I think is built into the economic equation there.
Meg Anderson: So it's a problem that just continues.
David Favaloro: Yeah, I mean, the only counterweight to that is government.
Laura Sullivan: But in cities all across the country government has not had a great track record intervening.
Archival TV News: They can't use their toilets. They cannot shower, they have no running water...
... New tonight, leaking toilets, hazardous black mold, broken heaters...
... residents live without power or even proper sewage...
... there are homes in desperate need of repair...
...15,000 building code violations...
... water has been shut off, the electricity is next, all because a landlord stopped paying...
...a huge slumlord bust...
…this involves two apartment buildings…"
Laura Sullivan: Intervening is difficult. Especially when there are few incentives for landlords to make conditions better. You can see that even with Khraish's houses. Longtime lawyer Michael Hindman joined the city's lawsuits against Khraish and other landlords and is also fighting his own suit over the leases Khraish and another landlord used that he says violated housing law. He says cities can't just show up one day and order repairs that cost more than the house. He says cities have to enforce code, day after day, decade after decade.
Michael Hindman: One of the things that Khraish relies upon heavily is, you know, his supposedly stellar record with not having any convictions on code violations. No one does. I mean that is a toothless animal.
Laura Sullivan: The code violations. You just called it a toothless animal.
Michael Hindman: Yeah.
Laura Sullivan: How do you figure?
Michael Hindman: Yeah. They're done in municipal court just like a traffic ticket. That's how it works.
Laura Sullivan: Hindman says without any real penalties, deteriorating conditions work out well for landlords. A house in bad condition is worth less money, and if it's worth less money, the landlord pays lower property taxes.
Michael Hindman: It doesn't take a genius to figure out that from the landlord’s point of view, it's to their benefit to be able to argue that the appraisals are too high and obviously the evidence of that would be, look at this dump — you say it's worth 15,000 dollars? Look, look at it — it's an uninhabitable home!
Laura Sullivan: And for cities, enforcing code costs money. It costs taxpayers’ money. Taxpayers who live in their own neighborhoods who might want their own streets paved, or upgraded, or better lighting installed, or a new park. After Khraish started evicting some of the residents, Meg and I took a walk around the battered houses and broken sidewalks of West Dallas with Michael Daniel, a longtime Dallas resident and a prominent housing civil rights lawyer.
Michael Daniel: You look at downtown. There's a lot of tax money that comes in from downtown. It wouldn't take a lot of it to make some differences. But you can't shift it.
Laura Sullivan: You can’t? You can’t take money from downtown.
Michael Daniel: ‘Cause it's already set for every place else. And if you start telling people your potholes are going to last a year longer because we're going to do code enforcement in West Dallas, the council members will say, I'll lose. I'll lose. I can't do that.
Laura Sullivan: As he said this, we stopped in front of one of dozens of vacant lots where Khraish has already demolished the house that was on it. I mentioned that city officials told us they were stunned Khraish had already torn some of the homes down.
Laura Sullivan: The city was very stunned when he started tearing the houses down.
Michael Daniel: They weren't stunned. G**damn the city! That's not being stunned. Those are crocodile tears at best. 'Cause the city will do it if the landlords don't.
Laura Sullivan: You're saying the city looks at this and is secretly happy.
Michael Daniel: Yeah, in fact, the landlord paid the money, the city didn't have to spend the money. I mean, it's the solution.
Laura Sullivan: It's the solution that goes to their end game?
Michael Daniel: Yes.
Laura Sullivan: Which is what?
Michael Daniel: You bring it all down and you bring it back as something that rises from the ashes.
Laura Sullivan: Except in those ashes, he says, only wealthy people get to live. And you don't even need code enforcement. And you might think that’s the end of the story. Landlords and cities will just have to come to some kind of balance on the conditions they’re willing to live with. Unless there was one last twist to what can happen to a city’s poorest residents. What if there was one more way for a landlord to collect payments every month, but not have to comply with code at all?
TV News Archive (Fox 4): Some West Dallas tenants on the brink of eviction are getting the chance at homeownership...
Laura Sullivan: Early last spring, Khraish stood outside one of his houses and made a new announcement. He said he was going to turn more than 130 of his tenants into homeowners. He’s promising the American dream, a pathway to the middle class.
TV News Archive (Fox 4): ...Now he's willing to sell...
Laura Sullivan: Now, no actual bank would give most of these tenants with bare bones incomes a loan for any significant amount of money. And it would be especially problematic because he's selling the homes for 65,000 dollars when their tax appraisals are about 10 or 20,000 dollars. But in Khraish's plan, Khraish is going to be the bank. He’s going to loan the tenants the money. Khraish is offering about a four and a half percent interest rate, which is respectable, and the payments will be about the same as rent. And one day, a decade or two from now, Khraish says, the tenants will be sitting on a windfall as the owners of a house in a revitalized neighborhood. Remember that new bridge and all the new restaurants and businesses? The neighborhood’s changing.
Khraish Khraish: We feel that the lower income households who are already here, uh, should be able to stay and should be able to benefit from the gentrification.
Laura Sullivan: Deals like this have many names and different structures. They’re sometimes called seller financed home sales, contract for sale, deed for sale, land contract, rent to own... What they are not is a federally backed mortgage, which provides legal protections for the buyer. These deals have been on the rise nationally since the housing crisis 10 years ago. Even some New York investment firms are getting into the market. And here's a funny thing. Last year, Meg and I met a man who had gotten into one of these deals. When we started reporting this story, we wanted to meet a lot of landlords, to see how they were running their businesses. So, one afternoon, we went south to interview a landlord named Dennis Topletz. Topletz is the Khraish of South Dallas. He, too, owns hundreds of homes that have brought in millions over the years. And that afternoon, Topletz introduced us to a man named John Grindle who he had just sold a house to. In fact, we were standing in front of it. It was an old grand dame of a house that had been shuttered and boarded up for decades. It had no plumbing, not even a garden spigot, no wiring or electricity. Tax records say the house is worth 15,000 dollars. But Topletz sold it to Grindle for about 75,000. As we waited to interview Topletz, we chatted with Grindle about the house and his plans to fix it up.
John Grindle: I'm really excited and really scared. The only room that's really decent is the sun room. The rest of them are in pretty bad shape. There's holes in the walls.
Laura Sullivan: Neither of us thought much about Grindle after that. Because we were there to talk to Topletz. A man whose family has been in the low-end rental business for more than a hundred years. His houses were in about the same shape as Khraish's and Dallas code compliance was after him too. We're going to come back to Grindle in a minute, but here's what Topletz had to say about the business. He was frank.
Dennis Topletz: I have empathy with almost everybody that lives in almost every one of my houses. And I really do feel bad for the people living there. But they can't afford to upgrade. And I can’t afford in the private sector to rent a house for two or three or four hundred dollars a month and fix it up like you want them to live. Take them home with you.
Laura Sullivan: Would you live in one of your houses?
Dennis Topletz: I would live in most of my houses. I wouldn't live in every single one of them.
Laura Sullivan: Is there any part of you that worries that you may have gotten rich off of the backs and suffering of poor people?
Dennis Topletz: Everybody does that. There isn't a business model out there that isn't there for making a profit. I've put more than my fair share of money in my pocket and I've put more than my share of money into fixing those houses to make them affordable housing. You know, there aren't very many people like Khraish and me that are going to rent those houses — as much as you don't like them — there aren't very many people who are going to rent them for 300 to 500 dollars a month.
Laura Sullivan: Could you have made a little less money and made their lives a little better?
Dennis Topletz: You can keep going over the question over and again and you could spend as much money as you want. It wouldn't be a little amount of money to put in heating and air conditioning and new windows and new doors and stuff into those houses. It would not be affordable housing.
Laura Sullivan: So you're the end of the road?
Dennis Topletz: I'm it. If you can't live in my house, you're on the street.
Laura Sullivan: As we were wrapping up, I looked around to see where John Grindle had gone. He seemed to have left.
Laura Sullivan: What happened to poor John? Has he been out in the cold this whole time, waitin’ on us?
Dennis Topletz: Yeah, had all he wanted. He's in for a surprise too.
Laura Sullivan: You think so?
Dennis Topletz: Come on, Laura.
Laura Sullivan: He's not going to make it work? Come on, I had such I high hopes for him, he’s so excited.
Dennis Topletz: I do, I do, and he is so excited. I want it to work for him. But I have to think to myself, self, you know, I don't know if I did this guy any favor.
Laura Sullivan: Can he really do the work?
Dennis Topletz: You know, I didn't want to ask a question I didn't want to know the answer to.
Laura Sullivan: Eight months later, Meg and I returned to that house to find Grindle and see how homeownership was treating him.
Laura Sullivan: Ahh!
John Grindle: Tough...
Laura Sullivan: How did you get up there?
John Grindle: I tell everybody, once you pet him once, you're his for life.
Laura Sullivan: Aw...
Laura Sullivan: We found him sitting on the porch with his Boxer, Toughie. Grindle remembered us right away.
John Grindle: I was trying to figure out how to get hold of ya’ll...
Laura Sullivan: It was clear from the moment we walked in. It wasn't going well.
John Grindle: Y'all, it's a mess.
Laura Sullivan: The lights are off to save money. The floor is littered with tools, food scraps, and water bottles. Everything is covered in a thin film of dust. Where the windows should be, there's plywood.
John Grindle: 12,000 dollars just for the windows for that one room.
Laura Sullivan: Where are you going to come up with 12,000 dollars for the windows?
John Grindle: I don't know.
Laura Sullivan: Do you have running water at this point?
John Grindle: No.
Laura Sullivan: So what are you doing for water?
John Grindle: The ice machine down the street sells it.
Laura Sullivan: Grindle says he gets 1,500 dollars a month on disability and pays Dennis Topletz 600 a month for the house. He has poured all his extra money into trying to fix up the place. But he says the water costs him a couple hundred a month and so does his electric bill.
John Grindle: I’ve wanted to give up a few times but something just kept me going. I mean, it's mine. You know, if I have to live in one room until the day I die, then, it's still mine.
Laura Sullivan: Do you know your contract well that you signed with him, do you feel like it was pretty fair?
John Grindle: I was like, whatever. I — honestly, I didn't even read it. Sign here, ok, sign sign sign sign. So, no.
Laura Sullivan: Do you worry, having not read the contract, that there might be something in it where he could come take it back from you?
John Grindle: I'm sure there is if I don't make my payments, but I mean, I would hope the law would protect me. I think I can trust Dennis.
Laura Sullivan: A few weeks after that visit, Dennis Topletz put an eviction notice on Grindle's gate. It said his quote "rent" was past due. It said Grindle had 3 days to leave. A couple days after that, we found Grindle on his porch.
John Grindle: It's been a nightmare. It's been a nightmare. So then I started getting notices from Topletz about my rent being late. I’m like, I don't have rent, I have a mortgage. It’s like, is it rent or is it payment? I mean, thought I bought the house. I wasn’t even late, is what killed me. I mean, it’s like he’s just waiting on me to make one little slip-up so he can yank the house away from me.
Laura Sullivan: That can happen in some of these sales. As a seller, you get to write the contract yourself and are not bound by the same federal laws that banks are. But as a buyer, that means you could lose the property for nonpayment or another breach, depending on how the contract is written. Sure, buyers like Grindle could always take a seller to court if they feel like they've been treated unfairly. But few of these buyers are in a position to hire an attorney, and those attorneys could end up costing more than the value of the house.
John Grindle: It's like, I don't want to move again. I love my home. I want to fix it up.
Laura Sullivan: How are you eating?
John Grindle [Crying]: Food pantry. I have to rely on food pantries. Which hurts. I mean…
Laura Sullivan: After a minute, he shook his head.
John Grindle: I'm not going to give up that easy. Damn it, this is my house. I worked for it. I deserve it. This is my home.
Laura Sullivan: Topletz's attorney says the house belongs to Grindle, and the contract is fair. But Grindle hasn't been making his payments. There's no way to know how things will turn out for Khraish's buyers. Khraish's contracts are pages longer than the one Grindle signed — and Khraish is a licensed mortgage broker — but several lawyers who have read over Khraish's point out terms that look bad for buyers. For instance, if the buyers miss one payment, Khraish can demand that they quote "immediately" pay off the rest of the loan, or lose the house. However the sales work out in the long run, little has changed for the tenants in the meantime. They still live in poor conditions… With one important exception. Those poor conditions are now their problem. In the city's eyes, the homes belong to them. And when there's a hole in the kitchen floor, or the electrical outlets don't work, it's now their problem to solve. They're the ones who could be fined. Pearlie Mae Brown signed one of Khraish’s contracts. That means she and her granddaughter will not be evicted. They get to stay. When we stopped by recently, two of her great grandchildren were running out the door after visiting.
Laura Sullivan: Is this your great granddaughter then?
Pearlie Mae Brown: Mmhmm.
Laura Sullivan: Must be.
Little Girl: [Giggles]
Pearlie Mae Brown: Say hey.
Little boy: Hi.
Laura Sullivan: Now, Khraish gave Brown and most of his older tenants a slightly different deal. Her deal is called a life estate. The way Khraish has it set up, Brown will make payments just as she always has. But when she dies, the property reverts back to Khraish and he becomes the owner again. In the meantime, the property value will likely go up and code can't touch him, because all the repairs are Brown's responsibility.
Laura Sullivan: Which leaves Brown right back where she started. She says she’s relieved she won’t be evicted, but her house looks about the same as when we first met her.
Pearlie Mae Brown: Well he said after ten years, it'll be paid for. And like if I pass away, well then the house will go back to him.
Laura Sullivan: And you're okay with that?
Pearlie Mae Brown: Yeah.
Laura Sullivan: Why, because you get to stay?
Pearlie Mae Brown: Yeah, because I didn't have no other choice.
Laura Sullivan: Would you have liked to have been able to pass this house down to your children?
Pearlie Mae Brown: Yeah I would.
Laura Sullivan: Why?
Pearlie Mae Brown: So the one that don't have a place, well, they would have this house.
Laura Sullivan: Khraish says it is a good deal for him, but it's also a good deal for Brown, because the payments are low and she has nowhere else to live. When we asked Mayor Mike Rawlings what he thought of all of this, he said he thought it was a happy ending. More than a hundred people will become homeowners and get to stay in West Dallas.
Mayor Mike Rawlings: It's not my job to lawyer the papers. Okay? And there are a lot of people that are trying to help these families to make sure they're, they’re doing the right things. Uh, I don't think that he's got any motivation to outright defraud individuals.
Laura Sullivan: As summer came to a close, Meg and I stopped by Khraish's office one last time. He had sale contracts lined up on a table. Fifteen more buyers were coming in the next morning to sign. It was hard to know how it would work out for these families. So Meg asked him.
Meg Anderson: What would you say to the criticism that you have too much power over each individual family and their house?
Khraish Khraish: This is still a business. This is still a for-profit business. Now, am I going to put a clause in there that says, ‘Oh, and you don't really have to pay me if you don't feel like it?’ I can't do that.
Laura Sullivan: But Khraish says he’s not going to abuse that power.
Khraish Khraish: I was never a slumlord. But I'm certainly not going to trade the slumlord moniker for the predatory lender moniker. I'm not going to do that. That's, that’s not, that’s not my goal. I'm trying to do the right thing. I believe I am doing the right thing. I believe the community trusts me that I'm doing the right thing.
Laura Sullivan: And that’s where we’ve landed. After 150 years of code compliance to raise the standard of living for millions of Americans living in poverty without any government help, the future of these residents at least comes down to trust — trust that this landlord will do what's in the best interest of his tenants.
Laura Sullivan: For the Frontline dispatch, I'm Laura Sullivan.