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HUD probes sale of Lowry Grove mobile-home park

The U.S Department of Housing and Urban Development is launching an investigation into whether a part of the Fair Housing Act was violated in the sale of the Lowry Grove mobile home park in St. Anthony.

In an Oct. 7 letter from the Chicago regional office of HUD, the agency requested that the new owners “refrain from taking further action to effect the removal of residents from Lowry Grove” during the investigation, per its standard operation procedure.

Housing advocates, developers and attorneys in the state are watching how the fight plays out after the June 13 sale of the park by the former owner, Phil Johnson, to The Village, an entity related to Wayzata-based Continental Property Group.

The Village said in a statement Tuesday that the investigation doesn’t affect its plans or timeline for redeveloping the property.

Lowry Grove residents and Minneapolis-based nonprofit developer Aeon said in a Sept. 8 complaint filed with HUD that the sale disproportionately affects people of color, a group protected by the Fair Housing Act.

The Lowry Grove Resident Association claims 27 percent of the residents have Hispanic surnames. Hispanic or Latino residents make up 6.9 percent of the population in Hennepin County, in which the park is located, according to 2015 data from the U.S. Census Bureau.

Aeon and the residents claim the sale violates a little-used state statute that allows mobile home residents or a nonprofit designee to match a purchase offer within 45 days to keep the park open. Aeon, the designee and an affordable housing developer, submitted a matching $6 million offer June 10, one day before the deadline.

Even so, the park was sold to The Village. Johnson and The Village have maintained that Aeon’s offer didn’t meet all the state requirements.

In August, Minnesota Attorney General Lori Swanson also weighed in on the case, accusing The Village and Johnson of taking actions to “undermine, circumvent and violate” the state law.

But last month, Hennepin County District Court Judge Joseph Klein ruled that even if the sale had violated the law, the same state law protects the sale once it is complete.

“It is evident that the statute was enacted only after balancing competing priorities: giving manufactured homeowners a tool to protect their homes while not overly interfering with [a] park owner’s ability to sell their property,” Klein wrote.

Residents and Aeon are now leaning on a section of the Fair Housing Act that makes it illegal to refuse to sell or rent a property on the basis of several factors, including race, after a person or group makes “a bona fide offer.”

If the federal agency finds the sale was illegal, Jack Cann, an attorney representing the residents from the St. Paul-based Housing Justice Center, said he hopes HUD “can implement remedies that go way beyond what the Hennepin County District Court has limited the residents to.”

But The Village ownership is undeterred. It’s currently working out the details of compensation to relocate 38 Lowry Grove residents, according to a company representative.

“We will continue to move forward with the development as planned from the very beginning,” Traci Tomas, vice president of The Village, said in a statement Tuesday.

The Village wants to redevelop the 15-acre site at 2501 Lowry Ave. NE into about 840 mixed-income units, up from the approximately 90 homes on the site today. The site would include about 90 affordable units alongside market-rate housing, senior apartments and “micro” units, according to planning documents submitted to the city in August. Those documents also show that 37 townhomes on the site would be for sale.

The St. Anthony City Council on Tuesday evening was scheduled to revisit a public hearing on the park’s closure after agreeing last month to continue the hearing indefinitely because of the then-pending lawsuit.

That decision meant that residents would not yet have access to a state mobile home relocation fund. It also could extend the nine-month timeline for the park closure if the hearing isn’t concluded by early next year. The park is scheduled to close mid-March.

St. Anthony Mayor Jerry Faust and City Attorney Phil Steger were not immediately available for comment ahead of the hearing Tuesday.

Asamblea de Derechos Civiles, a group backing the effort to keep the park open, said in a press release that residents on Tuesday plan to turn out “in force, demanding the city hold off on the process until the HUD investigation is complete.”

A HUD representative was not immediately available for comment Tuesday about the letter. But the agency warned of potential action in the letter.

“We may also refer the matter to the Attorney General with a recommendation that a temporary restraining order be sought,” according to the letter.

It is unclear whether the referral would be to the U.S. attorney general or Minnesota AG. Representatives from the two offices didn’t respond to requests for comments.

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