On Detroit's Rogue Landlords
On Detroit's Rogue Landlords
The ordinance map is not the housing territory
There is a rental housing story unfolding between a large Detroit landlord, Detroit’s City Council, the Buildings, Safety and Engineering Department (BSEED), and the City Law Department (LPD). To me, the story lays bare the disconnect between policies meant to regulate the Detroit rental housing market and the reality of that market.
At its center is a landlord, Gastón Muñoz (and his management company Munoz Realty), whose tenants have long reported hazardous living conditions in some of his properties (Outlier Media has a good summary of the situation thus far).
A recent report from LPD outlined approaches available to council for dealing with “rogue landlords,” a term used by LPD to describe “the kinds of numerous and inexcusable tenant complaints that have been brought to Council’s attention regarding Munoz Real Estate and its many assumed name LLCs.”
What's notable about using the term "rogue landlord" to describe Munoz Realty” is that — at least on paper — the company hardly seems rogue at all. In fact, its compliance rates with the City’s Rental Ordinance are far above average. I want to be very clear that I am not trying to absolve Munoz Realty of anything here, nor ignoring issues raised by tenants, but rather highlighting ways in which Detroit’s rental regulations clearly fail to capture the reality of the city’s rental market.
If compliance with the City’s rental ordinance is meant to distinguish safe and decent rental housing vs. bad, reliable landlords vs. bad, then what does it say about the City’s rental ordinance for a landlord with the amount of issues that Munoz Realty is alleged to have to be as compliant with the City’s ordinance as it is?
I’ll lay out some details of this situation, walking through key tenets of the Rental Ordinance and looking at how Munoz Realty’s portfolio of homes compares to the rest of the rental market.
Certificates of Compliance
The highest bar to complying with Detroit’s rental ordinance is obtaining a Certificate of Compliance (CoC). A CoC requires:
Registering your property as a rental with the City
A 3rd party inspection for the home’s condition
Lead remediation
A subsequent lead safety inspection.
No delinquent taxes (or, I believe, proof of a payment plan for any outstanding tax debt)
No unpaid blight tickets
Per the City of Detroit’s Open Data Portal (data as of September 2023) there were about 9,000 rental units with a CoC out of a total of about 130,000 rental units citywide (per 2022 ACS) — an anemic 7% compliance rate.
So, when a Bridge Detroit story yesterday included these numbers about the Munoz Realty saga, it caught my eye:
Muñoz's lawyer, Gary Segatti, in a text message, said Muñoz has 535 houses with certificates of compliance… BSEED reported that Muñoz has 321 certificates of compliance.
That would be, like, 4% - 6% of CoCs citywide — all with one landlord. That’s a lot!
Since no one seemed able to get their CoC numbers straight, I figured I’d check myself. Using 2023 tax roll data from the City of Detroit and OpenCorporates to disentangle Munoz’s LLCs, I found 543 properties across Detroit tied to one of 382 (!) Munoz-affiliated LLCs1.
I mapped those homes to Detroit’s CoC data:
50% of Munoz’s rental homes have a CoC (269 of 543 houses) — that’s 7x better than the citywide rate. Where BSEED got their numbers from, who knows — the CoC data on the city’s website is from September 2023. Perhaps 60+ Munoz properties have gotten CoC’s since then. Seems high, but I can’t say for sure.
As for Munoz’s attorney’s totals, I have a bit of a better idea where that figure may have come from…
Rental Registration
Prior to getting a Certificate of Compliance, you have to register your rental property with the City of Detroit. This is a comparatively easy step primarily consisting of paperwork that I believe can all be completed online at this point. Despite that, rates for registering rental units are still awfully low. Per the Open Data Portal 40,000 of Detroit’s 130,000 rental units are registered as rentals — 31%.
While I see no evidence that Munoz Realty has near total coverage for Certificates of Compliance, their properties do appear to be almost universally registered as rentals:
510 of Munoz’s 543 homes are registered as rental properties — a 94% rate. 3x better than the citywide rate. When Munoz’s attorney told Bridge that 535 of his homes had CoC’s, I’m guessing he meant that they were registered as rentals.
Delinquent Property Taxes
As mentioned, one of the requirements for obtaining a CoC for a property is having no property tax debt. Here, Munoz Realty’s portfolio is again better than par for the course. Out of 543 homes, only 21 had property tax debt in excess of $300 as of the end of 20232 (4% of the total portfolio).
Looking at rental housing citywide, 32,000 of 130,000 rental units owed delinquent property taxes in excess of $300 at the end of 2023 — meaning 1 in 4 rental units in the city carry property tax debt.
Blight Tickets
I have the least confidence in saying anything useful about rates of blight ticketing for Munoz Realty versus the rest of the city’s rental stock. BSEED’s data on the Open Data Portal runs back to 2005 — if you want to meaningfully attribute a blight ticket to Munoz Realty’s ownership you have to know when they acquired the property. There are owner names in the dataset, but I’m not sure where they come from or if they are reliable. A lot of the discussion around Munoz Realty revolves around blight tickets and some of the figures I’ve seen project a lot more confidence than I have in publicly available BSEED data.
The most I will say about blight tickets is that, across Munoz Realty’s 543 homes, there are 342 properties that received at least one blight ticket since 2017 (63%). How many of those came under Munoz Realty ownership? I don’t know.
Citywide, about 45% of rental properties have received at least one blight ticket in the same period. So, there is at least some indication that Munoz Realty’s rate of blight violations could be higher than city average, but I can’t say for certain without more research and data.
The Map is Not the Territory
So let’s recap:
Certificate of Compliance:
Munoz Realty: 50% Compliant
Rest of Rental Market: 7% Compliant
Rental Registration:
Munoz Realty: 94% Registered
Rest of Rental Market: 31% Registered
Property Tax Delinquency:
Munoz Realty: 4% Delinquent
Rest of Rental Market: 25% Delinquent
The narrative unfolding around Muñoz Realty and Detroit's rental market is more than a story of compliance — it's a glaring indication that the existing regulatory framework is misaligned with the practical realities of rental housing in Detroit. Simply put, more enforcement under the current system isn't a solution if compliance itself isn’t an effective filter for the kinds of issues alleged in this case.
That, to me, is the real story here: That of a regulatory framework that is ill-equipped and ill-informed to deal with the reality of rental housing in the city.
About 70 more of Munoz’s properties had debt under $300, but it’s difficult to discern tax debt from solid waste fees below that figure so I typically exclude lower debt balances from these analyses.