The Detroit City Council is weighing a legal settlement that will require a long-scrutinized realty group to bring hundreds of poorly maintained rental properties across the city up to code.
The city’s proposed agreement with Munoz Realty and its owner, Gaston Munoz, was the subject of a robust discussion during Tuesday’s formal session. The landlord has been criticized for years by tenants who demanded accountability.
The city filed a lawsuit in December against Munoz and various companies that he owns over property conditions. The initial complaint cited 10 of Munoz’s properties, which the city’s Buildings, Safety Engineering and Environmental Department (BSEED) determined were the “most egregious.”
Gaston Munoz is the CEO and a broker at Munoz Realty, a southwest Detroit-based real estate firm established in 2011. He is also the registered agent of “Detroit International Holding LLC,” which has the same address as Munoz Realty, according to state business records.
The city agreed to work with Munoz to resolve outstanding issues, but only if the city could include all 299 properties he owns. The issues included outstanding back taxes and water bills, noncompliance with the city’s rental ordinance, and unsuitable living conditions.
Under the proposed settlement, the company must complete the abatement by Nov. 30, 2028.
Other conditions of the agreement with Munoz include:
- Abating 10 properties per month, with BSEED conducting reinspection to verify compliance.
- The city will reduce blight tickets by 50% for each of the properties found to be in compliance by BSEED. The city did not agree to reduce water bills, reinspection and permit fees, or back taxes.
- The defendants are required to work with BSEED, the Detroit Water and Sewerage Department, and Wayne County to determine how much is owed in outstanding fees and taxes.
- The city will designate a BSEED project manager and supervisor to meet monthly with Munoz and its attorneys.
- The Housing and Revitalization Department will provide the defendants with names and contact information for “viable” tenants at the end of each 30-day review period.
The mayor’s administration and Munoz’s attorney weren’t able to provide an exact number of the properties that are currently occupied.
Munoz, in the past, has said the alleged problems with his properties were based on hearsay and that his realty firm has helped to rehab thousands of abandoned houses in Detroit.
Under Detroit’s rental ordinance, landlords must keep their properties safe by registering them, passing inspections, getting a lead clearance and paying any outstanding fees or blight violation tickets. These steps lead to a certificate of compliance.
Council President James Tate voiced concerns about the agreement and that it did not specify whether occupied properties had to be abated before work could proceed on unoccupied homes.
“I said I would never go into another (settlement) deal without understanding how many people and families are being affected,” said Tate, drawing lessons from a Stellantis land deal he previously voted in favor of.
“It’s not just the land, it’s not just the neighborhood, it’s the families in those homes,” he said Tuesday.
District 5 Council Member Renata Miller said it’s “too sweet of a deal for a slumlord like this.”
City attorney Jason Harrison, during a July 1 Internal Operations subcommittee meeting, told council members that the law department negotiated the proposed agreement with Munoz and his lawyer over two to three weeks.
Harrison noted that the provision to reduce blight tickets for the properties that achieve compliance is a benefit for the city because “we want abatement, we want compliance, we want a better situation for our neighborhoods where many of these residential properties sit.”
He also stressed that other outstanding balances owed to various city departments must be paid.
“We are not giving him a break on those balances,” said Harrison, noting that DWSD, Treasury and BSEED are compiling balances owed for the more than 290 properties. “These balances are being complied and Mr. Munoz is not excused from dealing with these three departments and the balances associated with these properties.”
Harrison noted that Munoz “as a sign of good faith,” has done some abatement work over the past six months before the city sued him.
Detroit City Councilman Scott Benson urged the law department to create a dashboard and provide quarterly reporting on the abatement process for the properties.
“This is a big deal, I believe, to show that we can actually do this,” Benson said during the July 1 committee meeting. “I also want to see how we’re doing it, where we’re successful, where we’re not successful and how we may need to modify for the future.”
Harrison said the structure of the deal isn’t new and pointed to other agreements that have included lawsuits involving a large portfolio of blighted properties. The city last year also sued Real Token, or RealT, a blockchain real estate firm that owns rentals with hundreds of violations.
Council Member Angela Whitfield-Calloway made a motion during the committee session to have the municipal division of the law department look into whether any of the Munoz property transfers were not done legally.
Miller pushed back during Tuesday’s meeting on the requirement to abate 10 properties a month, which she felt didn’t do nearly enough, noting that tenants don’t have the luxury of time.
Harrison said notices have been recorded in property records for about 120 of Munoz’s properties to signal that they are the subject of litigation, which prevents the properties from being sold without resolving outstanding issues with the city including permit and reinspection fees, certificates of compliance and poor living conditions.
The law department said it expects more will be filed over the next two weeks for the remaining 170 properties.
If Munoz fails to comply with the court’s order, the law department could ask Wayne County Circuit Court Judge Helal Farhat for a default judgment against Munoz. Harrison said that a judgment could include an order to show cause as to why Munoz shouldn’t be held in contempt for failing to abate properties, declaring the properties he failed to abate as a public nuisance, or other equitable remedies.
The council agreed to postpone its vote until next week, pending information about the number of occupied homes currently in Munoz’s inventory.
