"What is this doing to our neighborhood?" asked Jordan neighborhood resident and real estate agent Deb Wagner. "We are certainly distressed by all these blighted properties. Our own property values are going down. Now we’re fearful that [home] prices are just going to plummet again. Very little is selling, with the exception of the foreclosure properties."

The worst part, she added, is that "Investors once again are swooping into the North Side and picking up houses. Judging from past experience, the next step will be that they will fill our neighborhood up with bad renters."

Wagner said that in Jordan, most of the houses now in foreclosure were rental properties owned by absentee landlords. Many of their tenants had caused problems for other residents.

Last Friday, the Minneapolis City Council voted to revoke 45 rental licenses on vacant and boarded properties held by T.J. Waconia, Inc., a company that the Federal Bureau of Investigation is investigating for mortgage fraud. All but one of the houses is in North Minneapolis, and most are north of Lowry Avenue.

City staff’s "Findings of Fact" for 10 of the 45 properties, owned by a couple, paints a typical scenario of what was happening. The owners turned their properties over to Jon Helgason of Chisago City and Tom Balko of Rogers, co-owners of a company called T.J. Waconia, a Roseville-based real estate business. Helgason and Balko obtained rental licenses from the city and appointed property manager Ronnie Franklin.

(Helgason and Balko’s home phone numbers in Chisago city and Rogers are unlisted; there is no phone listing for T.J. Waconia in Roseville.)

Several more people were brought in and listed either as owners or "persons with interest in the property." Some of the couple’s properties are in the 3200 to 3800 blocks of Aldrich, Emerson, Humboldt, Knox, Vincent and Queen avenues N.

State Senator Linda Higgins, a North Side resident who worked in Minneapolis’ Problem Properties unit, said that Roberta Englund, executive director for Folwell Neighborhood Association, "had alerted us to the fact that some entity was buying all these properties. "We started tracking them, monitoring inspections orders, taxes, water bills. They were almost always paying the property taxes, but often not paying the water bills. They owe the city many thousands of dollars in unpaid fees. The properties were not being maintained. Many ended up vacant."

Most of them are single family homes located between Dowling (to the north) and Lowry (to the south) avenues, she added, in the McKinley, Folwell, and Victory neighborhoods.

The fast and numerous property sales had an adverse effect on the North Side’s housing prices, Higgins added. "They were controlling the prices of housing here. Houses worth $110,000 to $120,000, which were affordable in the market, would sell for $150,000 to $160,000. After you do that for three or four properties, all in a contained area, when you set the price for the next bunch, they sell for $200,000. All of a sudden you’ve got a $110,000 single family house selling for $200,000."

Higgins said T.J. Waconia "took a lot of owner-occupied properties and turned them into rentals. That was one of the things that compelled the city of Minneapolis to raise the conversion fee for turning an owner-occupied property into a rental."

(Minneapolis City Council members also voted, at the Feb. 29 meeting, to increase the annual registration fee for a vacant and boarded building from $2,000 to $6,000. Council Member Gary Schiff said there are 800 boarded properties in Minneapolis, and 90 percent of them have required "at least one police call, grass cutting, rubbish removal, re-boardingEnglund, of the Folwell Neighborhood Association, said she and her staff have been tracking T.J. Waconia transactions for about 20 months. "In the beginning, our concern was that they were turning into rental properties. Gradually we realized that these people were buying properties on a grid [specific areas], and creating their own comps [comparable sale prices that help lenders and appraisers determine a similar house’s value]."

Some of the properties were becoming problems, she added, "and meanwhile we were realizing that there was a continuous upward march toward owning land and buildings."

Englund contacted Fourth Ward City Council Member Barbara Johnson, who "got very serious about it. She was the anchor in the storm who motivated us to continue. When the list reached almost 200 properties, we delivered it to her. She delivered it to the FBI."

Now neighbors are watching the properties fall into foreclosure and become vacant. "We have a great deal of empathy for the people who have lived in these homes," Englund said. "They [Waconia] have caused irreparable harm, and it is going to take a long time to recover."

Paul McCabe, of the FBI, confirmed that there is a federal investigation of T.J. Waconia. As it is an on-going investigation, he added, "we just don’t make any comment."

According to local news reports, T.J. Waconia purchased hundreds of properties in Minnesota between 2003 and 2005, in an area that stretched from southern Anoka County to eastern Dakota County. Lenders foreclosed on approximately 150 of their north Minneapolis properties in a six-month period in 2007 and 2008.

Information on all of the property addresses and city actions is available on the city’s web site, www.ci.minneapolis.mn.us, under the city council’s Feb. 29 agenda and the Public Safety and Regulatory Services Committee’s Feb. 20 agenda.