Everyone has to live somewhere
The sudden closure of Whitepine Property Management highlights larger issues for UI students

March 7, 2018

Alen Korjenic and three friends signed a lease with Whitepine Property Management in 2016 — despite their misgivings.

“They (my friends) just said it (Whitepine) wasn’t great,” he said. “I didn’t know it was going to be this bad.”

Upon move-in, the University of Idaho fourth-year student could tell the house hadn’t been cleaned recently.

“It wasn’t very clean when we moved in. It kind of looked like trash,” he said.

The heat didn’t work, except for in the main floor bathroom. The washer and dryer broke down constantly. The only appliances that worked regularly at 614 S. Washington St. were the stove, refrigerator and microwave.

These problems were just the beginning for Korjenic, a first-time renter. After months of poor customer service, his lessor disappeared.

Whitepine Property Management — one of the largest property management companies in Moscow — vacated its office and closed for business without notice during summer 2017. Tenants, many of whom were UI students, began calling the City of Moscow and the UI Dean of Students Office with concerns.

“Throughout the utility billing department, we also got notice that there were some accounts that were delinquent. They were all belonging to it (Whitepine),” said Jen Pfiffner, Moscow assistant city supervisor.

Security deposits for properties were not returned. Renters in existing leases with Whitepine did not know who managed their property. Those who had not yet moved in, but paid a deposit, did not know if they had a place to live.

Property owners — who paid Whitepine to manage the lease, payment and maintenance — had not received rent payments for several months. City-issued utility bills in excess of $200,000 were left unpaid.

‘Something just wasn’t fitting’

Korjenic received three or four eviction notices during his 12-month rental period with Whitepine.

The first two notices were an accident. Korjenic said the company failed to check the dropbox located near the front door of the office.

“We had our rent in on time,” he said. “It was common to use that as empty threat. It seemed odd.”

The roommates received eviction notices when they paid rent late, but nothing ever happened.

In their second month of the lease, Korjenic and his housemates started receiving alarmingly high water bills, which appeared to be the result of poor maintenance — or none at all.

“Like a few thousand dollars, so that was obviously weird,” he said. “They (Whitepine employees) were really nice and caring and sympathetic towards our situation and it just made it seem like something was going to happen. It felt like things were getting done.”

Then, they tried to schedule repairs. It took about two weeks before they heard their repairman knock on the door.

Another exorbitant water bill arrived.

“He (Whitepine’s repairman) clearly didn’t fix anything,” he said. “At that point we realized something just wasn’t fitting.”

The city utility department showed Korjenic’s roommates the property’s typical water bill, which was significantly lower than the bills they received.

Korjenic said a city employee told the roommates not to pay the bills until Whitepine found a solution. Time drug on, until one of the housemates’ family members, who are lawyers, recommended they stop paying rent.

“They said to stop paying rent until they (Whitepine) sat down and got a spreadsheet open and did some calculations and actually gave us the numbers of what we should be responsible for as far as water usage,” Korjenic said.

Those calculations never happened. Then, Whitepine closed.

“At this point I think I can gauge the situation a little better,” he said. “It was learning experience, I wouldn’t trade it for anything, even though we got hosed.”

Korjenic and his roommates lost their $1,525 deposit and never paid their water bills. They weren’t the only Whitepine tenants to lose their money.


Criminal issues

When tenants do not receive their security deposit back, they can file in civil court. As the number of tenants who lost money grew, it was clear there was something else happening.

“There’s a lot of information that shows it (the case) goes back multiple months. We certainly feel there’s criminal issues going on here,” said Darren Gilbertson, an Idaho State Police (ISP) detective.

Gilbertson said the company was managing well over 100 properties when it disappeared.

Originally, the Moscow Police Department (MPD)was handling the case. MPD found Whitepine owed the city over $200,000 in utility bills. They then handed the case over to ISP in July to avoid a conflict of interest.

While the investigation moves forward, only limited details have been made public.

In late October, documents from the business were located in a house near the former Whitepine office in Moscow. Five boxes labeled Whitepine and two garbage bags full of documents were found in a storage room of the house. MPD seized the documents and gave the materials to ISP.

A forensic accountant is working through records from financial institutions for evidence of a crime. After the investigation is over, ISP will work with the Latah County prosecutor’s office to determine what — if any — charges can be filed.

“Unfortunately with these cases, they do take a lot of time because of the sheer amount of data we have to go through,” Gilbertson said.

If prosecutors do not elect to file criminal charges, people can file civil suits against the owners of Whitepine.

This incident highlights a larger problem with college students transitioning from on-campus to off-campus housing. Despite knowing the negative reputation of some property management companies, many students are still forced to work with these companies.

“Because we’re in Moscow and it’s such a small community, housing is such a shortage and limitation for students. It exacerbated the crisis,” said Blaine Eckles, UI Dean of Students. “Food and shelter is always at the top of everyone’s (needs) and this throws that into sharp focus.”

Jessica Monroe, another UI student who rented from Whitepine, lost her security deposit amid the chaos. She rented with Whitepine despite the poor reputation because the company managed a house close to campus.

“Everyone has to live somewhere,” she said.

Like new

Whitepine is a new iteration of an old company, University City Property Management. According to Idaho state business records, University City was registered as an LLC in the state of Idaho in 2009. The owner, Michael Osterholtz, retired in January 2016 and sold the business to Braxton Kirwan. Kirwan retained the accounts and clients with a new company called Whitepine Property Management, registered as an LLC in January 2016. The company was periodically called White Pine on leases, despite being registered as Whitepine.

University City and Whitepine followed similar practices — hidden fees in leases, ignored maintenance requests and exorbitant charges for damage done by lack of maintenance.

University City Property Management had 70 reviews and a 1.4 star rating on Google. Only two reviews are five-star testimonials.

All 27 Google reviews for Whitepine rate the company with just one star. Similar to issues reported in University City’s Google reviews, Whitepine reviewers complained of delayed maintenance and hidden fees.

Reviewers described moving into their units and finding them still dirty from the last tenant. Some didn’t have hot water for the washing machine. Outlets didn’t work. One roof leaked. Raw sewage backed up for days before being fixed. Some reviewers were left outside a rental property, waiting for a showing, and no one from either company made the appointment.

Attorney Ron Landeck, who reviewed a Whitepine lease obtained by Blot, said the lease was riddled with vague language.

“I’ve never seen a lease that has this kind of detail that is so tenant unfriendly,” he said.

The most problematic aspect was Whitepine’s policies regarding security deposits, Landeck said. According to Idaho state law, security deposits must be held in a separate account. The deposits must not be touched until termination of the lease.

The lease Landeck analyzed was riddled with fees. According to the document, the fees could be paid by the tenant or, “at (landlord’s) option, such fee may be withheld from the Resident’s security deposit.”

Landeck said this statement could create trouble.

“I don’t know if it means they can take (money) out (of the deposit), or if they wait until the end of the term,” he said. “This to me, says the landlord can apply the security deposit to past due rent. They’ve created their own standard in violation of the unlawful detainer provision regarding security deposits, so they can just take that payment. It’s not there for that purpose.”

Landeck said there is no enforcement outlined in the statute, making holding parties accountable difficult. Deducting fees from a deposit during a lease would violate that statute, he said.

In an interview with The Argonaut in 2013, Osterholz said his job as a landlord is to hold tenants accountable.

“Our lease is not set up to be complicated … we set it up to cover everything,” he said.

According to a press release, Osterholz was recently hired as the business manager for the College of Engineering, Science and Math at the University of Wisconsin-Platteville. Public records indicate he is involved with another property management company in Platteville.

Multiple attempts to reach Osterholz and Kirwan were unsuccessful. Former employee Cassie Morigaki Picciotti declined to comment.


An issue of knowledge

Staff liaison for Moscow’s Fair and Affordable Housing Commission (FAHC), Ryan Cash said students are stuck in a cycle.

Blaine Eckles, courtesy of the University of Idaho

“It’s not necessarily that everyone’s being defrauded in the community, it’s essentially a matter of ignorance,” he said. “Because of the transient population we have coming from the university, we have people who aren’t aware, who are first-time renters, so (rental companies) have this endless pool to take advantage of.”

The FAHC has no way of addressing the issues that arose in the closure of Whitepine. The commission does attempt to combat the problem of knowledge through renters rights workshops, aimed at first-time renters and home buyers.

ASUI Sen. Hannah Spear is working with the FAHC to better market the workshops to students. Spear said workshops are being planned for March and April to target students looking for summer housing. The workshop will cover tenant and landlord responsibilities, and what happens when roommates leave a lease or there is damage to an apartment.

UI does not provide resources for students on its website, beyond a list of rental companies in Moscow. Eckles said this is not UI’s responsibility.

“Our job is to help develop students to be informed consumers and help them understand they’re entering into a legal agreement. Students have to take responsibility for doing that,” he said. “If you don’t like what’s in that lease agreement, don’t sign it.”

Eckles said he worked at a previous institution where the general counsel would provide a clinic about common pitfalls in leases.

“(This situation) has me thinking, ‘I should get that going here,’” he said.

A balancing act

There are two kinds of property management companies. Some companies act as a third party between the property owner and the tenant and typically handle deposits, rent payments and maintenance. Other companies and individuals manage properties they own. Idaho does not regulate any of these transactions or business dealings.

Merida McClanahan works as a property manager for Team Idaho Realty, which operates an office in Colfax as well, called Team Washington. Because the business operates in two states with different laws, McClanahan said Team Idaho follows Washington state law.

A property manager operating in Washington must work with a licensed broker. Brokers must keep prepaid rent and security deposits in a separate escrow account from fees and rent payments.

Keeping things separate, McClanahan said, ensures nothing slips through the cracks.

“Ultimately, the broker is the one that’s responsible (for the money), their license hangs in the balance,” she said. “It offers that policing action we’re all looking for. We’re past the time where Idaho can be the wild, wild west when we’re looking at property management services.”

Sean Wilson, a broker with Latah Realty, agreed with McClanahan. Latah Realty is not a property management company, but Wilson said he is tired of watching property management companies close unexpectedly.

“It gives our community a black eye,” Wilson said. “I have rental properties I privately manage, and one day I want to be able to retire and know I’m not getting ripped off.”

Wilson said definitions in Idaho’s regulations need some fine-tuning.

“What is a property management company? If I manage two properties for my neighbor, who’s a retired guy, am I a property manager? I don’t know,” he said. “If I had 100 units of rental property and I own them, do I fall into that definition?”

Caroline Nilsson Troy

So, Wilson called his legislator.

Rep. Caroline Nilsson Troy, Republican from Genesee, introduced legislation this session that would require property managers who work with property owners to keep deposits in separate trust accounts. As of press time, Troy’s bill had been approved for print.

This would only affect property management companies who manage properties they do not own as a third-party entity.

“You can’t stop people from behaving badly but this is a start,” she said. “We’re trying to start with some options that aren’t hard for people to manage. You have to start somewhere.”

Troy said she worked with third-party and private property managers and realtors in Moscow and Lewiston to ensure the bill would be effective.

“We’ve had issues in Moscow, significant issues over the last ten years,” she said. “Whitepine was the third one, but not everyone is having the same kind of issues we are, so we have to explain the importance of this to everyone in Boise.”

McClanahan said it is difficult to balance the regulation and effects on markets of different sizes with state-level laws.

“(Moscow is) such a small community. There’s a limited number of properties that require property management services. Some of the more metropolitan markets are very different,” she said. “It’s a tall order.”

Wilson acknowledged Idaho’s tradition of limited government oversight, but said this is a circumstance where people could benefit.

“There’s a place for government to do things for people that they cannot do themselves and this is one of those cases,” he said. “Most states have oversight over real estate brokers and property management. They are done under the same umbrella. To me, it seems like there’s a mechanism already there that wouldn’t be a far reach to add one more component to it.”











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