Ray Peterson’s houses are easy to spot. The siding is often peeling, the windows are boarded up, or a wooden “house for rent” sign occupies the yard for weeks.
At one house, the front door has been stuck shut for months. At another, the tenant placed bags of leaves along one side to provide extra insulation in winter. In the backyard, a toilet sits discarded, never disposed of after a repairman replaced it.
This is “Petersonville,” as one tenant calls it.
Peterson’s 44 Madison properties speckle the east side of the city. He provides below market rents and accepts tenants with spotty rental histories in exchange for housing that consistently falls short of the city’s standards.
In 2014, Peterson had 71 building inspection complaints in Madison, ranging from one to 43 violations per complaint. Some of those violations were relatively minor, like peeling paint on closet shelves. Others were more serious, like dated smoke alarms or electrical issues. In 2014, the city posted seven of Peterson’s properties as “no occupancy,” prohibiting people from living in them due to the extent of violations.
“Mr. Peterson is in the top one percent of case generators for city of Madison building inspection,” said Madison Housing Inspection Supervisor Kyle Bunnow.
In many cases, Peterson has failed to complete all the necessary repairs within the required 30, 60 or 90 days allotted by the city. The city has consequently pursued prosecution, issuing 29 cases in 2014.
In April, a judge ruled against him on 10 complaints with a judgment totaling $455,848, the highest judgment Peterson has ever received. He has appealed those charges, calling them unreasonable and saying the city is targeting him.
Peterson believes he is offering a service, providing houses for people who might otherwise be homeless.
City officials and many of his tenants decline to characterize it that way, arguing that no one should have to live in some of the properties he owns. But those same tenants still live there, many renewing their leases year after year because of limited options in Madison’s housing market.
Peterson said he bought his first house in Iron Mountain, Michigan, when he was 17, before the attack on Pearl Harbor. He is now 90 and owns more than $6.5 million in properties in Madison, according to 2015 city assessor records, as well as a few properties in surrounding towns.
Peterson draws about $36,000 a month in rent from 50 of his 72 total rental units, the rest of which are not occupied, according to Peterson’s records. That comes to about $430,000 a year.
Some of that money is earmarked for property taxes, which totaled $151,142 in 2014 for his Madison properties. Some goes to repairs. Peterson said the rest goes toward a contingency account for repairs, which he said is now running low.
Peterson said he has stayed in the business because he likes to be helpful when he sees people in need, trying to avoid homelessness.
“That’s why I started in the first place,” he said.
His grandmother started the business with him, helping him buy his first house. He said he was very pleased to be able to get a woman and her family into a house by themselves. The tenant then purchased the house when he enlisted in the Navy, he said. Peterson moved to Wisconsin after the Navy and attended college. He continued to acquire properties in and around Madison, including properties in Cambridge and Medina.
Some hesitate to criticize Peterson as harshly as they would have when he was younger, but the problems with his properties have been consistent and longstanding. A Wisconsin State Journal analysis in 1990 found that Peterson's tenants filed more complaints per apartment than any major Madison landlord included in the review.
“The general feeling in the neighborhood is that his properties are embarrassments to the neighborhood,” said Marquette Neighborhood Association president Lynn Lee. “He seems to do the least amount of repairs to not be in trouble with the city and yet they’re still eyesores.”
Peterson describes his properties as “marginal,” saying they allow him to offer rents below market rate and therefore should not be held to some of the same cosmetic standards as other properties.
In Madison, average listed rents for 2014 ran more than $850 per month for one-bedroom apartments and more than $1,000 per month for two-bedroom apartments, according to rental listing aggregation site Rent Jungle.
Peterson’s rents fall below that, ranging from $450 to $1250, with a varying number of bedrooms, according to his records. More than half of his tenants pay less than $500 per person, per month.
“That’s what I’ve been doing, offering lower rent to get people most in need into homes,” Peterson said.
One of his tenants has bad credit. Another was evicted from her previous house when her son’s father stopped paying child support and she fell behind on rent. Another was homeless for 10 months. Tenants concerned about retaliation from Peterson asked that they not be named in this story.
“It’s a dilemma a lot of us who help people find housing have is you can rent from (Peterson), but you know the apartment is going to be under standards,” said Tenant Resource Center executive director Brenda Konkel. “It might be housing for a little while, but when most of us talk about renting from him it’s like use this as a temporary place until you can find another.”
Madison’s rental vacancy rate has been low for years, hovering around 2 percent instead of the 5 percent target that is typically considered a healthy rate nationwide. Housing service providers say Madison’s low vacancy rate allows landlords to be very selective with renters, often leaving low-income renters or people with imperfect rental histories without many options.
“I think that the fact that there are very few rentals available works to his advantage, because when a person is faced with living in a house that’s falling apart as opposed to living in no house, they’re going to choose to live in the house,” Bunnow said. “And I understand it, but our goal is to make sure that everybody has quality housing, that the choice to live in a substandard house isn’t a choice that anyone has to make.”
One tenant said she wasn’t able to land anything from a list of available properties. When she came across Peterson’s number, she hesitated. She and her mother had rented from him decades ago and frequently dealt with bats and raccoons in the house, among other issues. She needed a home for herself and her kids, though, so she applied and toured the property where she now lives.
“It was, from the looks of it, livable,” she said. “And I was happy to have it because I didn’t have anywhere to go with my kids and I wasn’t going to live in my car.”
She planned to stay for a year or two, but six years later, she hasn’t left. During her time living there, she has gone to court with Peterson four times over repairs or rent and doesn’t know if any other landlords will take her with that court record.
“Once you have an eviction on your record or even show up in the system as having something against you, people automatically blacklist you here and it is next to impossible to find somewhere to go,” she said.
Peterson has filed an average of 24 eviction cases in circuit court each year for the past decade. Many don’t result in actual eviction, but tenants say just having an eviction case on record in the Consolidated Court Automation Programs, or CCAP, is detrimental to their ability to find new rentals.
One tenant said she went to court with Peterson over who would pay for a sink repair. She said the sink fell off the wall when a kid was washing her hands, spraying water everywhere. She said the judge sided with her, but the record still shows up in CCAP without those details.
Another tenant said she went to court for an eviction notice over late rent. She said her paycheck was stolen out of the mailbox in her first month living in the apartment building because the mailboxes didn’t have locks. She said she paid her rent as soon as she got a new check, but the record still shows up in CCAP.
Peterson’s daughter and office manager, Danette Vollmer, said she has asked tenants to call her if they are going to be behind on rent. She said they try to be lenient, but there is no guarantee that Peterson won’t file the eviction notice if they are more than five days late on paying rent.
“We treat each tenant the same and it would be unfair for us to give preference to certain tenants,” Vollmer said.
Peterson echoed that statement in a high-profile story following the police shooting of Tony Robinson in an apartment on Williamson Street. Peterson sent an eviction notice to Robinson’s friends living there after they fell behind on rent, charging them an additional $1,192.15 for biohazard cleanup of Robinson’s remains. He said he felt compassion for them but had to treat all of his tenants the same.
“I don’t know what he has seen in his life to make him so mean and bitter,” one tenant said, noting Peterson’s Navy background. “He’s been doing this for so long, this ain’t just started. Ray Peterson’s been Ray Peterson since Ray Peterson.”
‘A Ray Peterson house’
While some tenants say they are using Peterson’s properties to build rental history or as a way to avoid homelessness, they stop short of saying he is providing a service, given the problems with his properties and management record.
“I think he’s used in a service-like manner by people, but he isn’t providing any value,” said one tenant who had minimal rental history and knew Peterson was one of the only landlords who would take him.
At his house, roofing shingles are nailed to the wood as siding and bags of leaves are lined up along one exterior wall for extra insulation. The porch “leaks like a sieve,” the tenant said, and half the windows are gone, boards wedged in their place. The bathroom has black mold and tenants rarely use the shower to avoid it.
“This is what you get in a Ray Peterson house,” he said.
The tenant said Peterson replaced the aging refrigerator after it stopped working and the stove when it started leaking gas, but he won’t fix anything until it’s bad.
“When a tenant complains to Ray, then he tries to get somebody out there as soon as he can,” Vollmer said. “Ray’s not able to do the work himself, so he has to rely on his help or a subcontractor to go out and help.”
Peterson used to do the repair work himself. Now that he can’t, Vollmer said, there's one maintenance person on staff and several subcontractors working on repairs.
Some tenants said repairs take a long time or are half completed, if at all. Some have stopped calling him altogether, opting to just live with the issue or take matters into their own hands when they don’t get any response.
“He sends this weird-ass repair guy who jimmy-rigs the s--- out of stuff,” said one tenant. “They’ve never officially fixed anything.”
At her house, the front door hasn’t opened since they moved in months ago, except one instance when they finally pried it open and couldn’t close it again for days. She said they told Peterson about the door when they first moved in but stopped bugging him after awhile.
“He’s a slumlord,” she said.
They have a bathtub that’s constantly dripping with a leak going through the floor, the bottom of the back door is rotting and there is poor insulation, which tenants said drives up the heating bills.
“The house is falling apart,” she said.
The tenant said she’s planning to move out as soon as possible, but her roommate said he has “crappy credit” and would have trouble finding another place. He also likes the location.
“I’ll take what I can get,” he said.
Peterson protests the idea that he is a slumlord — a word multiple tenants used to describe him — or that his properties are deteriorating.
“I don’t think they’re rundown,” Peterson said.
Peterson called many repairs required by city inspectors on his properties “minor” and said inspectors don’t accept repairs he makes as sufficient. His own house has a few code violations and is overflowing with clutter. A box of tennis balls sits on the floor, stuffed animals pile in a chair and dishes crowd the counter.
“We have a vindictive prosecutor and building inspection is targeting us by rejecting repairs we have made and refusing to give us the extension we would need to comply,” Peterson said.
Bunnow, the housing inspection supervisor, rejected that assertion, saying inspectors typically show up at Peterson’s properties due to complaints filed by tenants or neighbors.
“We have absolutely no interest in targeting anyone,” he said. “We are interested in having people correct code violations and do maintenance that’s required.”
Bunnow said it is highly unusual for complaints against property owners to consistently move on to the prosecution phase, as they have with Peterson, and the large majority of property owners have no problem following the ordinances. He said Peterson’s claims that he should be held to different standards for offering housing below the market rate “rings hollow.”
“What Ray is asking for is to not maintain his properties,” Bunnow said. “That’s something that the city has said is not acceptable by the ordinance that we’ve adopted and enforce.”
‘A chance to stay in business’
With Peterson’s decades-long history of non-compliance, the city has recently stepped up prosecution to either compel him into compliance or persuade him to sell his properties.
“If Mr. Peterson is not capable of maintaining his properties, or anyone is not capable of doing it, then they really need to examine whether or not they should be owning that property,” Bunnow said. “If they feel they can’t do what is required, it’s time to sell it and to allow somebody who can do what is required the opportunity to own that property.”
The city pushed Peterson in that direction with the judgment against him on April 3.
That $455,848 judgment stemmed from 10 complaints involving 59 counts for specific violations that Peterson failed to complete within the allotted time.
If a property owner fixes the violations within the 30, 60 or 90 days required by building inspection, there is no financial penalty. The city will also give extensions if it is clear the property owner is making progress on the repairs and needs more time, as it did with Peterson in at least one case.
If violations linger after the deadline, however, building inspection refers the case to the city attorney’s office.
“At that point, we really have no other options. We’re not getting communication, he’s not calling us to say when it’s going to be done,” Bunnow said, citing a specific case where Peterson failed to correct 11 of the 32 listed violations, even with an extension to three months to make the repairs. “While I’d prefer not to prosecute anyone, I’m left with no other options.”
City ordinances allow a forfeiture of $1 to $1,000 per count, per day, for violations extending past the deadline. In the April 3 judgment, Judge Daniel Koval issued a sentencing ruling of $100 per count, per day, plus costs, on all cases.
That’s a significant jump from past cases Peterson has dealt with where the sentence ran him $10 per count, per day, plus costs.
“I’m not willing to be subjected to these unreasonable charges,” Peterson said.
He is appealing the charges but said if it doesn’t go in his favor, he will probably start selling the properties.
“They aren’t giving me a chance to stay in business,” he said.
Peterson said it has been difficult to find or retain contractors as workers have heard from building inspection or others about the city’s complaints and financial judgments against him.
“I think that it’s hard keeping help, it’s hard keeping help to work on it, and it’s also hard getting subcontractors to work on it,” said Vollmer, Peterson’s daughter and office manager. “I think the city orders are real picky and very lengthy and it’s hard to do it exactly the way the inspectors want it.”
As for why he doesn’t keep his properties up to code to begin with, Peterson reiterated that he doesn’t think they are rundown. He also said he is “overburdened” and running out of reserve contingencies for repairs.
“The city’s done a good job getting us to shape up, but we did,” Peterson said, pointing to properties he has brought into compliance.
Much of that compliance happens after cases are referred to the city attorney’s office, however, and Bunnow rejected the idea that Peterson is overburdened.
“For someone who doesn’t maintain regular maintenance staff to claim that they are overburdened with work again rings hollow,” Bunnow said. “If you don’t have staff on hand to address maintenance issues, anything is an overburden.”
If Peterson continues to operate the way he has been with the same number of violations, City Attorney Michael May said the city may consider legal remedies other than judgments or fines. That could include foreclosure actions or exploring whether Peterson’s activities amount to a public nuisance over time.
“The landlords who follow the rules, it’s kind of unfair to them to have this guy out there who doesn’t follow the rules,” May said.
If the judgment stands, however, Peterson said he wants to get out of the business and will start liquidating properties.
And when he decides to get out of the business, Vollmer said she’ll get out of it, too.
“I can’t imagine doing it, period. And then I can’t imagine doing it at his age,” she said. “The reason I ever started doing this was because my mom needed the help, and now he needs the help. As soon as he’s ready to stop, I’m ready to stop.”
Source: City of Madison