Dennis Kefallinos Owes Half A Million Dollars In Water Bills.

DURING MY BRIEF, 45-MINUTE STINT WORKING IN THE DETROIT BUILDING DEPARTMENT, I remember a day when a slick, older gentleman strutted into one of the supervisors’ offices. Accompanied by two goons, he was wearing what looked like a half-decent suit, from as far as I could tell from across the cubicle farm. He also had a bright white shirt, unbuttoned about halfway. He and Terry Martin were carrying on like old buddies. “That’s your boy,” one of my co-conspirators whispered to me. “Huh?” I looked up from my spreadsheet of lead inspection reports. You know, what I was doing with my life. “Dennis Kefallinos!” And so it were. The man himself.

Kefallinos: BSEED’s Main Sleaze

Had I not known, and if it weren’t for the fact that the name elicited a visceral reaction of disgust, I might have actually found him charming, from a distance. Schmoozing, he looked like a natural. And, one might suspect, he’s also a natural slumlord. Anecdotally, one of my colleagues told me that his company had become inured to the city’s barrage of enforcement fines that they just viewed them as a cost of doing business. This is backed up by a litany of lawsuits and complaints against him ranging from wage theft to housing discrimination. Mysteriously, some properties seem to evade enforcement. In my neighborhood alone, Kefallinos owns a few buildings. They’re not in good shape.

The Russell Industrial Center and affiliated structures occupy a bunch of the space to the upper left of the train tracks. East Grand Blvd. connects to GM’s Hamtramck Assembly plant just to the east of this image. Note the extensive paved area. Dennis Kefallinos has owned most of this for about a decade.
Juggling Vacant Properties: 760 Campbell 

A nuisance abatement lawsuit against one Ferndale-based owner forced that owner to sell. The lawsuit pointed out that the city had been dispatched to 300 911 calls to 760 Campbell St. in just the first six months of 2018. “In a recent City inspection, the City representatives discovered two known prostitutes in the apartment of the purported “Property manager,” Michael Ferguson,” the lawsuit states. One of my colleagues in BSEED showed me a selfie he had taken with a Detroit SWAT team before going in for an inspection. I’m not making this stuff up.

Jack Lessenberry extolled the virtues of owner Kurt Hesse in 2010:

“His family still owns an old, circa-1929 Mediterranean-style building called Berwalt Manor, in Delray. For years, Kurt, his wife, and 72-year-old mother have been working hard to rehabilitate the Berwalt’s 67 units, pouring sweat equity into it, one floor at a time.”

(Berwalt isn’t really in Delray as I think of Delray. It’s like walking distance from me in Hubbard Farms. But I digress). So, who’d the owner end up selling to?

I’m glad you asked. Old boy Denny! He actually, uh, bought a bunch of stuff around this time, as it turns out. Mind that this is right after the city effectively forced him to sell a bunch of long-vacant stuff.

And Yet… More Positive News Coverage

Also back in 2010, Journalist-turned-developer Jon Zemke wrote a fawning article about Kefallinos’ acquisition of the Russell. Like Lessenberry’s piece, this was also during the “take what we can get” era of Detroit development. Any development news is potentially good news! We’re at rock bottom, so we can only go up! Kefallinos told Zemke that Detroit was a great place to start a business. You just had to want to work hard! Wrote Zemke:

Nowhere in the city is that more evident than in the crown jewel of his business kingdom — the Russell Industrial Center. The sprawling, Albert Kahn-designed industrial complex overlooking I-75 just north of the I-94 intersection got its start building chassis for the Fisher Body Company in the 1915 and helped manufacture B-29 bombers during World War II. It was on its last legs when Kefallinos bought it in 2003 and decided to primarily market small studio spaces in it toward artists and small businesses. Today, hundreds of small businesses that support even more jobs call it home and more are seemingly added everyday.

The idea of an arts and small business incubator space that can derive value from the economy of scale of a huge building is certainly interesting. Is that what’s happening in the Russell these days?

Honestly, I don’t know. But I do know that the Kefallinos Klan have $415,619.5 in outstanding water bills. Here’s the breakdown!

The Full List.

911-0486.300 (CLAY STREET GROUP LLC). 1446 CLAY ST. $140,868.17 including a past-due balance of $137,099.65.

930-2599.300 (CLAY STREET GROUP LLC). 1680 CLAY ST. $93,509.95 inclduing a past-due balance of 85,271.79.

930-2600.300 (KARPINSKI ALEXANDER). 7740-46 CHRYSLER FWY. $1,862.89, including a past due balance of $1,706.39.

911-0140.300 (KARPINSKI ALEXANDER, 2904 SQUIRREL RD, BLOOMFIELD HILLS MI 48304-2055). 1446 CLAY ST. $367.70, past-due.

030-0937.301 (ELIZABETH STREET LOFTS / RUSSELL INDUSTRIAL ASSOCIATES). 7400 RUSSELL ST. $177,199.76 due, $176,799.53 past-due.

030-0931.300 (ELIZABETH STREET LOFTS). 1600 CLAY ST. Last payment of $5,983.06. Account is current.

030-0459.300 (ELIZABETH STREET LOFTS). 7546 RUSSELL ST. Last payment of $745.24. Account is current.

030-0458.300 (ELIZABETH STREET LOFTS). 7700 RUSSELL ST. Last payment of $536.98. Account is current.

030-0448.300 (AAA ENVELOPE CO). 1660 CLAY ST. No payment due and no active service.

030-0446.300 (AAA ENVELOPE CO). 1660 CLAY ST. 2,003.86 including past-due balance of 1,811.03.

Clever Tricks Used By Slumlords To Avoid Regulatory Scrutiny.

How does one get away with this? Generally, by using shell corporations. Thus is the magic of the limited liability corporation. But if enforcement officials are wise to your schemes of using shell corporations, it’s possible to simply hire different registered agents. It’s fairly easy to mask who actually owns a company. If you need to create distance, hire someone else. If you want to create even more distance, have the registered agent be an attorney. Most corporate organization documents are public. But your operating agreement– outlining who really owns what- is probably not.

DWSD Records Are In The Poo

One thing is for damn sure: and that’s that DWSD has to get their systems together. Half a million dollars in outstanding fees could buy, you know, a city bus. Or hire a few teachers. There is no reason why this FOIA request should have taken several weeks. After all, they say it’s a five-day turnaround. The last time I requested documentation about citywide drainage fee assessments? They said it was impossible to prepare– and wanted to charge melike $800 for it. There’s a problem here that we’re not talking about. The water department, ever so desperately, needs to get it together. Modern management information systems, a real platform for CRM, and real customer service.

As for the accuracy of the data? The Detroit parcel map identifies the two major Russell sites as being 13.457 acres and 17.342 acres. This is, well, not actually accurate, and it’s not clear why. The total area is actually about 20 acres, including several separate, vacant lots at the corner of Clay and Chrysler Drive. But at $750 per acre for drainage fees, I figure that this should work out to something like $12,000 per month. Virtually all of the area is impervious. DWSD records appear to indicate that they’re charging drainage assessments of $3,768 + $8,238 per month. (Damn, I’m good). Of course, Kefallinos isn’t paying: there’s a chasm twixt “billing” and “assessment.”

A credible city government needs credible departments managing infrastructure. These departments need functional, modern systems. And they need an enforcement mechanism to make sure bad actors like Dennis Kefallinos can be held liable. This is why we can’t have nice things, Detroit!

We have reached out to the Water Department for comment and will update accordingly. Neither BSEED nor the Mayor’s Office have responded to repeated requests for comment.

Nat M. Zorach

Nat M. Zorach, AICP, MBA, is a city planner and energy professional based in Detroit, where he writes about infrastructure, sustainability, tech, and more. A native of Lancaster, Pennsylvania, he attended Grinnell College in Iowa, the Kogod School of Business at American University, the POCACITO transatlantic program, the SISE program at the University of Illinois Chicago, and he is also a StartingBloc Social Innovation Fellow. He enjoys long walks through historic, disinvested Rust Belt neighborhoods at sunset. (Nat's views and opinions are his own and do not represent those of his employer).

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