In re: Rental License Revocation Appeal for Stephen Frenz for properties owned by Equity Residential Holdings, LLC, National Housing Fund, LLC, 2020 Vision Investments, LLC, Berkely Holdings, Inc., 88 Quarters, Inc., JAS Duluth, LLC and 92124 Holdings, LLC.

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-0123

In re: Rental License Revocation Appeal for
Stephen Frenz for properties owned by
Equity Residential Holdings, LLC,
National Housing Fund, LLC,
2020 Vision Investments, LLC,
Berkely Holdings, Inc.,
88 Quarters, Inc.,
JAS Duluth, LLC and
92124 Holdings, LLC.

Filed March 4, 2019
Affirmed
Smith, Tracy M., Judge

Minneapolis Department of Regulatory Services

Kay Nord Hunt, Lommen Abdo, P.A., Minneapolis, Minnesota; and D ouglass E. Turner,
Hanbery & Turner, P.A., Minneapolis, Minnesota (for relator Stephen A. Frenz)

Susan L. Segal, Minneapolis City Attorney, Sara J. Lathrop, Iva n Ludmer, Heather
Robertson, Assistant City Attorn eys, Minneapolis, Minnesota (fo r respondent City of
Minneapolis Regulatory Services)

Considered and decided by Smith, Tracy M., Presiding Judge; Ro ss, Judge; and
Slieter, Judge.
U N P U B L I S H E D O P I N I O N
SMITH, TRACY M., Judge
Relator Stephen Frenz challenges the City of Minneapolis’s dec ision (1) to revoke
rental-dwelling licenses for properties owned by Equity Residential Holdings LLC (ERH)

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and National Housing Fund LLC ( NHF) and (2) to hold Frenz and h is wife ineligible to
hold or have interests in any other licenses for a period of five years. We affirm.
FACTS
The story begins with Minneapolis license-holder Spiros Zorbal as. Through a
revocation proceeding spanning from 2010 to 2012, the City of Minneapolis revoked three
rental-dwelling licenses in which Zorbalas had interests and de clared Zorbalas ineligible
to hold or have an interest in a rental-dwelling license for fi ve years. 1 Following the
revocations, the city and Zorbalas held discussions to find a way to avoid displacing tenants
from the approximately 50 properties that Zorbalas effectively owned. The discussions
were soon stymied, however, because the city and Zorbalas could not agree on the extent
of ownership that Zorbalas could retain in the properties.
Frenz was asked to become involved in the discussions as a pot ential third-party
manager of the Zorbalas properties. During these discussions, Frenz became aware that the
city would not accept Zorbalas’s continued ownership in the properties.

1 Frenz suggests that Zorbalas’s licenses were not in fact revok ed. However, as the city
correctly notes, Frenz raises the issue only in the facts secti on of his brief and therefore
forfeits it on appeal. See State v. Jackson, 655 N.W.2d 828, 837 (Minn. App. 2003) (“An
issue that is not addressed in the ‘argument portion’ of a brie f is deemed waived on
appeal.”), review denied (Minn. Apr. 15, 2003). In any event, Frenz’s suggestion is without
merit. The city council decided to stay the Zorbalas revocations “subject to the appeal being
filed in a timely manner and diligently pursued by” Zorbalas. Z orbalas’s appeal was
unsuccessful, In re Rental Dwelling License ex rel. Zorbalas , No. A11-892, 2012 WL
686095 (Minn. App. Mar. 5, 2012), review denied (Minn. May 30, 2012), and the appeal
ended when the United States S upreme Court denied his petition for a writ of certiorari,
Zorbalas v. City of Minneapolis, Minn. , 568 U.S. 1010, 133 S. Ct. 616 (2012). The stay
ended at that time, and Zorbalas’s licenses were revoked.

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In November 2012, Frenz and Zorbalas formed ERH. They both contributed to ERH
the rental properties under their respective control. The ERH o perating agreement named
as sole members two groups: “AOC M embers” and “Frenz Members.” AOC Members
were Zorbalas and companies owne d by Alpha-Omega Companies Inc. Alpha-Omega
Companies Inc. was who lly owned by Zorbalas. Frenz Members were F r e n z ’ s w i f e ,
Jennifer Frenz, and companies associated with Frenz. AOC Members and Frenz Members
held ownership interests in ERH that corresponded with the valu e of the properties
contributed. AOC Members had 80% ownership of ERH, and Frenz Members had the rest.
Frenz and Zorbalas also formed NHF, which was wholly owned by ERH. ERH directly or
indirectly controlled more than 60 rental properties in Minneapolis.
Zorbalas was the chief executive officer and Frenz the chief o perating officer of
ERH. As CEO, Zorbalas was “charged with the general and active management of the
Company, including authority and responsibility to manage the day-to-day operation of the
Company’s business, subject to the overall direction and control of the Managers.” He was
also the chief financial officer, responsible for “the custody of all funds and securities
belonging to the Company and for the receipt, deposit, or disbursement of these funds and
securities under the direction of the Managers.” The “Managers” were Zorbalas and Frenz.
After the formation of ERH, Frenz notified the city that he ha d purchased Zorbalas’s
properties. In the process of obtaining rental-dwelling license s on behalf of ERH, Frenz
had dealings with many city perso nnel. Most importantly, Assist ant City Attorney Wolf
asked Frenz in an email to provide information “regarding any and all partners in [ERH].”

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Frenz emailed Wolf a list of ERH members but did not include any AOC Members. Wolf
asked for further clarification, stating:
I did receive your list of owners for [ERH], I did a quick
check on them and you appear to be the CEO of all the
companies and they were all organized in the mid to late 90’s.
JoAnn wanted me to ask who the shareholders of the
Corporations were- If you could let me know (they want to
make sure Zorbalas is not involved).

Frenz replied: “We discussed a tr ansfer of ownership that would remove [Zorbalas] from
any control. The only difference is that you insisted on him be ing removed from the
equation. I have done exactly as you demanded. Take the gift you have been given and use
it wisely.” Frenz later admitted that his statements in these e mails were not truthful. The
city relied on these representations in issuing licenses for th e properties. Frenz received
license renewals in 2014, 2015, and 2016.
In 2016, through an unrelated m atter, the city became aware of Zorbalas’s
continuing involvement in a number of rental properties within Minneapolis. In a letter to
Frenz dated September 16, 2016 (the September 16 letter), the c ity listed a number of
properties (the licensed properties) and directed Frenz to provide the names and addresses
of all interest holders, direct or indirect, in the entities owning the licensed properties. The
letter specifically directed Frenz to provide an explanation of any legal or equitable interest
that Zorbalas had in the entities. Frenz submitted an affidavit in response. In it, he, for the
first time, identified AOC Members that had an interest in ERH, but he did not mention
Zorbalas.

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The city issued a notice of revocation on November 15, 2016. 2 The notice alleged
three grounds for revocation under Minneapolis ordinances: first, that the owner/licensee/
manager has had two or more licenses revoked; second, that the rental license application
is not current; and third, good c ause. After a hearing, an admi nistrative hearing officer
(AHO) concluded that the first and second grounds existed but t hat the third did not. The
AHO recommended (1) that licenses for the properties owned by E R H a n d i t s w h o l l y
owned subsidiary, NHF, (the ERH licenses) be revoked and (2) th at, based on those
multiple revocations, Frenz and his wife be determined ineligible to hold or have interests
in any other licenses. The city council subsequently voted on t he matter and adopted the
AHO’s findings and conclusions.
This appeal follows.
D E C I S I O N
“Any person aggrieved by a final [administrative] decision in a contested case is
entitled to judicial review of the decision” through “[a] petition for a writ of certiorari . . .
filed with the Court of Appeals. ” Minn. Stat. § 14.63 (2018). “ A city council’s decision
may be modified or reversed if the city violated constitutional provisions, exceeded its

2 In his reply brief, Frenz suggests that the city’s action to r evoke was not timely because
it was commenced after the subject licenses had expired on Augu st 31, 2016. The record
does not support this assertion. By ordinance, the city may commence “an action to deny,
non-renew, revoke or suspend” prior to “any lapse, surrender, withdraw[al], termination or
other loss” of the license to be affected. Minneapolis, Minn., Code of Ordinances (MCO)
§ 244.1940(b) (2019). In the evidentiary hearing before the administrative hearing officer,
Frenz testified that he had renewed the subject licenses in 201 6, and his opening brief to
this court reflects that fact. The November 15, 2016 notice of revocation therefore issued
while the licenses were active, and the city’s action was timely.

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statutory authority, made its decision based on unlawful proced ure, acted arbitrarily or
capriciously, made an error of law, or lacked substantial evide nce in view of the entire
record submitted.” Montella v. City of Ottertail , 633 N.W.2d 86, 88 (Minn. App. 2001);
see also M i n n . S t a t . § 1 4 . 6 9 ( 2 0 1 8 ) . “ T h e p a r t y s e e k i n g r e v e r s a l h a s t he burden of
demonstrating error.” Montella, 633 N.W.2d at 88.
Frenz challenges the city cou ncil’s decision to (1) revoke the ERH licenses and
(2) hold the Frenzes ineligible to hold or have interests in an y other licenses. We address
each issue in turn.
I. Frenz fails to demonstrate err or as to the revocation of the ERH licenses.
MCO § 244.1910(a) (2019) sets “ minimum standards and conditions [that] shall be
met in order to hold a rental dwelling license.” “Failure to co mply with any of [the]
standards and conditions . . . [is] adequate grounds for the de nial, refusal to renew,
revocation, or suspension of a rental dwelling license . . . .” MCO § 244.1910(a). The city
based its revocations of the ER H licenses on failure to comply with two standards: first,
the standard in MCO § 224.1910(a)(13)a, which prohibits persons who have had an interest
in two or more licenses revoked from holding or having an inter est in a rental-dwelling
license for five years; and, second, the standard in MCO § 244.1910(a)(15), which requires
a licensee or applicant to have a current, complete, and accurate rental-dwelling application
on file. We begin with the second basis for revocation—Frenz’s failure to have a complete
and accurate application on file.
Under MCO § 224.1910(a)(15), “[ t]he licensee or applicant must have a current,
complete, and accurate rental dwelling application on file with the director of regulatory

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services in accord with the provi sions of section 244.1840.” Se ction 244.1840, in turn,
requires that “[a]ll partnershi ps, corporations, limited liabil ity companies or other
recognized business associations which own a dwelling required to be licensed . . . shall
submit, upon request of the director of regulatory services or the director’s designee, the
name and address of all partners, shareholders or interest holders.” MCO § 244.1840(1)a
(2019). Thus, failure to provide information requested under section 244.1840(1)a renders
an application on file inaccurate and results in violation of section 224.1910(a)(15).
The city adopted the AHO’s finding that Frenz failed to provid e “complete, honest,
accurate applications and disclosu res related to the corporate ownership interests” of the
properties owned by ERH and NHF, as well as the AHO’s conclusio n that Frenz violated
the disclosure obligations of section 244.1840 and thus violate d section 244.1910(a)(15).
It is undisputed that, in the September 16 letter, the city dir ected Frenz to submit an
affidavit listing the name and a ddress of all interest holders in the entities owning the
licensed properties. The letter directed Frenz to submit “the n ame and address of all
partners, shareholders or interest holders in any partnership, corporation, limited liability
company or other business association which hold any ownership or equitable interest
whatsoever” in any of the licensed properties. It further directed that the request “shall be
construed broadly to include any subsidiary, parent corporation or entity and any individual
that may hold, personally or thro ugh an ownership or equitable interest in such an entity,
any interest whatsoever in any s uch corporation, entity or asso ciation.” Specifically, the
letter demanded “an explanation of any legal or equitable interest that Spiros Zorbalas, or
any entities or associations which he may have any interest in, currently maintains, or has

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ever maintained in any of the entities, associations, or corporations that have any interest”
in the rental-dwelling licenses or properties. Frenz acknowledges the letter to be a request
under section 244.1840(1)a.
In response, Frenz submitted an affidavit in which he identifi ed the “members of
ERH.” Frenz included four corpora tions. He did not reveal that those four corporations
were owned by Alpha-Omega Companies or that Zorbalas was the 100% owner of Alpha-
Omega Companies. Similarly, Frenz identified ERH as the “sole member of NHF” but did
not explain Zorbalas’s interests in ERH. Frenz did not explain that Zorbalas was effectively
an 80% owner of ERH and, through it, NHF. Nor did Frenz disclose that Zorbalas was the
CEO of ERH or that he had significant managerial control over i t. Nowhere in Frenz’s
affidavit was Zorbalas mentioned.
In arguing that the omission of Zorbalas from his affidavit di d not render it
inaccurate or incomplete, Frenz c ontends that section 244.1840( 1)a did not require the
disclosure of Zorbalas’s involvement because Zorbalas was not an “interest holder” in ERH
or NHF. By considering Zorbalas an interest holder, he argues, “ [ t ] h e c i t y h a s a c t e d
contrary to its definition of owner.” (Emphasis added.) “Owner” is defined under
Minneapolis ordinances as “[t]he person who is the last owner o f record or the fee owner
or the contract purchaser or the agent of the aforementioned person or member resident of
a warrant-owned building.” MCO § 244.40 (2019). Frenz interpret s “interest holder” to
have the same meaning as “owner.” Under his interpretation, for example, the sole interest
holder of NHF is ERH as an entity; Zorbalas, who is concealed u nder layers of other

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companies, is not an interest holder, no matter how much of NHF Zorbalas effectively
owns.
We are not persuaded by Frenz’s argument. When interpreting an ordinance, we
must “read [it] as a whole, . . . giv[ing] effect to all its pr ovisions.” Waters v. Comm’r of
Revenue, 920 N.W.2d 613, 615 (Minn . 2018) (quotation omitted); cf. State v. Vasko, 889
N.W.2d 551, 556 (Minn. 2017) (“The same rules that apply to the interpretation of a statute
apply to the interpretation of a n ordinance.”). We therefore pr esume that, if the authors
used different words in two prov isions, they intended two different meanings. Johnson v.
Paynesville Farmers Union Coop. Oil Co., 817 N.W.2d 693, 709 (Minn. 2012). The city
used the term “interest holder” in section 244.1840(1)a. Had it meant “owner,” a term that
it used (and defined) elsewhere in the ordinances, it would have used that term.
Appellate courts interpreting ordi nances must “give words and p hrases their plain
and ordinary meaning.” Premier Bank v. Becker Dev., LLC, 785 N.W.2d 753, 759 (Minn.
2010). “Interest” is defined by The American Heritage Dictionary to be “[a] right, claim,
or legal share” or “[s]omething in which such a right, claim, or share is held.” The American
Heritage Dictionary of the English Language 914 (5th ed. 2011). And Black’s Law
Dictionary similarly defines “interest” as “[a] legal share in something; all or part of a legal
or equitable claim to or right in property.” Black’s Law Dictionary 885 (10th ed. 2014).
Neither of those definitions depends on ownership as that term is defined by the ordinance
definition of “owner.” See MCO § 244.40.
Frenz argues, however, that “interest holder” must mean “owner” because,
otherwise, section 244.1840(1)a would be unconstitutionally vague as applied to this case.

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A statute is unconstitutionally vague if “it fails to give a pe rson of ordinary intelligence a
reasonable opportunity to know what is prohibited or fails to p rovide sufficient standards
for enforcement.” In re Charges of Unprofe ssional Conduct Against N.P. , 361 N.W.2d
386, 394 (Minn. 1985). And “[t]he [tolerable] degree of vagueness . . . depends in part on
the nature of the enactment.” Vill. of Hoffman Estates v. F lipside, Hoffman Estates, Inc. ,
455 U.S. 489, 498, 102 S. Ct. 1 186, 1193 (1982). Regulation of business behavior “is
subject to a less strict vagueness test,” as businesses “can be expected to consult relevant
legislation in advance of action” and “to clarify the meaning o f the regulation by its own
inquiry, or by resort to an administrative process.” Id.
Frenz, as a party “challenging the constitutionality of a stat ute on vagueness
grounds[,] must show the ordinan ce lacks specificity as to its own behavior rather than
some hypothetical situation.” Hard Times Cafe v. City of Minneapolis , 625 N.W.2d 165,
172 (Minn. App. 2001) (quotatio n omitted). A person of ordinary intelligence in Frenz’s
situation would have clearly understood that “interest holders” under section 244.1840(1)a
are broadly defined to include prominent indirect owners such a s Zorbalas. The
September 16 letter explained that it, as a “request” under section 244.1840(1)a, “shall be
construed broadly to include” interest holders of any sort, direct or indirect. Frenz was also
asked specifically if Zorbalas w as such an interest holder of t he enterprise. Frenz fails to
make the requisite showing for a successful vagueness challenge.
Frenz’s argument for why his 2016 affidavit satisfied section 244.1840(1)a is thus
unavailing. And, apart from the in accuracy of the affidavit, we also observe that the city
adopted the AHO’s finding that Frenz made material misrepresentations and omissions in

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2013. In early 2013, when Frenz was applying for licenses on be half of the then-newly-
formed ERH, he was explicitly ask ed to provide “information reg arding any and all
partners in [ERH.]” He submitted a list of the ERH members in r esponse, omitting the
names of AOC Members. Also, when asked, about a week later, for assurance that Zorbalas
was not in the picture, Frenz failed again to disclose Zorbalas ’s involvement in ERH. At
the hearing before the AHO, Frenz admitted that these representations to the city were not
accurate.
Frenz suggests that his false statements in 2013 cannot be use d to revoke ERH’s
2016-17 licenses because rental licenses expire each year on Au gust 31. We disagree.
Section 244.1910(a)(15) requires applications filed under section 244.1840 to be “current,
complete, and accurate.” MCO § 244.1910(a)(15). Section 244.184 0 does not require
applications to be filed every ye ar. Once a license is issued b ased on a section 244.1840
application, the licensee can apply for renewal “in such abbrev iated form as deemed
sufficient by the director to verify current information on fil e.” MCO § 244.1860 (2019).
Modification or, in some cases, refiling of a section 244.1840 application is required when
the information in the application on file changes. See MCO §§ 244.1840(6), .1870(a)
(2019). Nothing in the record suggests, nor does Frenz argue, t hat ERH’s original
applications were modified or re placed since 2013. Therefore, f or purposes of MCO
§ 244.1910(a)(15), the applications on file for ERH’s 2016-17 l icenses were those that
ERH had submitted several years earlier as the new owner of the properties. The record
supports the finding that ERH’s applications were inaccurate at their inception and
remained so in 2016.

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In sum, Frenz fails to meet his burden to demonstrate error in the city council’s
decision to revoke the ERH licen ses for violation of section 24 4.1910(a)(15). Because
“[f]ailure to comply with any of [the] standards and conditions” under section 244.1910(a)
is “adequate grounds for the denial, refusal to renew, revocation, or suspension of a rental
dwelling license,” MCO § 244.1910(a) (emphasis added), we need not address whether the
city erred in concluding that the ERH licenses were also in vio lation of section
244.1910(a)(13)a.
II. Frenz fails to demon strate error as to his and his wife’s ineligibility.
Based on the multiple revocatio ns of the ERH licenses, the city adopted the AHO’s
recommended findings and conclusions and determined that Stephe n and Jennifer Frenz
are ineligible to hold or have interests in rental-dwelling lic enses for five years. “Any
person(s) who has had an interest in two (2) or more licenses revoked . . . shall be ineligible
to hold or have an interest in a rental dwelling license or provisional license for a period of
five (5) years.” MCO § 244.1910(a)(13)a. The city council determined that the Frenzes had
interests in the ERH licenses, which numbered more than two, and pronounced both of the
Frenzes ineligible to have interests in any other licenses.
Frenz does not dispute that, s hould the ERH licenses be revoke d, he is ineligible.
The point of contention is the ineligibility of his wife. Frenz argues that his wife “suffered
a constitutional violation” because she was determined ineligib le although “no notice of
noncompliance or revocation was sent to her” and the city “did not make her a party to any
revocation proceeding.” This issue is not properly before this court. Jennifer Frenz could
have petitioned this court for a writ of certiorari but did not do so. See Youngstown Mines

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Corp. v. Prout, 124 N.W.2d 328, 349 (1963) (“Th e test of the right to certior ari, so far as
parties are concerned, is whethe r the person seeking the writ w as a party in form or in
substance so as to be concluded by the determination of the matters in controversy.”). And,
“[g]enerally, one does not have standing to assert the constitutional rights of a third party.”
In re Welfare of Children of J.R.B. , 805 N.W.2d 895, 906 (Minn. App. 2011) (quotation
omitted), review denied (Minn. Jan. 6, 2012). We decline to review the constitutionality of
the city’s action against Jennifer Frenz.
Affirmed.