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‘She absolutely should know better:’ Kenosha city leader in hot water over permits

KENOSHA — If you want to fix up a house to sell for profit you have to get the proper permits.  Or do you?

FOX6 Investigators show you how one couple made a tidy profit rehabbing houses with almost no record of the work at city hall.

Holly Kangas says she and her husband were "a bit naive."  They started flipping houses for profit in Kenosha five years ago.

But we found almost no permits for the rehab work they claim to have done.

Which is all the more troubling when you consider house-flipping is just her side job.

If there's anyone who ought to be held to a higher standard than the average citizen it's a public official.  Holly Kangas is a rookie on the Kenosha City Council, elected for the first time last April.

But public service is only her part-time job. Her real area of expertise is real estate.

Kangas has 34 years of experience as a licensed title insurance agent.

Kenosha Alderperson Holly Kangas declines to be interviewed by FOX6 Investigator Bryan Polcyn before a committee meeting on January 23, 2019.

 

And for the past five years, she and her husband have been flipping houses on the side.  They buy houses cheap, fix them up, and sell them quickly for a handsome profit.

"Should Holly Kangas know better?" Polcyn said.
"She absolutely should know better," Kevin Mathewson, former Kenosha Alderman, said.

Not that Kangas is eager to talk about it. She spoke to the FOX6 Investigators by phone, but insisted the call not be recorded. And when we approached her before a recent committee meeting, she wanted nothing to do with an on camera interview.

"I have 6 minutes to finance committee," Kangas said.
"So let's talk for 6 minutes," Polcyn said.
"Absolutely not," Kangas replied.

Since 2014, her company -- TJN Investments -- has bought at least five homes in Kenosha for an average of $80,000 each, then sold them within six months for an average of $163,500 each -- more than double the purchase price.

That's a total profit of more than $418,000 before expenses.

Former Kenosha alderman Kevin Mathewson says it's how Kangas increased the value of those homes that should be cause for concern.

"When these homes are purchased with the intent to flip them and resell them, safety is very important there," Mathewson said. "You would need electrical permits, you would need plumbing permits."

Jeffrey Labahn says permits are required for safety.

"For your safety, as a homeowner, but also for the public's safety," said Labahn, who is Kenosha's Director of Community Development and Inspections.

The houses Kangas rehabbed were listed on the MLS as having been 'totally remodeled,' 'completely remodeled,' or 'like buying brand new.'  But when the FOX6 Investigators requested copies of any permits issued for the five properties during the time Kangas owned them, we found only two:

An electrical permit for a house at 5306 55th Street. And a fence permit for a house at 1822 25th Street.

There was no record of any permits for the other three during the time Kangas owned them, including 5316 37th Avenue, for which the listing boasted a new furnace, new water heater, new air-conditioning, electrical, duct work and plumbing.

"She either did the work without the permits or she lied about what she did to the home to inflate the value," Mathewson said.

"This house you guys sold, you had 80 percent new plumbing? All new duct work? Is that accurate?" Polcyn said.
"I didn't put that in? The real estate agent did," Kangas said.
"So is the real estate agent wrong? Are you throwing her under the bus?" Polcyn said.
"Absolutely not," Kangas said.

Homestead Realty Agent Christie Graham declined to comment, other than to say she does her business honestly and would never put something in a listing unless the owner told her it was true.

"I think she's trying to deflect blame," Mathewson said.

Kevin Mathewson is a former Kenosha Alderman once fined for failing to get a plumbing permit for bathroom remodeling he had done to his own house. He calls the city's lack of action against Kangas "political hypocrisy."

But Kangas didn't stop with her realtor.

I've explained this to you. We've hired professionals for big jobs," Kangas said.
"So the professionals you hired for this job didn't get the proper permits?" Polcyn asked.
"I don't know, if you didn't find one, then apparently not, and I'm done now, thank you," Kangas said, before standing up and walking out of the committee room.

"At the end of the day it's up to the owner of the property to confirm that everything in the MLS is accurate," Mathewson said.

"Is the owner ultimately the one who's responsible?" Polcyn asked Kenosha Mayor John Antaramian.

"Owner is responsible for the work they have done at the property," he said, though the mayor said he assumed Kangas followed through with whatever she was supposed to do.

"If that's not the case, what should happen?" Polcyn asked.
"If that's not the case, then she would be treated like everyone else would be treated," Antaramian said.

"The city is treating people differently," Mathewson said.

Mathewson is speaking from personal experience.

"I was an outspoken alderman, I often times clash with city administration," he said.

A few years ago, the self-described 'Kenosha Watchdog' remodeled his own upstairs bathroom without pulling a permit.

"I got a knock on my door. It was 2 policeman and a city inspector," Mathewson said.

The city got a warrant to search his house just days before an election. He was forced to get a permit after the fact and pay double the usual cost.

"It's political hypocrisy at its finest," Mathewson said.

Whatever the city does, Mathewson feels it ought to be consistent.

"Because the average taxpayer is thinking, how am I going to be treated if there's ever an issue with me or my property or my home or a home that I just purchased from an alderman," he said.

In a phone call, Kangas acknowledged she and her husband might have "moved some stuff we should not have," like electrical outlets.

But she refused to talk about that on camera.

"I've offered you interviews which you declined," Polcyn said.
"I decline right now, so please get out of my face," Kangas said.

"I don't think anybody is asking for Holly to go to jail or to be prosecuted, but what we are asking for is that the city treat everybody the same," Mathewson said.

After we caught up with Kangas at city hall, she paid a visit to the city inspections department and confessed. Sort of.

“She came into our office, talked to our staff," Labahn said. "She described the scope of the work that was done on those properties.”

"In this case you had to rely on a self-report," Polcyn asked.

"We did," he said.

Labahn said Kangas admitted to having two dishwashers and one furnace installed without a permit. She paid $561 in fines and issued a statement apologizing for her "mistake."

But she said almost nothing about the MLS listing that appeared to show a laundry list of work that should have required a permit.

Jeff Labahn, Director of Community Development and Inspections for the City of Kenosha

"Does a new furnace require a permit?" Polcyn asked Labahn.
"Yes it does," Labahn answered.
"Air conditioner," Polcyn said.
"Yes it does, central air conditioning system," Labahn answered.
"Water heater?"
"Water heater."
"New plumbing."
"New plumbing."
"Duct work?"
"New duct work."
"And electrical."
"Electrical, new electrical."
"Those are all things that would need permits?" Polcyn asked.
"That`s correct," Labahn answered.

"Shouldn't there have been at least 6 permits for that property alone?" Polcyn asked?

"Well, again, if those, we, as things get represented in a listing, those are fairly, those are fairly broad and fairly general. We would need more information to really determine in some of those cases whether a permit was required," Labahn answered.

"I don't think anybody is asking for Holly to go to jail or to be prosecuted, but what we are asking for is that the city treat everybody the same," Mathewson said.

For what it's worth, the home Kangas is currently fixing up has a city permit posted in the front window.

Labahn says there are good reasons they treated Mathewson's and Kangas's cases differently. For one, he says they had a 'reliable' tip from a person who had been inside Mathewson's house and had personally witnessed illegal plumbing work. Plus, Mathewson still owned the house, making it easier for the city to hold him accountable.

By contrast, the five properties Holly Kangas rehabbed have all been sold to new owners, so Labahn says any retroactive inspections or permits would be the responsibility of the current owners.

Whether or not those new owners have recourse against Kangas, Labahn says, is a private matter.

On Monday, February 4th, Kangas sent FOX6 Investigators the following statement:

"Recently it was brought to our attention that during the process of buying and selling homes,
we made the mistake of not ensuring all permits were pulled either by us or by the licensed
contractors we hired.

While some permits were obtained a few were missed. This was not done intentionally and has
resulted in citations being issued by the City of Kenosha which we immediately paid in full. We
did not ask for nor did we receive any special treatment.

Going forward we will follow the permitting process carefully and verify all necessary permits
are obtained prior to initiation of any project. We apologize for this oversight."

--Russ Kangas & Holly Kangas, Alderperson District 4

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