Pangea was founded by Al Goldstein, a Deutsche Bank investment banker who quit to found a massive, intercontinental payday lending outfit; he tapped the investors that he enriched with his payday lending business to stake him $180 million and bought up thousands of low-rent buildings in Chicago’s poorest neighborhoods (which are also Chicago’s blackest neighborhoods).
Pangea took over buildings (some of them derelict and abandoned or squatted) and renovated them, and rented them out, becoming the city’s largest landlord and collecting many public accolades for their work in helping Chicago’s affordable housing crisis.
But on the way, Pangea also reinvented how tenants get evicted in Chicago, taking eviction from a rarity in the city to a commonplace occurrence, inventing a playbook for rapid evictions that other landlords are now following, creating an epidemic of evictions in a city where eviction was once unheard-of.
A very long, in-depth report in the Chicago Reader investigates the conditions in Pangea rental units, and finds many tenants who have complaints about substandard maintenance, including problems with mold, asbestos, toilets, power, etc, as well as a bewildering array of fees levied against them (along with surprise rent-hikes). Tenants struggle to get justice, not least because Pangea owns its buildings through thousands of shell companies that trade the titles around between them, making it hard to name the right owner in court filings.
The business has grown by 13,323% since its founding, with annual revenues of $113m.
Pangea’s eviction playbook involves dragging tenants in arrears into court — Chicago’s eviction courts are incredibly stilted and one-sided and don’t even keep transcripts of hearings to be used in appeals — and then getting them to sign paperwork saying they’ll pay high fees and penalties as well as paying back-rent, paperwork that also makes tenants surrender their right to legal remedies for the hazardous conditions in their homes.
Illinois has a large pool of “homelessness prevention grants” that could save tenants facing evictions from Pangea, but Pangea will not accept these grants (according to a nonprofit that administers these grants, Pangea is the only landlord in the city that won’t accept them). Pangea doesn’t fully explain why they won’t accept these grants, but they do say that they won’t accept money that “restrict our legal remedies or rights under the terms of the rental agreement” — and to get the grants, Pangea would have to suspend their eviction proceedings, which would allow tenants to retain the right to demand working heat, toilets and water, as well as mold abatement and other basic maintenance.
Getting evicted is a lifelong trauma: financially distressed tenants don’t just lose their homes and their possessions, but they also face penalties everywhere else they rent, with higher security deposits and fewer options for every other lease they sign. That’s one of the reasons Chicago took so many measures to prevent evictions, which worked until Pangea figured out how to get aroudn them.
Meanwhile, Chicago’s eviction courts remain a shambles: no record-keeping, a 60% eviction rate for tenants, and no legal representation for the majority of tenants facing evictions.
In theory, Chicago tenants have access to an alternative system, mediation via the the Center for Conflict Resolution, which routinely mediates eviction disputes with the majority ending in agreements that are fulfilled by both parties. But Chicago eviction courts do not inform tenants of their right to access this system, and so they go through the courts, lose their homes, and are cursed by the stain of an eviction forever.
The building in Austin where Eyevie McHenry lived had a lot of problems. Department of Buildings records indicate tenants complained about leaky ceilings, mice, roaches, and bedbugs once Pangea took over in 2015. When the Reader visited her in early March last year, McHenry, 30, was heating her one-bedroom apartment with the stove because the radiator wasn’t working and her maintenance calls had gone unanswered. She’d lived there for nearly a year with her fiancé and their small scruffy dog, but they hadn’t bothered to get much furniture for fear of the mice eating through it. Squeals from inside the walls periodically interrupted our interview.
Despite these conditions—and despite the fact that they regularly heard gunshots outside—the rent was $850. Not long after they moved in, in May 2017, her fiancé lost his job. Unable to pay rent in one lump sum, they’d bring the company a few hundred dollars at a time—though they knew they accrued nearly $30 in late fees every month they didn’t pay in full. For three months Pangea took the partial payments. McHenry showed the Reader the receipts they got from the company and said they were never told making partial payments put them at risk of eviction.
By her calculation she only owed Pangea $100 at the beginning of September. But when she went to the office the property manager couldn’t accept payment—the company had filed for eviction. In court Pangea’s lawyers offered a pay-and-stay deal: she could stay in the apartment in exchange for sticking to a payment plan for her arrears and the ongoing monthly rent; if she didn’t make her payments she agreed to an eviction judgment without a trial. Court records filed by Pangea indicate that on November 16 McHenry made a $1,000 down payment toward her nearly $3,000 debt (which included $400 in court costs Pangea passes on to tenants when making such deals). Going forward, she agreed to pay $930 for rent on the first of the month and $323 toward her debt on the 15th of every month.
The deal seemed unfair—especially since her rent had been $80 lower until then—but McHenry didn’t have a lawyer and said she didn’t know she could negotiate.
Pangea has taken thousands to eviction court. The story of an apartment empire [Maya Dukmasova/Chicago Reader]