ELIZABETH NELSON:
Welcome to Episode 4 of Hollow Hype. In Episode 3, Ann Arbor City Council approved an ordinance to regulate short term rentals or Airbnb. The ordinance would require residents to register and get a license to use their own homes periodically for Airbnb. Full-time businesses - homes where no one lived - would be banned from residential neighborhoods in the City of Ann Arbor.

In January 2020, when City staff recommended the regulation, Mayor Christopher Taylor defended the expectations of residents moving into the community.

[2020 recorded meeting]

MAYOR CHRISTOPHER TAYLOR:
For me, the key difference… folks that avail themselves of Airbnbs, of short-term rentals, they do not become part of our community. People who move into residential districts have an expectation that they're moving into a neighborhood, that they're moving into a community. The proliferation of short-term rentals in residential districts frustrates that expectation.That for me is a key difference.

ELIZABETH NELSON:
In December 2020, Mayor Taylor defended the expectations of investors. He advocated for a loophole that would allow full-time businesses to continue operating in residential neighborhoods.

[2020 recorded meeting]
MAYOR CHRISTOPHER TAYLOR:
It’s just unnecessary. I think that the proposed prohibition, rather the existing prohibition, does violence to people's existing expectations, does violence to their ongoing exercise of their… the rental their property as had been. And that we going forward can and ought to make sure that everybody is operating in a manner that is consistent with good neighborliness.

[MUSIC]

ELIZABETH NELSON:
My name is Elizabeth Nelson. From 2018 to 2022, I served on Ann Arbor City Council. That experience taught me a lot. Mostly, I learned: people will say just about anything if they think you’ll believe it. This is HOLLOW HYPE.

I sponsored the resolution to study short term rentals in March 2019. My colleagues supported the idea of regulation but it took us a year and a half to approve an ordinance… it only happened after community engagement, months of staff review, and hours of both public comment and City Council discussion.

In September 2020, a majority of City Council understood that policy decisions should not be driven by a handfull of investors

[MUSIC]

ALI RAMLAWI:
I've been running Jerusalem Garden since 93, so been there for 33 years. now. I've been running it, day-to-day operations there every day, etc., for 33 years.

ELIZABETH NELSON:
That’s my friend Ali. We served on Ann Arbor City Council at the same time. We sat through a lot of meetings together

ALI RAMLAWI:
Way back in the day, my family had another business, Ralph's Market, back in 1984/85, when I was really young. That was my first introduction to Ann Arbor, and I would come out and hang out in the summer time, and there was so much fun things to do.
It was on Packard and State. State and Packard, where the Five Corners development is going on now, There was a pet store there, like a place that sold fish, and there was Bell's Pizza, there was Double Focus across the street, where... I'm not sure what there is now, just a revolving door of businesses,

ELIZABETH NELSON:
Ali is everything you’d want in an elected representative: smart, sincere, committed to the community, and honest. He was also the first Palestinian American to be elected to Ann Arbor City Council.

During our term, his business was threatened. On social media, the Mayor’s friends attacked Ali, in mostly childish ways. Sometimes Council Members joined in. During COVID, when our ZOOM meetings ran late into the night, Ali would sometimes call me up afterwards and joke, “That was gross. I feel like I need to take a shower.”

When Ali and I get together now, we reminisce about the absurdity of it all.

ALI RAMLAWI:
When we won in 2018. We looked at everything we could do for affordable housing.
We put 11 city owned properties on a list and evaluated them and proposed that the City develop those properties and keep them under their control for affordable housing for Ann Arbor residents. So we're looking at everything that we have at our disposal to bring affordable housing to reality. One of the other things that I was noticing - and many other people - that the phenomenon of short term rentals was this 800 pound gorilla that nobody wanted to tackle.

So the ordinance passed, but there was a lot of discussion about how we're going to grandfather the ones that are in and not allow any more to come online. And then the city staff had issues about knowing which properties had been used for short term rentals and which ones were long term rentals. We needed to allow them time to get their house in order, do something different with the property, sell them, repurpose them, turn them into long term leases, et cetera.

But at the same time, there was an election going on.

[MUSIC]
ELIZABETH NELSON:
In 2020, City Council elections were flooded with money. In each ward, campaign spending tripled or quadrupled. Mayor Taylor organized a slate of candidates that collected unprecedented amounts of money, much of it from out of town and a small network of wealthy donors. In one City ward, the wife of a tech billionaire self-funded tens of thousands of dollars. That seat was essentially bought.

The Mayor’s coalition in 2020 campaigned aggressively on the idea that incumbents did not do enough to expand housing supply. As challengers, they promised to do much more to address the shortage of housing in the community.

New council members took office in November 2020. At their third meeting, Mayor Taylor sponsored a resolution, directing staff to write amendments to the short term rental ordinance, three months before it would be implemented.

Mayor Taylor’s resolution asked for a “regulatory structure to enable the continued operation of preexisting short term rentals.” In other words, he wanted to protect the investments of Heidi and a handful of others.

A resolution typically includes a lot of explanation of why it’s the right thing to do. Mayor Taylor’s resolution was pitifully short. It simply acknowledged that “Short term rentals are an emergent industry in Ann Arbor” and “numerous property owners had gotten into the business before its regulation”. Whoever wrote the resolution didn’t even try to defend it.

Heidi was pleased, of course.

[2020 recorded meeting]

HEIDI:
I appreciate the actions taken to revisit the STR ordinance and to determine regulatory structures that will allow continued operation of pre existing short term rentals.
While I strongly disagree that there's a connection between STRs and affordable housing, I do see the passion and the advocacy for attention to this issue as something that's critically important. I want to say that this advocacy has led me to consider what I can do to contribute to addressing this challenge.

ELIZABETH NELSON:
To say I was horrified would be an understatement.

[2020 recorded meeting]

COUNCIL MEMBER NELSON:
Our local Ann Arbor tenants union and DSA organization, including a recent DSA candidate for council oppose this agenda item for all the obvious reasons around housing and how short term rental units deplete the local housing supply that is available to year round residents. I just want to add that recent council campaigns centered on the idea that we need more housing in the city. And if those ideas were anything more than words,I think that a vote on this should be very straightforward. The units at stake here are somewhere between a hundred and 200 units of housing.

ELIZABETH NELSON:
Then Council member Grand lined up with brand new colleagues in support of the Mayor’s resolution to protect existing businesses

[2020 recorded meeting]
COUNCIL MEMBER GRAND:
This has been, you know, had an impact on housing affordability in larger communities where tourism is a bigger part of their economy, but in small cities like ours, it doesn't seem to be having as big of an impact.

ELIZABETH NELSON:
Eleven months earlier, her position was very different.

[2020 recorded meeting]
COUNCIL MEMBER GRAND:
But we often are battling for small number of units at a time. So I don't think that this is really any different than when we're advocating for ten units in a high-rise to be affordable as well But sometimes we have to think about the individual lives and individual families when we think about affordable housing

ELIZABETH NELSON:
Without exception, New Council Members supported the investors, like Heidi.
New Council Member Jen Eyer spoke out. Heidi had donated to her election campaign.

[2020 recorded meeting]
COUNCIL MEMBER EYER:
When we create ordinances as city council members, it’s my view that we need to do so in a way that balances various needs in the community and does not put the city at unnecessary financial or legal risk.

ELIZABETH NELSON:
New Council member Erica Briggs went further

[2020 recorded meeting]
COUNCIL MEMBER BRIGGS:
I think as long as these are properly regulated and we address the nuisance issues that were present from a few bad actors, I think what we're adding to our community is something of benefit which has been mentioned by some of our callers earlier tonight

ELIZABETH NELSON:
New Council Member Travis Radina repeated the talking points of investors.

[2020 recorded meeting]
COUNCIL MEMBER RADINA:
I've had conversations with some of the property owners who are using these for short-term rental purposes. I think it's been unfair to characterize them as simply utilizing residential areas for tourism purposes.
I've heard of folks who are visiting relatives at the hospital and simply want to go home to a home at night rather than a hotel.
Frankly, I think just doing what's best by the people who have been running these short-term rental businesses in good faith and legally for a period of time, it's the right thing to do.

ELIZABETH NELSON:
Staff was caught off guard and acknowledged: this was a drastic shift in policy.

[2020 recorded meeting]
DEREK DELACOURT:
If Council wants to create some type of quote unquote grandfathering and passes this resolution, we're going to go back as staff, evaluate that with the attorney's office, discuss it with the planning commission, and then come back and make our best recommendation how to do it. We're going to need some time to look into it.
At this point, the resolution is asking us to go back and find a way to allow the existing
legally existing short term rental non owner occupied short term rentals to exist, post
March 1. Up until now that has not been anything staffs been directed to do.

ELIZABETH NELSON:
Everything about that Council discussion was exasperating. My friend Ali said what I was thinking

[2020 recorded meeting]
COUNCIL MEMBER RAMLAWI
City Council did not start this with the idea of… I don't want to go backwards. I would rather talk about going forward here. This resolution here takes us backwards. Because it does take away housing supply. It does start picking winners and losers. It does create more of an unstable climate legally when we start applying unequal applications of the zoning ordinance. I think that creates more issues for us than what we currently have.

ELIZABETH NELSON:
Every newly elected member of Council voted with Mayor Taylor in directing changes to the ordinance. They all lined up in support of Heidi and a handful of investors who had Airbnb businesses in residential neighborhoods.

[MUSIC]

ELIZABETH NELSON:
A week after that vote, I published an essay on my website, calling out the hypocrisy of my new colleagues. In recent campaigns, they had argued that the need for more housing took priority over virtually any other concern. It was a crisis.

In 2019, a majority of City Council rejected a plan to build a nursing home on top of a high concentration of groundwater pollution. Experts warned that dense development at this location could cause the pollution to spread.. That pollution has since been declared a Superfund site.

In Council campaigns, this polluted site was held up as evidence that incumbents did not care about housing, that they were broadly anti-housing. On behalf of investors, Mayor Taylor and others argued that the city desperately needed housing supply. Now, when a handful of investors wanted to reduce housing supply by hundreds of units, Mayor Taylor and his allies were eager to help them. The crisis around housing supply had magically disappeared.

Did the new council members support housing supply or did they support investors?

In my essay, I emphasized that City Council was under a lot of pressure to give investors what they wanted. Without naming her, I shared the story of my phone call with Heidi six months earlier, including the “I don’t mean a bribe” comment. In explaining the conversation, I described Heidi generically as a short term rental investor. My essay set off a firestorm.

[Typing on a computer, sound effect]

Within hours, I got an email from Heidi herself. She included Mayor Taylor and Council Member Jen Eyer on her email. She used words like despicable, libelous, and slanderous. She made this remarkable statement

I can’t think of anyone who would waste their time or trust you with that kind of offer.

I think she meant this as an insult, but I read it as a compliment. Heidi seemed to be saying that I was untrustworthy. I did not want to be trustworthy for that kind of offer.

Heidi’s email revealed something else– in adding Council Member Jen Eyer to the message, she used Eyer’s personal email address, rather than the city address that elected leaders were instructed to use for all City business. Presumably, Heidi’s email auto-filled the address she typically used to communicate with Eyer.

[MUSIC]

In response to my essay, Council Member Eyer lashed out publicly: on social media, she followed Heidi’s lead in suggesting that the conversation never happened. She speculated further about what I had, in her words,“alleged.”

Eyer proposed that the “I don’t mean a bribe” conversation constituted an actual bribe and therefore it was a felony. She concluded that I was guilty of a serious breach of duty for failing to report that felony. Using phrases like “if it happened”, she landed on the tidy logic that I was probably lying, but even if it was true, I was the guilty party. Eyer boasted that she had reported me to the proper authorities.

Just a couple weeks later, the FBI stood on my front porch.

In retrospect, this series of events is almost comical. Jen Eyer had apparently directed the FBI to talk to me. I did not yet know anything about Heidi’s past, but the FBI definitely did. Jen Eyer had given me a unique opportunity to discuss Heidi among the people who knew her criminal background and also knew that in other communities, she had convinced elected officials to help her.

I couldn’t talk to the FBI when they first showed up but I wanted to.. I told them

“I want to talk to you, I would talk to you now, but I have to go… I have an appointment this morning, but I’m free this afternoon.”

The agents gave me their cards and I promised to call them back. On the short drive to my appointment, I called a friend. I was eager to talk to the FBI and tell them everything I knew. My friend insisted that I should talk to an attorney first. He had a suggestion for who and he gave me the number.

After my appointment, I called Nick the Lawyer and explained the situation. He said it was never a good idea to talk to law enforcement without a lawyer. I wasn’t convinced. I had done nothing wrong, I was smart enough to handle this. Nick sent me a video, a lecture about why no one should ever talk to law enforcement without a lawyer, how even lawyers needed lawyers to navigate these situations. Reluctantly, I agreed that Nick could help me handle it. He didn’t think I should talk to the FBI at all. He thought he could make them go away.

I convinced myself that this probably made the most sense. I had already put the whole story on my website, I thought. There was nothing else to share.

Several weeks went by and I didn’t hear anything from Nick. I was at the preschool when he eventually called. The kids had gone home and we were preparing for the next school day. I was surprised to hear from Nick.

[MUSIC]

He was surprised he hadn’t heard from me.

I sent you an email… did you get it?

I hadn’t gotten it. I would later discover that his emails had been going into my spam folder. I had missed several updates. Nick explained.

They want you to answer questions before a grand jury next Wednesday.

I was too stunned to speak. Nick filled me in

I can hear that you’re shocked. So they think you might know something and they’re playing hardball with the grand jury.

I struggled to wrap my head around this news.. I fixated on logistics.

I teach preschool on wednesday until 1:30… depending on where it is, the earliest I can be anywhere in Ann Arbor is maybe 2 or 2:30… if it’s in Detroit… I don’t know how soon I can get there….

Ultimately, the grand jury did not happen. Instead, we scheduled a meeting at Nick’s office.

[Papers shuffling]

This meeting included more people than I expected: the FBI agents who had knocked on my door, several US Attorneys, Nick and me. Before the meeting, we gave them every written communication between me and Heidi. I wrote up a summary of every interaction I had ever had with her.

They asked me questions about my Council colleagues and emphasized that I was not the person they were interested in. I remember they also asked me more than once if I planned to run for office again. I couldn’t figure out how that was relevant to anything, but I told them that I actually wasn’t sure. These local elections had changed a lot in just two years. The last election cycle had demonstrated how much money the Mayor’s candidates could leverage from special interests, family, and the wealthiest people in town. I wasn’t a reliable vote for special interests with money. I didn’t have enough wealthy friends or family to compete in the new environment.

At the end of the meeting, one of the FBI agents asked me to please reach out if I had any suspicions about anything. They relied on information from people like me, who might know something.

[MUSIC]

For several years, I had no idea why the FBI was so interested in talking to me about Heidi.

Since that awkward meeting, I’ve learned a lot more about Heidi. I’ve learned about how strategic she was in other places, targeting people who were connected, people who would be useful to her. In Ohio, she found community leaders to support her schemes. Their names appear on the paperwork for Sequelle, the company Heidi used to launder federal funds.

JACK MOBERG
For a period of about 14 years I was president of the Marietta Chamber.
I just knew that this was a very good thing for Southeastern Ohio and Marietta and Washington County in particular and that It was going to take some big bucks and Sequelle was here to make that happen
I was certainly a cheerleader, can't deny that and I would have said it before I met you.
As the chamber guy, if it's good for Marietta, the chamber ought to be involved, and as the hired hand, I ought to be a face in the picture. And that's really kind of my position. I should be a promoter, not necessarily a rah-rah guy, but certainly a positive face forward, “let's make this happen” kind of guy.
Jim was on the board I think at the chamber or was he… Jim was very active in community activities as president of Dime Bank
Mark Bradley was Marietta savings and loan… Larry Holdren was with People's and Mark Bradley was president of People's at the time

I have a friend who Invested a lot of his business's time and resources in promoting Sequelle and He took a big bite

ELIZABETH NELSON:
Sequelle eventually moved from Ohio to West Virginia, just twenty minutes away, across the river. The state of West Virginia was an easier target.

MARTY SEUFER:
Just outsider looking in… I think the development office was… and they still are…they're so hungry to get business in West Virginia that maybe it's not as hard over here.
They want jobs. You know, we need it.
We're not getting the bigger companies that would employ people.
At that time there were a lot of pockets that just didn't have access to the Internet.
So when somebody comes in and says hey we can provide and you know it'd be like somebody bringing in the cell tower for out and around 50 where we don't have coverage. Heck yeah we want it. You know so I think that's that that was that.

ELIZABETH NELSON:
Thanks for listening. Visit HollowHype.com to find more information about this episode.

Coming up in episode 5: New members of Ann Arbor City Council give Heidi the loopholes she needs to continue her Airbnb business. Heidi hires a member of the City Planning commission to work on her projects. She builds relationships with staff at city hall, travelling with them to conferences and negotiating deals to buy City property.

If you have something to share about Heidi’s activities in Michigan, Ohio, West Virginia, or California. Please reach out to hollowhypepodcast@gmail.com