For Rossi, business and politics prove a potent mix
But Rossi, then a state senator, was sure he could drive out problem tenants, spruce up the place and make money for himself and his partners, two of them Statehouse lobbyists. He succeeded enough to sell the building 3-½ years later for $600,000 more than what the group paid for it.
The deal illustrates how Rossi's business and political lives have merged at times and would later demonstrate his antipathy to government regulations.
Rossi, 45, is touting his private-sector credentials as he travels the state in his bid to become Washington's first Republican governor in two decades. "I come from a world of no salary, no benefits, you don't work, you don't eat. I understand the free-enterprise system from the ground up," Rossi says in his stump speech.
As a candidate, Rossi has vowed to rewrite or eliminate regulations that are "not central for public health, safety and welfare." As a landlord, he unsuccessfully argued that a county safety review of a hot-water spa at his apartment complex was unnecessary.
Some former tenants praise Rossi, saying he took good care of their living spaces. But one is angry with him for not fixing a mold problem so severe that the county urged her to move for the sake of her children.
Management credentials
Rossi made his money selling apartments and some commercial buildings, and buying several troubled properties. He leveraged properties into bigger holdings while cultivating a political career.
In his 19 years as a real-estate salesman, Rossi purchased six properties: two houses he lived in with his family, and four rentals, two of which he also lived in as he learned the business.
His current holdings consist of a $530,000 house in Sammamish, a $650,000 fourplex in Seattle and a 31-unit apartment building in Lake Stevens managed by an older brother. The apartment building is valued at $1.7 million, according to a county assessment, but Rossi said he wouldn't sell it for less than $2.35 million.
Rossi said his rental property accounted for most — and some years all — his income since 1997, when he became a state senator representing East King County.
By his account, Rossi has managed more people in his seven years as a state senator than he did in two decades of business.
While candidate Rossi notes "I am actually a candidate that does come from the private sector and has signed the front side of a paycheck," his business payroll has consisted largely of an on-site manager, an assistant manager and an occasional contractor.
The last time Rossi supervised people in the private sector he was in high school and college working as a janitor. His title as vice president of Scott Real Estate Investments in Seattle is more a reflection of his value to the company than a description of administrative duties, he said.
Bob Wright, who has worked with Rossi at two companies, including Scott, said commercial real estate is a notoriously fickle business, where annual income from commissions can range from $10,000 to $100,000. Agents who survive, he said, never count their money until a deal has closed, and smart ones buy property.
Rossi said he knew he wanted to own property the day he started selling real estate. He bought his first property — a fourplex — with $805 down when he was 25 and working at Capretto & Clark, a commercial firm that went bankrupt in 1985.
He also got involved in Republican Party politics and declared to a former supervisor, Leon Moore, as early as 1985 that he wanted to run for governor one day.
Rossi officially entered politics in 1992 but lost his bid for the 5th District state Senate seat to incumbent Kathleen Drew. After the campaign, He resumed selling full time and switched his license to the Scott agency.
In December 1993, he bought the 31-unit Hartford Court Apartments in Lake Stevens after its owner, developer/financier Michael Mastro, asked him to sell it, Rossi said.
Mastro, who sells tens — and sometimes hundreds — of millions of dollars in land and buildings annually, is one of the state's largest apartment developers. He and his wife also are among the earliest contributors to Rossi's gubernatorial campaign, giving the maximum amount — $2,500 each — before Rossi even announced he was running.
In 1996, Rossi was elected to the state Senate, defeating Drew to represent the 5th District.
A year into his first four-year term, Rossi said, three investors approached him about buying an apartment building. The group included two government lobbyists: David Ducharme and his father, Richard Ducharme, who represented the Building Industry Association of Washington while he invested with Rossi.
Rossi said he has known the elder Ducharme since the early 1990s. Both Ducharmes also are co-investors in a bank in Bellevue that Rossi provided $10,000 to help start four years ago.
On Rossi's recommendation, the investors bought the Windsor Court Apartments, the Federal Way complex that was the site of the meth bust. "I always saw potential there," Rossi said. "You know, applying the right management, strong management, you know, predictable management."
Handling tenants
Rossi notes that no tenant or client has ever sued him.
"Quite frankly, that's the last thing I ever want to do is go to court," he said. "Most people, what you can do is go to them and say, 'Look, it's not good for your credit, and I don't want to ruin your credit.' You know, 'Move out.'"
In one instance, Rossi initiated an eviction against a tenant on Dec. 11, 1991, when she did not allow him into her unit to inspect or repair it. "She moved out in the middle of the night," he recalled. "Never saw her again. It took two pickup-truck loads to the dump to take all the garbage that was in there."
Rossi said he insists on month-to-month leases for his tenants, so that if one isn't working out, he can terminate the lease.
Rossi said he would rent to low-income tenants who qualify for Section 8 Housing, a government voucher program. But Rossi's month-to-month policy "effectively precludes" Section 8 tenants because the program generally requires yearlong leases to hold down costs, said Pamela Negri, a spokeswoman for the U.S. Department of Housing and Urban Development.
Some tenants who have lived in Rossi's rentals speak well of him.
"Whenever there was a situation that needed to be taken care of, he was right there," said Gloria Thompson of Moses Lake, who lived at Rossi's Hartford Court apartments with her husband in the mid-1990s. "They were constantly keeping it up."
Yvonne Florek, who also lived in Hartford for about a year, said: "I thought he tried to keep them clean and nice."
However, Barbara Brindle, who was a telecom manager for Bristol-Myers Squibb at the time, said Rossi never responded to complaints about mold and moisture when she lived on the ground floor of his Magnolia triplex with her two daughters, ages 2 and 4, in 1993.
The moisture was so bad, she said, that green mold grew on boxes, clothing and toys, and a foot-size mushroom sprouted in the carpet beneath her toddler's crib.
About a month after a broken water heater in the unit above hers exacerbated the problem, she complained to the Seattle-King County Department of Public Health and notified Rossi she was moving.
An inspector, who recorded relative humidity of 61 to 75 percent "plus" in the apartment, verified the mold, and wrote: "I recommend you move away as soon as possible due to possible adverse health consequences from such a polluted environment."
Brindle's rental insurance covered $2,254 worth of water and mold damage to her belongings, and she moved without hearing from Rossi, she said. When she received her damage deposit, he had deducted $100 for cleaning and charged her for two days in August that she lived in the apartment.
Rossi's campaign spokeswoman, Janelle Guthrie, said Rossi didn't recall the specifics of Brindle's case but remembers the broken water heater.
"He says he thinks he thought the apartment would just dry out naturally," she said, adding that the unit was subsequently remodeled and dry enough to pass inspection when he sold the triplex a month later.
Another health-department inspector would later shut down a hot-water spa at the Windsor Court Apartments after learning that the county had not reviewed plans prior to its construction. Rossi, then a state senator, apparently learned about the problem after buying the building but "didn't seem to be real interested in quickly resolving" it, a department supervisor wrote in an e-mail.
A county inspector closed the spa in July 1998, noting safety issues such as the lack of handrails and indicating that the spa's drain and electricity, among other things, would have to be checked to see if they were safe. Rossi objected and took his complaints to the department's top official and to King County Councilman Pete von Reichbauer, who said he remembers Rossi's call but not the details.
Rossi also contacted the inspector's supervisor, Gale Yuen, who wrote in a July 1998 e-mail:
"I told him to get open, we'd like to inspect his spa to see if there are any life threatening safety hazards and to check the chemistry, etc. and that we'd like this plan and permit problem resolved in two weeks. Every time I mentioned 2 weeks, he said, 'we'll see.' when I mentioned $ for plans or field plans, and more money for annual permits, and it seemed like he was getting cold feet. He even mentioned von Reichbauer again so heads up! I'm not sure where this one will go yet."
Rossi met with the department head in October 1998. A letter written by Yuen after the meeting indicates Rossi argued that the spa be opened without the required review.
"Our interest and role revolves around health and life safety issues, which cannot be ignored," Yuen wrote. The review was eventually done, some changes were made to the spa, and it reopened in June 1999.
Rossi considered the issue a paperwork problem, his spokeswoman said, and fought the review because the county had previously signed off on the spa.
"Over the years, he's had to comply with numerous regulations and he's done it," Guthrie said. "There really is no connection between this experience and his goal to improve regulations for the small businesses and citizens of Washington."
Ralph Thomas contributed to this report. Susan Kelleher: 206-464-2508
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