MN Court of Appeals Upholds Winona’s “30% Limit” on Rental Licenses – Real Estate Matters
Residential Real Estate, Student Housing

MN Court of Appeals Upholds Winona’s “30% Limit” on Rental Licenses

In a case being followed by many college towns across the state, the Minnesota Court of Appeals recently upheld a City of Winona ordinance limiting rental licenses.  The ordinance caps the number of properties elgible for rental certifcation to 30% of the properties on a block. Licenses are granted on a first-come first-served basis. Rental properties existing prior to the adoption of the ordinance are exempt from the requirement.

The ordinance was adopted in 2005 as a result of an increase in the number of rental properties and concerns about off-street parking. A City task force found that rental housing comprised about 39% of Winona’s housing units, but were resonsible for 52% of complaints. The task force paid special attention to neighborhoods surrounding Winona State University, which has enrollment of 8,900 students, and found that rental properties tended to “become run-down and unnatractive.”

The appellants in the case are the owners of three house who were each denied rental licenses due to the 30% cap. One homeowner wished to rent his home while he was on military duty in Afgahnistan, while another sought to rent his property out after he was unable to afford his mortgage payments. Their attorney Anthony Sanders stated their case as “an issue of whether you can take a perfectly safe home and rent it out to perfectly safe tenants, of whether you can be denied that right because your neighbor’s already done it.” According the Sanders the plaintiffs will ask the Minnesota Supreme Court to consider the case.

In its ruling the MN Court of Appeals found that it could “easily conclude that the public has a sufficient interest in rental housing to justify a municipality’s use of police power as a means of regulating such housing.” In upholding the lower court’s decision, the Court of Appeals found that the 30% rule was rational, and did “not delegate legislative power to other property owners,” it affirmed the district court’s award of summary judgment to the City.

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