Posted by: Patricia Salkin | March 4, 2014

MN Court of Appeals Upholds College Community’s Imposition of a 30% Cap on the Number of Lots on a Block of Residentially-zoned Property that are Eligible to be Certified for Rental – Rather than Owner-occupied – Residential Use

The City of Winona, Minnesota, adopted an ordinance “limiting the number of lots on a block that are eligible to obtain certification as a rental property.” The ordinance limited the number of properties eligible for rental certification to 30% of the lots on a block, with an exception for rental properties existing prior to the adoption of the ordinance. The adoption of the ordinance was prompted by an increase in the number of rental properties, as well as off-street parking issues. From 2003 to 2005 the City implemented several task forces to determine the severity of the impact that high density rental properties, and off-street parking issues were having on the City. Special attention was paid to the residential areas located near Winona State University. In 2005, the task force found that “rental-housing properties comprised about 39% of [the City’s] total housing units, but 52% of complaints . . . [were] related to rental properties.” The task force also found that areas with high density rental properties “tend[ed] to become run-down and unattractive.” And also, that the rental properties comprised about 52% of the City’s zoning violations, as well as at least two calls to police for noise complaints. The City held public hearings on the issues and passed the ordinance December 5, 2005.

In 2011, the appellants, which consisted of residents of the City who sought to rent their homes because they were relocating and wished to rent their homes instead of selling, or were seeking to rent the property as a means of income. All of the appellants were denied rental certification because of the 30% rule, and subsequently brought suit against the City. The appellants challenged the 30% rule alleging that it was an ultra vires act exceeding the City’s zoning authority, and that it was unconstitutional under the Minnesota State Constitution.

The court began with the appellants’ ultra vires challenge and began with an analysis of its police power. It quickly concluded 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.” Moreover, because the City found that the rental properties were having a “negative impact on the quality and liveability” of the area, that such an impact concerned the public interest and welfare of the City. Thus, the City had the police power to regulate accordingly, so long as there was not a conflict with any constitutional provisions. And, although the appellants argued that the ordinance was an improper exercise of the City’s zoning power, not its police power, the court found that because it concluded it was a valid exercise of the City’s police power, it did not need to address the zoning argument. Thus, “the 30% rule was an authorized exercise of police power, subject to constitutional limitations.”

Next, the court addressed whether the 30% rule violated the Minnesota Constitution, specifically the equal protection clause, substantive due process, and procedural due process. With regard to the appellants equal protection clause challenge, the court found that the ordinance was facially neutral because it established a neutral numerical limit for the number of eligible rental properties, it applied uniformly, and the appellants failed to show that it “treat[ed] them differently than other similarly situated individuals.” Next, the appellants alleged that the rule violated their substantive due process rights because it violated their “right to rent their property.” The court assumed for the sake of analysis that the right to rent property was protected under the Minnesota Constitution, but quickly found the appellants failed to meet their burden. The court found that the rule met the rational-basis standard because it “provid[ed] a reasonable means to a permissible objective.” Lastly, the court addressed the appellants’ procedural due process claim, which alleged that the rule violated their due process rights because it “unconstitutionally delegated legislative power to a property owner’s neighbors.” Essentially, appellants claimed that the rule delegated too much power to property owners on each block, creating “mini-republics.” The court did not give much weight to this argument and found that their “dissatisfaction with the local majority’s adoption of an ordinance” placing a limitation on their ability to rent their houses, did not constitute unconstitutional conduct. In sum, the court 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.

Dean. v. City of Winona, 85-CV-11-2329 (Feb. 24. 2014)

The opinion can be accessed at: http://www.mncourts.gov/opinions/coa/current/OPa131028-022414.pdf

Hat tip to John M. Baker, Esq. of Greene Espel, PLLP in Minnesota for sending this opinion to Law of the Land


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