District Court Judge Jeffrey Thompson will determine the fate of Winona's 30 percent rental cap, after a group of homeowners suing the city over the rule, filed for summary judgement in the case.
The two sides presented arguments Wednesday over the rental regulation, which prevents homeowners from getting a rental license when more than 30 percent of the dwellings on the block already have such a license. The rule has been in effect since 2005, and aims to prevent student rentals from dominating residential neighborhoods.
The nonprofit law firm Institute for Justice Minnesota Chapter is representing the homeowners: Ethan Dean, Holly Richard, and Ted and Lauren Dzierzbicki. Attorney with the firm, Anthony B. Sanders, said the suit is considered a "Civil Rights Complaint and Declaratory and Injunctive Relief," claims damages of $1, and simply asks that the rule be abolished.
"This is a radical restriction on property rights," Sanders said during the hearing Wednesday. He explained that the rule violates the U.S. and Minnesota constitutions, which protect equal property rights. The 30 percent rule is not based on a zoning district, but provides rights to certain homeowners based solely on whether their neighbors hold rental licenses. "The fundamental rule of constitutional law is that the government cannot legislate arbitrarily," he said.
Not only are his clients restricted from renting their homes, said Sanders, but appraisals show two of his clients' properties would have been worth $20,000 over current appraised values if they were able to obtain rental licenses. George Hoff, representing the city of Winona, challenged the appraisals during the hearing.
Hoff argued that the rule affected property owners the same, and that elected city leaders had implemented the regulation in response to valid concerns: nuisance issues with areas saturated by rentals, the deterioration of housing due to rentals and the loss of owner-occupied residences. He said the council had the right to implement the rule in order to protect the welfare of city residents, adding that the plaintiffs wanted the judge to act as the council and overturn a valid city regulation. Concerns about the rental cap, he added, should have been presented to the Winona City Council when the rule was adopted.
Hoff also implied that the plaintiffs should have attended a Winona City Council meeting in early 2012, when the 30 percent rule was moved from the city zoning ordinance and into the housing code section of the city charter. At the time, city staff members said the city charter included broader powers than those outlined in state statutes for cities' abilities to regulate under zoning ordinances. Hoff said the plaintiffs should have argued against the rule at the 2012 hearing. "They didn't show up and say 'You can't do this because it's litigation strategy,'" said Hoff.
Sanders also claimed that some rental license holders do not rent their property, and that they may have gotten the licenses in order to reach the 30 percent cap and ensure their neighbors could not be certified to rent.
Hoff questioned whether people can take advantage of the rule in order to infringe on neighbors' abilities to obtain rental licenses, as Sanders described, adding it was unclear if Sander's assertion was true.
On July 25, 2011, during a public hearing on a plan for Winona State University to rent "Theme Houses" for students, Winona City Inspector Greg Olson said he had obtained a rental license for his home in order to prevent his neighbors from renting. He said people needed to remember neighborhoods are for families and for raising children. "I don't want to live next door to a rental, and I don't want to live next door to a theme house," he said during the hearing.
Judge Thompson gave Hoff a week to respond to Sanders' motion, after which he is expected to rule on the case. Keep reading the Winona Post for the full story.