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Extension to 30% rental rule exception (02/20/2013)
By Emily Buss

As the motion for summary judgment in the case against the city's 30 percent rule rests in the hands of District Court Judge Jeffrey Thompson, the Winona City Council is expected to extend its temporary rental license provision once again.

As this issue was going to press, the council was set to discuss amending the section of city code to extend the ordinance for another year, after the inspections department recommended the extension, citing a soft real estate market.

The extension is an attempt to accommodate the needs of local homeowners who are struggling to sell their properties under the city's 30 percent rental rule, which allows only 30 percent of the properties on a given block to be rental properties. Anthony Sanders, the Institute for Justice attorney representing the four Winona homeowners suing the city, is not impressed.

“What the council should be debating is whether to repeal the 30 percent rule, not whether to continue to adopt the sham band-aid of a temporary license ordinance,” Sanders said.

If extended, the provision would allow homeowners, whose property is actively for sale and subject to the 30 percent limitation, the opportunity to obtain a temporary rental license until April 19, 2014. However, Sanders said because the temporary licenses cannot be transferred to buyers of the home, property values continue to fall.

“Leases issued for properties with temporary licenses terminate upon a sale, which makes it harder to find tenants,” Sanders explained. “Tenants, like anyone, want stability in their living arrangements, but even if they sign a year-long lease, if the property has a temporary license, they may be kicked out of the house at any moment if the house is sold.”

If approved, this would be the fourth year the council were to extend the temporary provision.

“Whether or not it is extended for another year, [the temporary rental license] continues to be a cold comfort for Winona homeowners and their property rights,” Sanders added.

The council is also expected to update the language in the “Rental Housing License” section of city code.

Recently, the 30 percent rule was moved from chapter 43 Zoning to chapter 33A Rental Housing. The city board of adjustment was the previous issuer of rental licenses, but because the board deals with zoning issues, not rental housing issues, they are no longer the authoritative entity for rental licenses.

If approved, the updated chapter relating to rental housing would state that after a unit is found to meet or exceed requirements, a “building official or housing inspector” could issue a rental license.

Trial update

It has been nearly a month since the 30 percent rule case against the city of Winona was presented in court. Sanders filed a motion for summary judgment on behalf of Ethan Dean, Holly Richard, and Ted and Lauren Dzierzbicki. Sanders said the city has been “playing musical chairs with” the property rights of the four Winona homeowners.

During the hearing last month, Sanders said the 30 percent rule was a “radical restriction on property rights,” and was adamant in his belief that the city code violates both the United States and Minnesota constitutions.

The suit was first filed in late October 2011 when the four homeowners encountered separate but similar problems in renting out houses that they had difficulties selling. Even though Sanders’ evidence presented during last month’s hearing proved that two of his clients’ properties would have been worth $20,000 over current appraised value if they were able to obtain rental licenses, money is not the issue, he said.

The homeowners are seeking nominal damages in the form of a $1 settlement, a “symbol of past rights violation,” Sanders said, and asking that the ordinance be overturned.

George Hoff, representing the city of Winona, argued during the hearing that elected leaders had the right to enact the ordinance in order to protect the welfare of city residents.

Sanders added that while the official ruling on the case could still be several months away, he is confident that the ruling will be in favor of his clients.

“We’ll have to see what the judge says,” Sanders said. “Even if the judge rules that just our clients should be able to get rental licenses, that small move could have a wider impact.”

Keep reading the Winona Post as this story continues to develop. 

 

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