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30 percent rule stands, appeal looms (04/24/2013)
By Chris Rogers

Appeals court is the next stop for the legal opponents of the city of Winona's 30 percent rule, the contentious restriction on the percentage of rental licenses per block. District Court Judge Jeffrey D. Thompson ruled in favor of the city in a summary judgment decision on Wednesday, April 17, saying the homeowners who brought the suit against the city did not have a strong enough case. A legal relocation of the 30 percent rule from the zoning ordinance to the city charter made by the City Council this spring seems to have bolstered its defense.

Attorney for the libertarian Institute for Justice and counsel for the homeowners, Anthony Sanders, says he is already preparing an appeal and expects that the case will ultimately be filed with the Minnesota Supreme Court. What happens in the case will have a big impact for homeowners and renters in Winona as well as for cities across the state with similar rules.

Sanders and his colleagues made two main arguments: first, that the rule violated homeowners' constitutional rights for equal protection and, second, that the city acted outside of its legal authority when it created the rule.

The 30 percent rule violates requirements for equal protection under law because it treats the plaintiffs differently from homeowners in blocks with few rental units, Sanders argued.

However, Thompson ruled that the number of rental units on a block is a substantive difference between such properties a real difference that would exist with or without the rule. The rule treats groups differently because they are indeed different, he held. "The distinctions are genuine and substantial," Thompson wrote, countering claims of unequal treatment. He added, "It is not arbitrary that the 'first-comer' gets the [rental] license."

Attorneys for the homeowners also argued the rule violated the limits of the city's zoning powers because it did not regulate how property was used, but who used it. This spring, the city moved the rule out of its zoning ordinance and into the body of the city charter, where the city has broad police powers that give it more legal leeway to regulate. "If the 30 percent rule falls under the city's broad police powers, it is valid," Thompson wrote. He added that the rule does serve a genuine public purpose: benefitting the "public health, safety, moral, or general welfare" of the city. Sanders maintained that the public benefit is not strong enough to justify depriving homeowners of their right to rent.

It is not the court's place to weigh the wisdom of any regulation, Thompson stressed, and because the court must presume legislation to be constitutional, the burden of proof lies with the plaintiffs. Homeowners did not meet that burden because they did not provide a factual basis that the rule was not legal, Thompson said. Because Thompson determined there were no relevant facts in dispute, he granted the city's request for summary judgment, finding that a trial was unnecessary to make a ruling.

Thompson also critiqued a further argument by the plaintiffs, that the 30 percent rule's "first come, first served" system "unconstitutionally delegated legislative powers" to other homeowners who could determine who received a rental license by applying first and never relinquishing their license, even if they did not intend to rent their property. In other words, Sanders argued that homeowners who beat out their neighbors to rental licenses wielded governmental power over those neighbors. That argument is based on "strained logic," Thompson wrote.

Sanders said that he was not surprised that the case did not go to trial at the district level, though he was disappointed with Thompson's decision. He said he will bring the same fundamental arguments to appellate court. Sanders expects to make oral arguments at appellate court this fall and receive a decision by the end of the year or early next year. He added that the case might make it to the Minnesota Supreme Court by next summer. 


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