Exceptions to the 30 percent rule for homeowners trying to sell their houses are now a permanent part of Winona City Code. The City Council voted unanimously last week to permanently establish exceptions that allow homeowners in blocks "saturated" by rentals to obtain temporary rental licenses while they try to sell their home. To qualify homeowners must be actively listing their homes for sale and may only rent to a single family. The temporary license terminates once the home is sold.
The 30 percent rule limits the number of rental units that can exist on a given block. Once 30 percent of the properties on a block obtain rental licenses, other property owners on the "saturated" block are barred from obtaining licenses. The 2005 rule was the first of its kind in the state and is currently being challenged at the Minnesota Supreme Court by homeowners who argue it violates property rights. A temporary exception to the rule for homeowners trying to sell their properties was first created in 2009. Homeowners who are not living in the house they are trying to sell may need the income from renting the house to make mortgage payments while waiting for a buyer, supporters have argued.
Each year since 2009, the City Council has extended the exception for a year at a time. Under the new permanent exception, homeowners still must reapply for a continuation of their exception every year, but until now, homeowners could not be sure if the program would continue after the year, or if the council would allow the exception to "sunset" and disappear.
Renewing the exception every year by a vote of the council "got to be a hassle for council and staff," Building Official Steve Carson explained, when asked why staff proposed making the exception permanent.
While the exception is now permanent in the sense that it will not automatically terminate after a certain "sunset" date, Carson said he does not expect it to be in City Code forever. "We should, hopefully, be getting out of that period of houses [being difficult] to sell," he said. With a more fast-paced housing market, the exception might not be necessary, he suggested.
The requirement that exceptions be renewed annually was enacted partly so that city staff can scrutinize whether homeowners are earnestly trying to sell their property or "just trying to skirt the 30 percent rule," Carson explained. For example, staff will examine whether a homeowner's asking price is exorbitant when deciding whether or not to reissue an exception. "If it gets to the third time around, we're going to look at what's going on there," he said of renewing exceptions.
Asked if the new permanency of exceptions would encourage more sellers to make the investments necessary to meet rental codes, Carson said he did not think so.
So far, few Winonans have taken advantage of the exception. The greatest number of exceptions that has been granted at one time is three. Currently only one homeowner has an exception. Carson said that because there are only a few instances in which seeking an exception makes sense for homeowners, such as someone who is transferred out of town for a job, he does not expect to be inundated with new requests.
To apply for an exception to the 30 percent rule, contact the Inspections Department at 507-457-8231.