Do Minnesota cities have a legal right to inspect rental properties without any evidence of code violations? That’s the critical question that will be answered in a case now headed to the Minnesota court of Appeals.
The case involves Jason and Jackie Wiebesick’s Golden Valley duplex. The city was requesting an inspection in order to renew the couple’s rental license. City housing inspectors were refused access after the couple’s tenants felt such a visit amounted to an invasion of privacy.
“This is about the right to be left alone,” Attorney Anthony Sanders said.
Sanders is with the Institute for Justice, which took on the couple’s case.
“The principle in this case is whether or not a government can come into your home without evidence there’s anything wrong in your home,” he said.
After the Wiebesicks refused access, the city asked a Hennepin County judge for an administrative warrant. Judge Susan Robiner denied the request. Golden Valley now hopes the Minnesota Court of Appeals will affirm its ordinance and grant the inspection when they hear the case this spring.
“What’s at stake is a simple matter of making sure we have safe housing that meets minimal standards,” Golden Valley Fire Chief John Crelly said.
Chief Crelly says inspections are needed to assure the safety of all tenants as inspections search for fire hazards and other code violations. He says the city will normally give 48 hours of notice.
“In general, there are no unannounced inspections,” Crelly said.
But the Wieiebeseck’s say such inspections are unreasonable, because the city provides on evidence of any prior wrongdoing as basis for the administrative warrant.
“What we’re trying to reaffirm is the old rights that the government cannot pass the threshold unless it has a good reason,” Sanders said.
Chief Crelly points out that not all safety violations are obvious and often catch both tenants and landlords by surprise.
Attorneys for the couple say there’s nothing to prevent a tenant or landlord from requesting an inspection.
The case will be watched closely by other municipalities because the outcome could indeed set a statewide precedent. The League of Minnesota Cities has already filed an amicus brief, supporting Golden Valley and the need for inspection access.
After hearing the case of three Winona property owners fighting the city’s cap on rental houses, the Minnesota Supreme Court decided not to decide.
In a ruling issued Wednesday, the high court found that the case was moot because each homeowner had already resolved their fight, either by selling their house, letting it go back to the bank or gaining a rental license. The order left the city’s law in place.
The homeowners were challenging the city’s 2005 ordinance limiting the number of rental properties to 30 percent per block in some neighborhoods. The rule was meant to ease parking problems and protect the neighborhoods from decline, but property owners who were denied long-term rental licenses sued, arguing the rule infringed on their property rights.
The case was being watched around the state to see whether governments could limit house rentals in specific areas to preserve neighborhood livability. Both the district court and state court of appeals ruled in favor of the city.
Mankato, Northfield and West St. Paul had similar caps in varying percentages.
The court acknowledged that other municipalities have similar regulations, but said they did not operate in an identical fashion and would require independent consideration. “This case does not present an urgent question of statewide significance,” the court found.
George Hoff, an attorney for the city, said the ruling importantly leaves in place the appeals court’s analysis of city power to tackle livability issues. The cap was “the product of a long process that included several studies,” he said.
Plaintiffs, represented by lawyers from the Institute for Justice, a national libertarian nonprofit with an office in Minnesota, argued that the law treats homeowners unfairly. They appealed on grounds of constitutional due process, equal protection and other arguments.
Karen Johnson owns two houses on the same lot in South St. Paul, living in one and renting out the other. But she worries a proposed ordinance limiting rental units to 10 percent of properties per block could keep her out of the rental market.
“If I decided to move away and keep the property, then I would be unable to rent both properties,” said Johnson, a resident for 15 years. “And if I should sell it to somebody, and there’s only one license for one property, it may affect my ability to sell the property to somebody, who may want to own it for rental purposes.”
The controversial provision surfaced in an overhaul of rental policies now before city councilors in the Twin Cities suburb. The so-called rental density cap would direct the city clerk to consider rental license applications on the basis of whether anyone on the block already rents his or her residence. Four Minnesota cities already have rent caps on the books.
“That obviously has been very controversial in other communities, but it has worked effectively to avoid high concentrated areas of rental properties,” said city attorney Korine Land in the first city council meeting on the ordinance. “Because that can be a burden on public service and public safety considerations.”
The development has already prompted a hint of possible legal action. The Institute for Justice previously sued Winona over the constitutionality of the nation’s first rental property cap, but the Minnesota Supreme Court left the legality unresolved because some plaintiffs no longer owned the property at issue.
The city issues about 775 rental licenses to owners of single-family houses, duplexes and apartment buildings. The 10 percent cutoff would apply to single-family properties only.“A future challenge to Winona, or another municipality’s, rental cap could be the case that allows the Court to answer whether rental caps are permissible,” said IJ attorney Anthony Sanders in a letter to South St. Paul Mayor Beth Baumann. “Your proposed ordinance would be just as unconstitutional and unlawful, and also just as bad a policy, as Winona’s.”
“One of the reasons that this ordinance was brought forth was based upon residents in the community that were concerned with the number of rentals on their block and issues related to them,” said South St. Paul city clerk Christy Wilcox in an email.
But the proposed rental limit raises fundamental property rights concerns that have led to complaints and comments at city hall. Critics include some property owners with no intention of renting their homes, but who view the cap as a threat to everyone’s economic freedom.
“If you and I were next door neighbors, and you already had your house rented out, I’m screwed,” said Burnell Beermann, a 76-year-old homeowner who opposes the ordinance. “That’s the thing, it ain’t right. If they’ve got concerns with behavior, they should address the behavior.”
The restriction has also mobilized the St. Paul Area Association of Realtors. The group alerted 1,500 members in the area, leading several to file bluntly worded complaints with city planners.
“Although your office may have good intentions, it is not the cities business to restrict homeowners rights in this fashion,” wrote Tim Krey, a broker from Real Estate Masters. “Drawing up any percentage is completely arbitrary and UNFAIRLY rewards some but not others. This is an intrusion on a basic American property right.”
Others see the robust rental market as a positive economic indicator for the blue-collar community, population 20,000.
“Strong rental demand today is probably going to turn into strong purchase demand in the future,” said Eric Myers, government affairs director for the St. Paul Area Association of Realtors. “There are cities all over the country that would love to have a rental problem today.”
Official promise to iron out the kinks in a city council workshop and meetings with concerned property owners. Lucky duplex owners may get a break.
“If they sell their duplex and the rental density is over 10 percent, the new owner would still be able to obtain a rental license,” said Wilcox. “I believe that some of the wording in the language of the proposed ordinance may be confusing and we will have to tweak it so it clearly defines this type of situation.“
Regardless of the wording, opponents contend the ordinance says the same thing — renters not welcome.
“Your city would be saying to renters: ‘You are second-class citizens,’” wrote Sanders. “’We do not want you living in our single-family neighborhoods. Therefore we are making it illegal for more than a nominal amount of you to live in those neighborhoods.’”
This article was originally written by Tom Steward for Watchdog.org. The article can be read in its entirety here under its original title, “City considers law preventing most residents from renting their homes”.
Home ownership in the Twin Cities is above the national average and also up from 2012. For the second quarter in 2013, the home ownership rate in the Twin Cities was 73.1% up from 72.3% in 2012 but down from its peak of 76.5% in 2005. The national home ownership average for the second quarter in 2013 was 65%, in 2012 it was 65.5% and in 2004 it was at 69%. The home ownership rate is expected to fluctuate around a point much lower than the 2005 peak which reflects a healthier balance between owning and renting.
*These numbers are from the National Association of Realtors second quarter local market report.