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Minnesota Rental Caps Under Scrutiny in Winona Case

How far can local governments go in controlling the number of housing units that are devoted to rental housing? In the last five or six, years, the issue has kept coming up - and not only in college towns. The most recent instance was in not in a college town but in a developed suburb, West St. Paul.

As Minnesota commercial zoning lawyers, we know the importance of making sure property rights are protected in these cases.

In 2005, Winona, home to Winona State University, passed the first ordinance restricting the percentage of rental units on certain blocks. The figure was set at 30 percent on those blocks.

Northfield, the home city for St. Olaf and Carleton colleges, followed with a similar ordinance in 2007. Residents had complained of issues with excessive noise, inadequate parking and unsightly litter in areas of the city with large concentrations of rental housing. Northfield's ordinance capped rentals at 20 percent per block.

Mankato, the site of Minnesota State University, was next. Its ordinance involved a 25 percent cap on rentals.

Now it's West St. Paul. In September, the city council passed an ordinance limiting rentals properties to 10 percent on certain blocks. The ordinance is due to take effect on January 1.

But homeowners are starting to push back against these restrictive ordinances. In Winona, several homeowners are challenging the city's 30 percent cap. They have filed suit, seeking an injunction against enforcement of the ordinance.

The Winona suit contains significant legal issues regarding property rights and the limits of local governments' zoning authority.

City officials in cities that have passed rental caps argue that the goal of the caps isn't to deter rentals. Rather, it is to distribute them more evenly across the city instead of clustered in only a few areas.

The legal issues, however, are far from resolved.

Source: "Suit vs. city: 30% rule musical chairs," Winona Post, 10-26-11

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