We are proud to announce that we filed an amicus curiae brief with the Minnesota Supreme Court on behalf of the Minnesota Vacation Rental Association last week in Dean et al. v. City of Winona, a case concerning municipal power and the right to rent out one’s residential property.
Four property owners represented by the Institute for Justice Minnesota Chapter challenged a City of Winona, Minnesota ordinance that caps the number of rental licenses per residential block to thirty percent (“the thirty-percent rule”). In other words, if you live in one of Winona’s low-density residential districts, your right to rent your home is subject to your neighbors’ exercise of theirs.
Here’s the background:
The City of Winona, Minnesota was unhappy with parking, density, and aesthetic issues in the residential areas near the Winona State University campus. Rather than enforce existing laws against problem residents (students), the City of Winona decided to expropriate its residents’ property rights by restricting the number of homes that could be rented out to 30% of the houses on a given block.
Thus, if six houses comprise your block, owners of only two houses on the block could obtain a license to rent to tenants.
Four homeowners challenged the thirty-percent rule after facing ruinous financial consequences as a result of the rule. One homeowner, who was deployed to Iraq, almost lost his home because the city wouldn’t let him rent it, thus depriving him of rental income to cover the mortgage payment.
Another couple bought a home in Winona for their daughter to live in while she was in college and as an investment that would provide rental income. After their daughter left, the home sat empty on the market because they couldn’t rent it and interested buyers backed out when told of the rental restriction.
The Institute for Justice brought statutory and constitutional challenges against the city on behalf of the homeowners. They alleged that the City of Winona violated the equal protection and due process clauses of the Minnesota Constitution (which has been interpreted more stringently against the government than the U.S. Constitution has). The homeowners further claimed that the thirty-percent rule was beyond the city’s zoning power as limited by the Legislature (ultra vires).
As part of its litigation strategy, the City of Winona renumbered the rental ban from the chapter on zoning to the chapter on housing as a transparent attempt to argue that the ban was not a zoning law, which would be subject to the limits of the Municipal Planning Act, Chapter 462, Minnesota Statutes.
The homeowners lost at the district court and the court of appeals. The court of appeals asserted that the municipal power is broad enough to allow the ordinance even if the Legislature specifically restricted the city’s zoning power.
As we argue in our amicus brief, the court of appeals erred because the zoning power is a subset of the police power and legislative limits on the zoning power necessarily limit what the City can do through the police power. That is, a city can’t get around legislative zoning limits by merely characterizing its action as under the police power.
The Minnesota Supreme Court granted review of the case and our request to participate as amicus curiae (literally “friend of the court”) to address the limitations on the zoning power under the Municipal Planning Act. Our brief argues that (1) the thirty-percent rule is for all practical purposes a zoning ordinance, and (2) is an ultra vires act that exceeds the city’s authority because it seeks to zone in impermissible ways.
For anyone interested in property rights, this case is worth following.