Another Minnesota city restricts right to rent out one’s home

NMankato CC 8-16
The North Mankato City Council is considering clamping down on rental property rights.

Another Minnesota city, North Mankato, has restricted one of Americans’ most fundamental property rights – the ability to rent out one’s home.  But North Mankato faces not only constitutional concerns but questions over whether a proposed ordinance that prevents many homeowners from renting their property amounts to a backdoor way of keeping renters out of their community.

Anthony Sanders, a senior attorney with the Institute for Justice, didn’t mince words in a pointed August 26 letter to North Mankato Mayor Mark Dehen.

Rental caps deny property owners a traditional method of paying their mortgages when they cannot live in their homes and cannot sell them. But more fundamentally, they also stigmatize a class of people-renters-simply because of how they choose to find and pay for their housing.

…Your city would be saying to renters: “You are second-class citizens. We do not want too many of you living in our single-family homes, or even in many of our duplexes. Therefore, we are making it illegal for more than a few of you to live in those neighborhoods.”

Currently rental properties comprise about 15 percent of total residential properties in North Mankato. Concerns over the number of police calls to rental properties, upkeep issues and impact on property values led the city to put a hold on rental license applications a year ago in order to study the issue.

The ensuing 141 page report by contractor Bolton & Menk recommends allowing just ten percent of residential properties to be rented out.

While the City values providing opportunities for renters, research shows that concentrations of rental properties may lead to undesirable conditions posing a threat to neighborhood quality of life.

The document glosses over constitutional issues in a couple of sentences.

…The City approaches rental regulation in a nondiscriminatory manner, appropriately considering the rights of property owners, rents and their neighbors similarly. Regulations such as this are naturally conflictual because of the effect such regulations have on individuals and property rights.

But the proposal has generated a backlash over property rights among some taxpayers, who dressed down city officials at a recent public meeting over the controversial plan, according to a local news account.

Not everyone was a fan of the way city officials ran the meeting, however. Several residents wanted to have an open forum to discuss the cap, while city officials wanted to use a small-group exercise the city previously used in similar community meetings.

City Administrator John Harrenstein got into an argument with one landlord, Nancy Evans, for more than five minutes early in the meeting over how it should be run. Though several residents said they found the exchange off-putting, Harrenstein said after the meeting he was responding to a small group of citizens who like to “hijack public meetings,” which has happened in the past.

“I think communication among people who came for a true dialogue was had, and had very well,” he said.

Opponents to proposed rental property restrictions are speaking out in North Mankato.
Opponents to proposed rental property restrictions are speaking out in North Mankato.

North Mankato would become the fifth Minnesota city to implement rental property limits, along with Winona, Northfield, Mankato and West St. Paul.  But outspoken opposition from property rights advocates doomed similar restrictions that surfaced earlier this year in South St. Paul and Brooklyn Center. Will North Mankato be next?

In North Mankato, the cap is getting a mixed reception. Tenants and property owners alike have given city officials feedback during several public meetings on the rental density cap. Many agree the city’s cap at 10 percent feels too stifling, though not everyone is opposed to an overall cap.

“Ten percent is extremely restrictive,” Karla Van Eman, a Mankato real estate agent, told city officials during a recent public meeting.

Some residents are happy to see the city do something about rental properties, while others are concerned the cap will limit the city’s rental options in the future.

Moreover, the city risks the likelihood of an expensive legal dust-up. The Institute for Justice challenged Winona’s first-in-the-nation 30 percent rental property cap all the way to the Minnesota Supreme Court. Unfortunately, the court punted and left the constitutional questions unresolved. Ultimately, however, it’s more than a property rights issue for IJ’s Anthony Sanders.

This is an outrageous way for the City of North Mankato to treat the numerous renters living in the city, and it is an un-American exclusion of a group of people that includes a disproportionately large number of the poor and minorities.

The North Mankato City Council takes up the proposed rental property restrictions on September 6.