Iowa Law Limiting Occupancy Restrictions to go into Effect January 1, 2018

By Eric Christianson

House File 134 was signed into law on April 21 by Gov. Branstad limiting the ability of cities to set occupancy restrictions based on familial relationships. This law has appeared several times in various forms over the past few years in the Iowa legislature. It was opposed by many larger cities along with the Iowa League of Cities. It was supported by the Iowa ACLU as well as the Landlords of Iowa.

The bill amends Iowa Code 414.1 subsection 1, adding the bolded text:

a. For the purpose of promoting the health, safety, morals, or the general welfare of the community or for the purpose of preserving historically significant areas of the community, any city is hereby empowered to regulate and restrict the height, number of stories, and size of buildings and other structures, the percentage of lot that may be occupied, the size of yards, courts, and other open spaces, the density of population, and the location and use of buildings, structures, and land for trade, industry, residence, or other purposes.

b. A city shall not, after January 1, 2018, adopt or enforce any regulation or restriction related to the occupancy of residential rental property that is based upon the existence of familial or non familial relationships between the occupants of such rental property.

This change will mostly impact college towns which were actively trying to limit the number of students moving into historically single-family neighborhoods.

See coverage of the bill’s passage in the Des Moines Register and the Ames Tribune and Little Village to read more about how some communities have responded.

You can find a copy of the bill as well as its history here.

 

 

Winona, MN rental ordinance case dismissed as moot by Minnesota Supreme Court

by Andrea Vaage and Gary Taylor

Dean v City of Winona
Minnesota Supreme Court, August 5, 2015

This is an update on the Winona, MN case from last year, which can be found here. To recap, homeowners wishing to obtain a rental license in Winona cannot do so if 30% of the properties on their block are already rental properties. The question before the court was whether the 30% rental rule was a valid exercise of the city’s police power, and whether the ordinance was a violation of their equal protection rights under the Minnesota Constitution. The district court granted summary judgment to the City of Winona and the court of appeals affirmed. The applicants then filed a petition for review, which was granted in May 2014.

The City moved to dismiss the appeal for lack of jurisdiction, arguing that the case was moot. Minnesota courts have established “an appeal should be dismissed as moot when a decision on the merits is no longer necessary or an award of effective relief is no longer possible.”  Of the three original plaintiffs in the lawsuit, two no longer owned their properties, and the third received a rental license from the city.  While acknowledging that their claims were technically moot, they nevertheless argued that they fell within either or both of two narrow exceptions to the mootness doctrine: (1) that the issue being litigated is capable of repetition, yet likely to evade review, and/or that the case is “functionally justiciable” and of “statewide significance.”

The first argument was quickly dispatched by the court since the ordinance, which is continuing to be enforced by the city, is open to challenge at another time.  The claims against the ordinance, therefore, are still capable of being reviewed by the courts.

As for the second argument, the Court concluded that the case is not of statewide significance.  Although other cities do have rental ordinances they do not all operate in the same manner as the Winona ordinance. While the right to rent is an important property interest, the only population affected in this case was the homeowner’s pursuing a rental license in this one municipality, hardly an urgent or impactful case calling for the application of a narrow exception to the mootness rule.

The appellants’ claims were considered moot and the case was dismissed.

News from around Minnesota: Winona rental restriction ordinance now before the MN Supreme Court

Winona, Minnesota’s ordinance restricting the number of rental units to 30% of the total properties on any given block is going to be heard by the Minnesota Supreme Court today.  We blogged about the Court of Appeals case here.  The Court of Appeals determined that the 30% rule was a valid exercise of the city’s police power, and was not a violation of the Equal Protection clause of the US Constitution.

An article from the Winona Daily News can be found here.  According to the article, Mankato, West St. Paul and Northfield, Minnesota have all approved similar ordinances, and I know of at least three Iowa cities that are watching this Minnesota litigation.

Limiting percentage of rental units allowed per block was valid exercise of police power

by Rachel Greifenkamp and Gary Taylor

Dean v. City of Winona

(Minnesota Court of Appeals, February 24, 2014)

In the City of Winona, MN, there exists an ordinance that limits, in certain districts of the city, the number of lots on a block that are eligible to obtain certification as a rental property. Based on the findings from the city’s planning commission and a Parking Advisory Task Force that was formed to consider the issues of increased parking demands, the City found that rental-housing units comprised about 39% of the City’s total housing units, but that these rental properties comprised 52% of the complaints received by the Community Development Department. Based on data from 2004, the planning commission found that 95 of the 99 calls for police service based on noise and party-related complaints involved rental properties. They also found that 52% of the zoning violations that resulted in written violations were for rental properties. In 2005, the idea of restricting the number of rental properties per block was suggested. The Parking Advisory Task Force suggested that the number of rental units be restricted to 30% of the total properties on any given block. The task force adopted a motion to forward a “30% rule” to the planning commission for its consideration. The planning commission voted to recommend the 30% rule to city council, and the council subsequently passed the 30% rule.  The three appellants challenging the 30% rule in this case were the owners of three houses that were purchased after the 30% rule was adopted. In January of 2013 the district court denied the appellants’ motion that the 30% rule was an invalid exercise of the City’s broad police power, and that it violated their Equal Protection, Substantive Due Process, and Procedural Due Process rights under the Minnesota Constitution, and granted summary judgment to the city. The appellants then took their case to the Minnesota Court of Appeals.

Police Powers. The Court of Appeals determined that the 30% rule was, in fact, an authorized exercise of police power. The term “police power” means simply the power to impose such restrictions upon private rights as are practically necessary for the general welfare of all. “The development of the law relating to the proper exercise of the police power of the state clearly demonstrates that it is very broad and comprehensive, and is exercised to promote the general welfare of the state….[T]he public has a sufficient interest in rental housing to justify a municipality’s use of police power as a means of regulating such housing.”

Equal Protection. In order for an equal protection challenge to be valid the appellant must show that “similarly situated persons have been treated differently.” Similarly situated means that the two groups in question are alike in all relevant respects. The Court concluded that the 30% rule is not invalid on its face:

The ordinance is facially neutral and applies equally to all property owners in the regulated districts. The ordinance sets a 30% cap, but it does not define or predetermine which lots will be certified. That determination is made based on the changing facts and circumstances on each block, and not based on the ordinance or the characteristics of lot owners. The fact that the number of lots that may be certified might be less than the number of property owners who desire certification is not a class-based distinction between two groups of property owners.

The Court also concluded that the 30% rule was not discriminatory in the manner it was being applied by the city.  The Appellant did not show that the city “has done anything other than apply the mathematical formula on a first-come, first-served basis. Appellants’ real complaint is about the effect of an otherwise neutral ordinance on their particular circumstances, which does not give rise to an equal protection claim.”

Substantive and Procedural Due Process.  The substantive due process and procedural due process claims were also considered invalid. The appellants argued the the 30% rule violated their right to rent their property, but such a right is not a “fundamental right” protected by the Minnesota Constitution.  Unless a fundamental right is at stake, substantive due process requires only that the statute not be arbitrary or capricious.  The Court concluded that the 30% rule was adopted after a long, deliberate information-gathering process that considered public input, data, and expert review, and was thus not arbitrary or capricious.

As for procedural due process, the appellant’s argued that the 30% rule improperly delegates the power of deciding whether or not they may receive a license to their neighbors, but the Court reasoned otherwise because the “neighbors” (owners of certified rental properties) do not determine which other lots may be certified. “The certified-property owners’ views regarding whether a particular lot should be certified as a rental property are irrelevant; they can neither grant certification by consenting to it nor prevent certification by denying consent.”

The Minnesota Court of Appeals affirmed the district court’s award of summary judgment in favor of the city because the adoption of the ordinance was an authorized exercise of its police power and because the appellants did not met the burden to show that the ordinance is unconstitutional.

More new bills introduced

SF 2047 would amend Iowa Code 303.34(3)  to allow a city with an historic preservation commission to appoint one member to the commission who is not a city resident or property owner if that member meets certain professional qualification standards defined by rule by the department of cultural affairs.

HSB 536 would amend Iowa Code 68B.22(4), commonly known as the gift law.  The gift law includes a list of exceptions that makes an otherwise impermissible gift permissible.  Currently, one of the exceptions is for food, beverages,  registration, travel, and lodging for a meeting, which is given  in return for participation in a panel or a speaking engagement at the meeting when the expenses relate directly to the day or days on which the donee has participation or presentation responsibilities. The bill would limit the exception to situations where the public official is an actual speaker, not merely a participant.  The bill would also limit the definition of “entertainment” in another exception so that it does not include “admission to a sporting event, concert, theatrical performance, or other similar type of event or performance….”

SSB 3089 would add a new section to Iowa Code 364.17 that would allow a city to adopt housing code provisions related to sprinkler systems in rental housing. Any such housing code provisions could only apply to newly constructed rental units or substantially renovated rental units. The bill states that “substantially renovated” means renovations that include repairs or improvements to more than 50 percent of the rental unit.

SSB 3090 would create an amendment to Iowa Code 414.1 allowing a city to regulate and restrict the occupancy of residential rental property on the basis of square footage, but disallowing ordinances that regulate the occupancy  of residential rental property based upon the familial or nonfamilial relationships of occupants, presumably in response to the Ames Rental Property Association v. City of Ames (link to summary here) case decided by the Iowa Supreme Court in 2007.

SSB 3091 would rename the Iowa Geological and Water Survey as the Sandrock Center for Land and Water Science.  It would make the director a gubernatorial appointee, rather than an appointee of the director of the DNR as it now stands.  the Sandrock Center is to be located in or near to Iowa City, and the University of Iowa shall cooperate with the director of the center to provide office space and staffing assistance.

Montana state agency determines Bozeman rental ordinance discriminatory

by Gary Taylor

The Montana Human Rights Bureau (MHRB) has found reasonable cause to believe that a city of Bozeman housing ordinance illegally discriminates against people with disabilities, and on the basis of age.  The ordinance prohibits more than four unrelated people from living together unless they meet certain criteria.  The ordinance is similar, but not identical to ordinances that have been adopted in several Iowa cities, including the Ames ordinance that the Iowa Supreme Court found to be constitutional in a 2007 decision.  Bozeman is home to Montana State University, which has an enrollment of roughly 13,000 students.

An article from the Bozeman Daily Chronicle that includes an embedded PDF of the MHRB investigative report can be found here.

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