The Minnesota Court of Appeals hears arguments today in a case involving the rights of Winona homeowners to rent out their properties.
The city's rental law allows rental properties to make up only 30 percent of homes on any given block.
It's a law that Ted and Lauren Dzierzbicki weren't aware of when they bought a house in Winona in 2007. They planned to have their daughter Jenna live in part of the house while she was a student at Winona State University and rent the rest out to other students. They spent $40,000 to renovate the two-story house.
But when the Dzierzbickis applied for a rental license, the city said the house was ineligible for a permit. The block had already reached its 30 percent limit for rental certificates.
The Dzierzbickis and two other homeowners filed suit against the city in Winona County District Court.
Earlier this year, a district court judge said that law is constitutional. Now, the group of Winona homeowners is appealing that decision, arguing it's not the city's job to limit the number of homeowners who want to rent their properties.
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"Whether or not you're able to rent out your property to somebody else should not depend on whether or not your neighbor has already rented their property out," said Anthony Sanders, an attorney with the Institute for Justice representing the Winona homeowners. "We think that we have a very good shot at overturning the district court's decision to ignore the right of homeowners to rent out their homes and to protect property rights in Minnesota."
The Dzierzbickis' daughter has graduated and their Winona property sits empty because they can't rent it. It hasn't sold, Sanders said, despite dropping the price a few times.
City leaders passed the 30 percent rule in 2005 to control the number of homes being used as rentals near the Winona State University campus. Since then, other Minnesota cities have passed similar caps on rentals, including Mankato, Northfield and West. St. Paul.
Supporters of the rule say the law has helped stabilize the neighborhoods closest to the university, where many homes are used as rental properties.
The three-judge panel will have 90 days to issue a ruling.