It appears that 2011 will continue to be another challenging year for many looking to sell their home, particularly given a glut of inventory sure to be on the market from an increase in foreclosures. That’s just the latest hurdle, however, for a Minnesota man who says a controversial city rental ordinance not only restricts his property rights, but also his ability to sell his three bedroom house.
Ethan Dean recently wrapped up his fourth tour of duty as a U.S. advisor in Iraq, but soon he’ll be carrying on the battle from his new post in Afghanistan–his battle, that is, with the City of Winona, Minnesota.
Dean’s campaign on the home front involves a controversial city ordinance that he says has cost him the opportunity to sell his $139,900 house that’s located in a prime location near Winona State University.
The conflict involves the so-called “30 percent rule” that limits the number of rental properties to 30 percent of residences per block in this college community. Home owners who live on blocks above the 30 percent cutoff are not only prevented from renting their property, but also in effect from selling to buyers looking to invest in rental housing for college students.
“If it weren’t for the 30 percent rule, I’d have sold my house two years ago,” Dean emailed from Iraq recently. “There are many in town, some elderly who need the money from their house sale for medical issues. They are being punished for being Winona residents more than anyone.”
Proponents view the measure as a way to preserve the single family character of city neighborhoods particularly near Winona State University by regulating the number of houses rented to college students. Complaints over student parties, vandalism and absentee landlords led to the imposition of the ordinance in 2005.
“It’s not ideal, but it’s working right now and it’s helping to address our problem of density of rental properties around the downtown core area and Winona State,” said Debbie White, a city council member who helped institute the regulation. “We’ve been losing residences and homes and trying to keep a balance in our neighborhoods.”
Some 70 percent of the properties on Ethan Dean’s block were grandfathered in when the ordinance took effect. As a result, Dean doesn’t qualify for city permission to rent out his house, though almost all of his neighbors do.
“The official legal opinion of realtors’ counsel is that the rule constitutes an uncompensated taking of property,” said Jonelle Moore, a Winona realtor with Coldwell Banker. “Those who try to sell properties in blocks with more than 30 percent rental may be forced to take less for their property or unable to sell it at all.”
Dean had never heard of the rule until he put his house up for sale. He says several interested buyers have backed off upon learning there’s no city rental certificate to go with the title. Concerned about paying his mortgage while stationed overseas, Dean rented it out to three students in violation of the ordinance. After learning Dean was working with U.S. troops abroad, however, the city granted him a one-time waiver that expires at the end of April.
“After that, I have no idea what will happen,” Dean emailed. “But I do know with the 30 percent rule the house will not sell. Without it, I’m told by several realtors it would not only sell instantly but for much more than I have it listed at. Very frustrating to say the least.”
Recently, the Freedom Foundation of Minnesota showed how other local governments enforce onerous before-sale residential inspection ordinances, adding to the cost and red tape of buying and selling a house at the worst possible time. A city task force reviewing the Winona rule’s impact in 2009 concluded the ordinance should remain on the books.
“That group felt the rule was working fine. We’ve heard a number of times that the rule does restrict property owners like Ethan from doing things and that question it to a certain extent,” said Mark Moeller, Winona city planner. “But the task force recommended the rule be retained.”
Now that Ethan Dean has re-upped for a fifth tour of service in a war zone, Winona officials will have to decide whether they will re-up Dean’s exemption back home on his home. For his foreign service, Dean was just awarded two medals: the Global War On Terror medal and the Superior Civil Service Award medal.
“I don’t really understand how someone believes they have the right to tell someone else how and what they can do with their home, but it is a strange world at times, I guess,” Dean said in an email to FFM.
“If he’s thinking he’s going to go back, I think now’s the time to start talking a little bit and we’ll see if we can help him,” Moeller said.