Minneapolis Renter First Housing Policy
Investor · Crystal, MN · Member since 2013 · 486 posts · 277 votes
Anyone notice the Minneapolis City Council passed Renter-First Housing Policy today? In the words of Mayor Frey, who actually is a good mayor, IMO, "Protecting Tenants rights is key to successfully addressing our affordable housing crisis. Tenants often find themselves at an unfair disadvantage when they go up against powerful, exploitative landlords".
I bet a lot of apartments suddenly hit the market in Minneapolis. How far behind will rent controls be?
The implicit message in the policy is that landlords are bad, tenants are good, and that the average landlord is somehow, someway, taking advantage of the tenant. This is a narrative, that most often is not true. Regardless of any new "policy" the fact is 9/10 evictions are for non-payment of rent: tenants did not pay rent as required under contract. The landlord offered the tenant housing (kept the benefit of the bargain) and the tenant did not pay for the housing (did not keep to the contract or meet its end of the bargain). Yes there are bad landlord actors but they in no way outstrip the # of tenants who destroy properties, don't pay rent, etc. and leave landlords out thousands. There are a minor amount of bad actors on both sides and arguing one versus the other is the true victim is a political decision.
The truth is CM Frey, Bender, etc. seek votes and re-election. They seek votes in a city where 50%+ rent. Unless the mayor or CMs are fighting for renter constituents, another candidate in the next election will fight more and they will be replaced. This is why new pro-tenant "wins" (aka additional regulation) are added almost each year in Minneapolis: 1) Landlord requirement to notice tenant of voter registration info (2016), 2) Advanced sale notice with 3 month tenant protection period (2018), and 3) time of sale energy disclosure on TISH for SFH and duplex (2019).
Big picture, multifamily real estate investors need to know that if you invest in Minneapolis, and increasingly in other inner ring suburbs and urban Minnesota cities, landlords and management companies do and will face significantly more regulation than other suburbs or out-state cities, including regulation with civil penalties. In other words, yes there is state and federal regulations, but the city level varies considerably from city to city in Minnesota.
As an old mentor of mine used to say go into a deal with "eyes wide open" (the good and the bad). If you invest in Minneapolis for whatever reason, expected higher returns, estimated appreciation, etc. you do so with "eyes wide open" to the political and regulatory reality of Minneapolis.
Caveat Emptor!
I think there is a balance to be had in the tenant/owner model and for a long time, and we all know there have been a certain number of slumlords who have preyed on tenants and operate places that are absolutely disgusting. When you hear about apartments w/o heat for weeks that can't even maintain 50 degrees or rampart mold/bug/rat infestations, you have to feel for the people that live there. I also know you have to charge enough to cover your payments, make a profit, and have enough allocated to fix the issues. I remember reading last year about QT apartments near Uptown that was charging very low/too low of rents and didn't have enough each month to fix the leaks/heat issues/pests ect. When they put the money in to fix things, they had to raise the rent and there were big protests from people living there and from a renter's union so it's obviously not just an easy answer since there is a minimum needed to keep a place up and running and no one wants to hear that.
My opinion is that even marginal owners won't hardly be effected. Slumlords give everyone a bad name and causes the city to enact drastic measures rather than just focusing on the bad players. IMHO
@David Moore Thanks for bringing this topic up! I'm sharing the link for future readers. http://www.minneapolismn.gov/news/WCMSP-217690
I find this interesting and I wonder how landlords feel about this in Minneapolis?
The implicit message in the policy is that landlords are bad, tenants are good, and that the average landlord is somehow, someway, taking advantage of the tenant. This is a narrative, that most often is not true. Regardless of any new "policy" the fact is 9/10 evictions are for non-payment of rent: tenants did not pay rent as required under contract. The landlord offered the tenant housing (kept the benefit of the bargain) and the tenant did not pay for the housing (did not keep to the contract or meet its end of the bargain). Yes there are bad landlord actors but they in no way outstrip the # of tenants who destroy properties, don't pay rent, etc. and leave landlords out thousands. There are a minor amount of bad actors on both sides and arguing one versus the other is the true victim is a political decision.
The truth is CM Frey, Bender, etc. seek votes and re-election. They seek votes in a city where 50%+ rent. Unless the mayor or CMs are fighting for renter constituents, another candidate in the next election will fight more and they will be replaced. This is why new pro-tenant "wins" (aka additional regulation) are added almost each year in Minneapolis: 1) Landlord requirement to notice tenant of voter registration info (2016), 2) Advanced sale notice with 3 month tenant protection period (2018), and 3) time of sale energy disclosure on TISH for SFH and duplex (2019).
Big picture, multifamily real estate investors need to know that if you invest in Minneapolis, and increasingly in other inner ring suburbs and urban Minnesota cities, landlords and management companies do and will face significantly more regulation than other suburbs or out-state cities, including regulation with civil penalties. In other words, yes there is state and federal regulations, but the city level varies considerably from city to city in Minnesota.
As an old mentor of mine used to say go into a deal with "eyes wide open" (the good and the bad). If you invest in Minneapolis for whatever reason, expected higher returns, estimated appreciation, etc. you do so with "eyes wide open" to the political and regulatory reality of Minneapolis.
Caveat Emptor!
I think you may be reading more into this than is there. It's not implicit that all landlords are bad-I welcome the city spending more of its time/effort on the 5% of bad landlords and do whatever is necessary. I'm sure you read the stories as I do about the horrendous conditions some places are in. I don't find anything here that will impact me since I'm hands on and provide safe, healthy housing with hardly any issues. I was on a feedback committee for this and they heard multiple landlords speak up and several initiatives were nixed as too aggressive so it's not a "we're out to get landlords".
In fact, they are looking for ways to encourage small, successful landlords to buy more property to offset some of these bad players in the market. They see the 2040 comp plan as one way by allowing more duplexes and triplexes to be built or converted. As these are difficult for national players to scale, it opens more opportunity for local people to build on infill locations.
They are also rolling out the legalization of ADU's to everyone which will eliminate the owner occupy requirement for ADU's. I'm planning up to 7 ADU's for our current duplexes. I'm also currently building a triplex and received encouragement/help to move forward steering through some variances/rezoning to get it done.
@Bruce Runn I drive by your triplex every other day (not intentionally), looking good! What is that "lighthouse" in the back of the building? Storage? I'm currently working with the city on a simple parking variance for my commercial building, and it's a "process" to say the least... so I don't know how straightforward ADU's are going to be.
I jokingly say, that's my section 8 apt.
I thought I'd add this to part of the renters rights discussion as there is a lot of effort on the cities part to reduce evictions. In the MPLS study on evictions, they found the following:
http://innovateminneapolis.com/documents/Evictions%20in%20Minneapolis%20Report.pdf
Key findings
2 months and <$2,000 stands between tenants and eviction. Non-payment cases account for 93% of eviction filings, most of which had no other reasons identified. For those cases, tenants were an average of 2 months behind and owed $1,700 (median) to $2,000 (average). This figure is higher than the actual amount of rent owed, as court fees of $324 are typically included in the total amount owed.
The point MPLS found was- if the tenants paid on time, that would eliminate 93% of all MPLS evictions. There's a lot of effort being put on the side of tenant protections but I'm not seeing any discussion at all about what is causes these evictions.
I thought I'd share an eviction study the city of Minneapolis published 2 years ago. As stated above, 93% of evictions were due to non payment of rent. As MPLS looks at all of the ways to reduce evictions, solving the non payment would be the easiest way. How about a fund to help tenants instead of thinking of ways to make it so they don't get displaced? No Landlord wants to evict people lbut has to get paid as that is how it works.
http://innovateminneapolis.com/documents/Evictions%20in%20Minneapolis%20Report.pdf
@Bruce Runn I agree with you 100% on the issue of mitigating non-payment of rent in a collaborative way. I am not an expert with county emergency assistance, but I do find that in housing court, a good % of tenants who do seek emergency assistance in cases I handle are not eligible due to use within the past 12 months, etc. I have raised the issue with several CMs and the mayor with more resources for emergency assistance--how can MPLS partner with County or start own pool of funds with criteria, etc. Not one has taken my offer to help invest time, etc.
I agree there are many many cases of good tenants who just don't have rent--sometimes just 1 or 2 months behind (also backed by data). If the city focused on solving that gap rent problem first (not just multiple hearings over added landlord regulation), they could keep many more families in their homes and kids in the same schools. To me this is the obvious first step with potential for real common good (tenant stays in housing, landlord gets paid, no eviction and time wasted to both), not just support for new housing ($200k+/unit), NOAH housing, or added landlord regulation.
I’d be glad to sit down with a couple CM have personal relationships with who are very much invested in this if you want to collaborate