Minneapolis Renter First Housing Policy

[David Moore]

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?

[Brad Schaeppi]

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!