Landlords sue Minneapolis over Section 8 anti-discrimination ordinance

A group of Minneapolis landlords has sued the city over a new law that bars them from screening out prospective tenants who use Section 8 vouchers.

The lawsuit was filed in district court last week by 55 apartment owners who control more than 3,200 units in the city. It comes about three months after the Minneapolis City Council approved the ordinance, which goes into effect in May 2018.

Under the new rules, landlords can still screen prospective renters but can no longer stipulate that Section 8 tenants are not allowed — a common statement on apartment listings. The ordinance grants reprieve for landlords who can show compliance would create an "undue hardship," though only after a discrimination claim is filed with the city's Civil Rights Department.

"We expect the city to prevail in the case," said City Attorney Susan Segal. "There are similar measures in place, that have been in place for years, in other parts of the country."

Peter Coyle, an attorney for the plaintiffs, said federal and state law have made clear that Section 8 is a voluntary program.

"The city of Minneapolis has upped the ante by now decreeing that if you do not participate in the Section 8 program as a landlord, subject to a couple of exceptions, you will be considered to have committed a civil rights violation, which is a pretty serious allegation," he said.

The lawsuit argues the mandate conflicts with state law and unfairly forces them to comply with requirements of federal housing voucher programs for low-income residents. It also says the law violates the Minnesota Constitution because it reduces their property values, forces landlords to enter into contracts and represents an unnecessary government intervention in their businesses.

The new law "expressly prohibits a rental policy, even based on objective, rational business decisions, that denies potential tenants who would be paying with [housing vouchers]," the lawsuit said.

Landlord Tom Fletcher, one of the plaintiffs, said among other changes, the ordinance would require him to accept one-year leases from Section 8 tenants, rather than the month-to-month leases typical in his buildings.

"Let's work together," said Fletcher, who owns about 40 units in Uptown and Loring Park. "Instead of throwing mandates at the landlords, why not focus more on working with them and making it work for everybody."

Minneapolis isn't the only city to go down this path. Buffalo, N.Y., Seattle and St. Louis are among other cities with similar ordinances.

A city document from March said less than 6 percent of the city's rental units would be affected by the ordinance, given how many vouchers are used in the city. And research by HousingLink has found that most apartment listings in the city are too pricey to meet the Minneapolis Public Housing Authority's rent limits for Section 8.

Renters receiving housing vouchers typically pay a portion of their apartment rent, with the voucher making up the rest. The share paid by the tenant depends on their income, the number of bedrooms and whether they pay for heat.

Nearly all Section 8 voucher holders in the city identify as people of color, the city document said, and about half of the 17,000 residents served by the program are children.

Landlords warned in a media campaign that the ordinance would result in "coastal rents" in the city and longer wait times to find an apartment. The council voted unanimously to approve it.

The lawsuit says the ordinance changes landlords' business practices, requiring them to submit rent increases for review and leaving apartments vacant for inspection between tenants. To comply with Section 8 rules, the city's public housing authority must inspect each unit before it is rented out.

"I know that this whole issue of inspections and delay caused by inspections has been raised as a concern," Segal said. "And certainly I think that's something the city and the public housing authority has been looking at, to make sure that that can happen in a timely fashion."

Minneapolis is simultaneously fighting a challenge to its sick-leave ordinance. And Segal said she would expect a similar challenge should the $15 minimum wage ordinance pass on Friday.

The landlords' lawsuit requests that the court declare the law invalid and order the city not to enforce it.

Eric Roper • 612-673-1732

Twitter: @StribRoper