When the cities of Apple Valley and Bloomington banned home rentals of less than 30 days, they violated the Fifth Amendment to the U.S. Constitution, which bans government takings of private property without compensation — or so says an Apple Valley Realtor, who filed twin lawsuits against both cities Monday in U.S. District Court in Minnesota.
“I’ve been selling real estate well over 50 years in both areas,” said Connie Toupin, of Burnsville. “My main concern is property rights. I’ve lost a lot of money due to these short-term rental laws. But I’m doing this for the good of the people.”
Toupin maintains that city councils in Apple Valley and Bloomington over the past decade passed blanket restrictions against Airbnb and Vrbo-style rentals without any evidence they might harm surrounding properties, and before their own planning commissions could complete further study. To justify a blanket ban on short-term rentals, Bloomington officials mostly pointed to the potential for unwanted competition with the city’s hotels, according to her 31-page complaint against the city.
“For Bloomington, it was definitely the hotels along (Interstate) 494,” said Toupin, noting her renters are interested in visiting the Mall of America and Minnesota Zoo. “We get high-end guests who visit all of our properties. I’d guess 70% to 75% of them are families. I’m very careful in who I select to allow to stay in my properties because I don’t want to bother the neighbors at all. I don’t allow any parties or big events or things like that.”
While the two federal lawsuits were filed against the individual cities, Toupin hopes the federal courts will create precedent discouraging bans on short-term rentals statewide and overturning those already in place elsewhere. An upcoming ban in Richfield, limiting short-term rentals to five days, takes effect Jan. 1. Many other cities require licenses for short-term rentals.
“Sharing my home occasionally has helped me be independent and invest in my retirement, while supporting local shops, restaurants, and attractions,” Toupin said. “Instead of supporting homeowners like me, the city is punishing us with a blanket ban.”
Samuel Diehl, Toupin’s attorney with the Anoka law firm of Cross Castle, said he was unaware of any similar lawsuits previously filed in the state’s district or federal courts with the intention of overturning blanket bans on short-term rentals.
Apple Valley officials could not be reached Monday, and Bloomington officials declined to comment.
Loss of traditional housing
Airbnb launched its short-term rental website in 2008 and had drawn 1 million bookings by 2011 when it branched out to international markets, such as London and Paris. Its growing popularity drew competition from other online short-term rental companies, as well as concerns from municipalities.
Housing advocates bemoaned the loss of traditional housing stock at a time of rising rents, and cities grappled with noise complaints related to raucous weekend rentals around sporting events, college spring break and other festivities.
Still, cities can simply enforce noise and nuisance violations without banning short-term rentals, Diehl said.
“I have more problems with long-term tenants not maintaining properties than I ever do with short-term tenants,” Toupin said. “You’re only going to hear the horror stories. Nobody complains about the majority of travelers.”
In Spain over the weekend, thousands of protesters — some squirting water guns at tourists — took to the streets of Barcelona and Mallorca to protest the impact of short-term rentals and mass summer tourism on housing costs.
Renting in the Twin Cities
In 2017, St. Paul created elaborate rules limiting the number of short-term rentals allowed within multi-unit properties, while also creating licensing requirements and imposing hotel and lodging taxes.
Under those rules, a St. Paul duplex or triplex that is not owner-occupied may lease out one short-term rental. A duplex or triplex that is owner-occupied may lease out all of its units as short-term rentals. Rules around fourplexes vary with the type of zoning district, but residential buildings in St. Paul with more than four units may devote no more than four units to short-term rentals, and no more than 50% of their total units, unless the owner obtains a conditional use permit.
St. Paul’s short-term rentals require applications, licensing fees and proof of insurance. Non-owner-occupied properties require a fire certificate of occupancy.
In Minneapolis, property owners are limited to owning one short-term rental property aside from their homestead. Buildings with 20 or more units may reserve no more than 10% of their units as short-term rentals.