ST. PAUL, Minn. (CN) – The Minnesota Supreme Court heard oral arguments Tuesday on a state law that prevents landlords from refusing prospective tenants based on their use of public assistant programs, notably federal housing vouchers.
Enacted in 2017 to give low-income renters more options in a city where just 23% of rentals affordable to Section 8 voucher holders would accept them, the law is said by landlords to violate their due process rights.
Hennepin County Judge Bruce Peterson had agreed in 2018, striking down the provision after finding that the ordinance infringed on landlords’ rights to substantive due process and equal treatment under the Minnesota Constitution by assuming they deny housing to Section 8 voucher holders for a discriminatory reason.
The federal government’s Housing Choice Voucher, or HCV, program – formerly known as and still often referred to as the Section 8 program – subsidizes the housing costs of more than 2 million low-income American households. Section 8 of the Housing Act of 1937 allows such voucher payments.
The Minnesota Court of Appeals reversed the lower court’s decision last June, finding that the blanket prohibition on systematically refusing vouchers did not create a presumption that such refusals are done maliciously.
Tuesday’s arguments in the Minnesota Supreme Court saw an attorney representing 54 landlords spend much of her time directly countering the appeals court’s viewpoint. Tamara O’Neill Moreland of the Minneapolis firm Larkin Hoffman argued that the restriction’s placement in a civil rights ordinance and the penalties that could be imposed upon landlords for breaking it would unfairly paint noncompliant landlords as discriminatory.
“This isn’t just, ‘oh, I got slapped on the wrist,’” she said, adding that damages can rise to $25,000. “Violation of a housing code is a lot different from telling you that you have committed discrimination.”
The Minneapolis ordinance allows landlords to affirmatively defend themselves before the city’s civil rights commission on the basis of undue hardship. That process, Moreland said, is lengthy at 270 days and prevents landlords from renting out the unit at issue in the interim.
Assistant City Attorney Kristin Sarff pushed back on that claim, saying that there was no provision in the law stopping them from renting the unit – only requiring them, in some circumstances, to offer a unit to a denied Section 8 applicant.
Justice Barry Anderson focused heavily on a case law divide, asking each party about the dispute’s relationship to Twin City Candy & Tobacco Co. v. A. Weisman Co. and Fed. Distillers Inc. v. State. The two cases involved a law preventing the sale of cigarettes below cost and another requiring liquor distillers to sell to all the state’s wholesalers on an equal footing.
The state’s high court had overturned the cigarette law because it presumed alleged violations to be intentional harms to other sellers. The liquor rule made no such accusation, and Sarff told the court the anti-discrimination rental ordinance didn’t either.
Also at issue Tuesday were exemptions to the ordinance allowing the city’s smallest landlords – including those who rent out rooms in their own homes or live in one part of a duplex or triplex while renting out another – to refuse to accept Section 8 vouchers. O’Neill Moreland argued that the exemptions violate equal protection rights and show that the city’s stated intent of desegregation and increasing the supply of Section 8-accessible housing wasn’t being lived up to.
“If they truly wanted to help their segregation problem, they would have included everybody,” she said, pointing out that most of the units eligible for housing vouchers are in areas near the poverty line, particularly in the city’s majority black north side.
Several judges questioned O’Neill Moreland on that line of reasoning. Justice David Lillehaug asked whether the federal Fair Housing Act’s similar exemptions also violated equal protection rights. He noted that if the exemptions were found unconstitutional and struck, the landlords most hurt by the decision would be the smallest ones.
Asked about the impact of the exemptions in light of Minneapolis’ recent decision to allow duplexes and triplexes in all of the city’s former single-family zones, Sarff deferred.
“Oh boy,” she laughed. “That might be before you on another day.”
Attorneys for both sides declined to comment before a ruling is issued.
The Minnesota Supreme Court typically publishes orders on Wednesdays, meaning that a decision could be made as early as March 4.