Hennepin County District Court File No. 27-CV-17-9410
K. Schuchard, Tamara O'Neill Moreland, Larkin Hoffman
Daly & Lindgren Ltd., Minneapolis, Minnesota (for
L. Segal, Minneapolis City Attorney, Kristin R. Sarff, Tracey
N. Fussy, Assistant City Attorneys, Minneapolis, Minnesota
Cann, Housing Justice Center, St. Paul, Minnesota; and Eric
Dunn (pro hac vice), National Housing Law Project, Richmond,
Virginia; and Philip Tegeler (pro hac vice), Poverty &
Race Research Action Council, Washington, D.C. (for amici
curiae Housing Justice Center, National Housing Law Project,
and Poverty & Race Research Action Council)
Considered and decided by Cochran, Presiding Judge; Hooten,
Judge; and Reyes, Judge.
ordinance prohibiting landlords from refusing to rent to
tenants with federal housing choice vouchers does not
implicate a fundamental right.
City of Minneapolis (the city) challenges the district
court's order granting summary judgment to
respondents/cross-appellants Fletcher Properties, Inc., et
(collectively, Fletcher). The city argues that the district
court erred in concluding that the city's 2017 amendments
to Title 7 of the Minneapolis Code of Ordinances (the
amendments) violate Fletcher's substantive-due-process
and equal-protection rights under the Minnesota Constitution.
By notice of related appeal, Fletcher argues that the
district court erred in concluding that the amendments do not
implicate a fundamental right and in applying the
rational-basis test to Fletcher's constitutional claims.
Because we conclude that the amendments do not implicate a
fundamental right and Fletcher's constitutional claims
are subject to rational-basis analysis, and because the
amended ordinance meets the rational-basis test, we reverse
and remand for the district court to conduct further
8 of the United States Housing Act of 1937 (Section 8)
provides, among other programs, tenant-based housing
assistance through housing choice vouchers (vouchers). 42
U.S.C. §§ 1437f(b)(1)-(2), f(o) (2012 & Supp. V
2017). The Minneapolis Public Housing Authority (MPHA)
administers the Section 8 program in Minneapolis. Under the
Section 8 program, the MPHA determines the fair market rent
for a rental unit and establishes payment standards that
determine how much a voucher holder will pay toward the
established fair market rent and how much the MPHA will
survey of Minneapolis rental listings conducted by HOME Line,
a nonprofit organization that provides legal advice to
renters, revealed that only 57% of the particular listings
surveyed were within rent limits that are affordable to
voucher holders and, of those affordable listings, only 23%
would accept vouchers. The HOME Line survey also revealed that,
of the limited properties accepting vouchers, the vast
majority were concentrated in high-poverty zip codes in north
year the MPHA administers about 4, 870 vouchers, serving
approximately 17, 000 people. Of those 17, 000 people, 53%
are children, 84% are people of color, 78% are families
headed by women, and 41% include households where someone has
a disability. The average income for voucher holders is just
over $15, 000. The inability to find housing is a daily
occurrence for voucher holders. At any given time, about 250
voucher families are searching for housing in Minneapolis.
Minneapolis has a tight rental market in general, with a
vacancy rate of about 4%. There is even less availability for
low-income households, with a vacancy rate of only about 2%.
Some landlords explicitly state in their property
advertisements that they will not accept vouchers.
voucher holder identifies a qualifying rental unit, the MPHA
conducts an inspection of the unit to determine whether it
satisfies certain livability standards. If the unit passes
the inspection, the MPHA enters into a payment agreement with
the landlord by using a form known as a Housing Assistance
Payment (HAP) contract. The MPHA must use the HAP contract or
request approval from the U.S. Department of Housing and
Urban Development to adapt the contract. The HAP contract has
standardized language, is used nationally, and has been in
effect for years. Hundreds of thousands of landlords have
signed the agreement, and over 1, 000 landlords participating
in the Section 8 program in Minneapolis have used the HAP
2015, the city council published a notice of its intent to
introduce amendments to its civil rights ordinance,
prohibiting discrimination based on any requirement of public
assistance programs, including the Section 8 program.
Following the notice, the city council engaged in nearly two
years of discussion, study, research, and listening sessions
with those who might be affected by the amendment, including
landlords, voucher holders, and the MPHA. The city's
request for committee action identified increasing affordable
housing opportunities for voucher holders as a goal of the
amendments. The request for committee action noted that
voucher holders experience "a denial of housing
opportunities in high opportunity areas based on their use of
rental subsid[ies]" and that "the [c]ity would like
to broaden the opportunities for access to housing that is
otherwise not affordable to families and individuals without
a Housing Choice Voucher."
March 2017, the Minneapolis city council enacted amendments
to its civil rights ordinance, Title 7 of the Minneapolis
Code of Ordinances (the amended ordinance), with an effective
date of May 1, 2018. Minneapolis, Minn., Ordinance No.
2017-010 (Apr. 1, 2017). In December 2017, the Minneapolis
city council adopted Ordinance No. 2017-078, further amending
the amended ordinance. Minneapolis, Minn., Ordinance No.
2017-078 (Dec. 16, 2017).
final amendments make it an "unlawful discriminatory
practice" for a landlord or any agent to use "any
requirement of a public assistance program [as] a motivating
factor" to "refuse to sell, rent or lease, or
refuse to offer for sale, rental or lease; or to refuse to
negotiate for the sale, rental, or lease of any real
property." Minneapolis, Minn., Code of Ordinances (MCO)
§ 139.40(e)(1) (2017). Under the amended ordinance, a
landlord's decision to refuse to rent a property for
reasons related to the requirements of the Section 8 program
constitutes an "unlawful discriminatory practice."
Id. Thus, the amended ordinance prohibits landlords
from declining to rent to voucher holders who meet the
landlords' other requirements, even if the landlords have
legitimate business reasons not to participate in the Section
the amended ordinance, a landlord has an affirmative defense
to a claim that the landlord's refusal to rent property
constitutes an unlawful discriminatory practice if "the
refusal, denial, or withholding is due to a requirement of a
public assistance program and that requirement would impose
an undue hardship" on the landlord. Id.
"Undue hardship" is defined as:
[A] situation requiring significant difficulty or expense
when considered in light of a number of factors to be
determined on a case-by-case basis. These factors include,
but are not limited to:
(1) The nature and net cost of complying with any requirement
of a public assistance program, taking into consideration
existing property management processes;
(2) The overall financial resources of the landlord, taking
into consideration the overall size of the business with
respect to the number of its employees, and the number, type,
and location of its housing stock; and
(3) The impact of complying with any requirement of a public
assistance program upon the business and dwelling.
MCO § 139.20 (2017). In addition, the amended ordinance
exempts four classes of rental properties from its
anti-discrimination provisions related to public assistance
programs: (1) a room in an owner-occupied single-family
dwelling; (2) a single-family dwelling or single dwelling
unit being rented for no more than 36 months by an owner who
homesteaded the unit at the start of the rental period; (3) a
unit of an owner-occupied duplex; and (4) a previously
homesteaded property of an owner on active military duty. MCO
§ 139.30(b)(1)-(4) (2017).
the city council passed the amendments, it also directed
staff to report on the development of a landlord incentive
fund to offset property-damage claims by landlords. The fund
went into effect on January 1, 2018, and allows a landlord
renting to a voucher holder to request reimbursement for
damage in excess of the security deposit.
2017, Fletcher filed a complaint seeking a declaration that
the amended ordinance is unlawful and violates the Minnesota
Constitution. Fletcher moved for summary judgment, arguing
that (1) the amended ordinance is preempted by Minnesota law,
(2) the amended ordinance deprives Fletcher of its right to
substantive due process, (3) the amended ordinance deprives
Fletcher of its right to equal protection under the law, (4)
the amended ordinance constitutes an unlawful regulatory
taking, and (5) the amended ordinance deprives Fletcher of
its right to freedom of contract. The city filed a
cross-motion for summary judgment. The district court granted
Fletcher's summary-judgment motion and denied the
city's summary-judgment motion, concluding that the
amended ordinance deprives Fletcher of its rights to
substantive due process and equal protection under the
Minnesota Constitution. The district court did not address
Fletcher's other claims. In a subsequent order, the
district court enjoined the city from enforcing the
provisions of the amended ordinance that it found to be
unconstitutional and held that Fletcher's other three
claims are moot. This appeal follows.
I. Do the amendments implicate a fundamental right?
II. Did the district court err in concluding that the amended
ordinance violates Fletcher's substantive-due-process
rights under the Minnesota Constitution?
III. Did the district court err in concluding that the
amended ordinance violates Fletcher's equal-protection
rights under the Minnesota Constitution?
IV. Did the district court err in concluding that
Fletcher's other ...