Last month, Corcoran adopted a rental ordinance for the first time. The ordinance addresses several potential risks and negative outcomes for the city. This includes reduced housing affordability and availability as homes are converted into rentals, property maintenance requirements, and the impacts that high levels of rentals can have on surrounding properties.
Key provisions of the ordinance include:
- A requirement for rentals to be licensed, subject to some exceptions for family members, and inspected for safety.
- A limit on the number of licenses that a single person/entity can possess in the city (max of 5), except for multi-family housing (apartments).
- A cap on the number of licenses available on each low density residential block, with a maximum of 15% allowed.
- The adoption of formal property maintanance standards, and a strike system for property maintenance and nuisance activity that can result in loss of a rental license.
While single family rental levels are currently low in Corcoran, there are a number of them in the Twin Cities area, and significant national growth has occurred with over 14 million single family rental units nationally, according to Statista.
Some areas in the Twin Cities have significant levels (>30%) of this kind of investor ownership in rental residential real estate. This contributes to lower levels of affordability, according to the Minneapolis Federal Reserve bank studies conducted to date, with investor ownership pulling properties off the market for home buyers.
Owner occupied homes tend to have better outcomes for upkeep and maintenance, and the creation of maintenance standards for rentals is expected to ensure a better and more uniform level of care across the city. Similarly, provisions tying continued licensure to absence of public nuisances should help mitigate issues in rentals.
The code becomes effective July 1st 2023, and all existing rentals must be licensed within 1 year. For any property owner who currently has more than 5 rental homes, if they apply for licensure prior to January 1, 2024 their existing properties can be licensed due to a grandfather clause in the ordinance.
The city council discussion and presentation on the ordinance can be viewed here.