The Minnesota Multi Housing Association (MHA)
is a state-wide nonprofit trade organization. With nearly 2,100 members representing more than 250,000 housing units throughout Minnesota, MHA is the voice of the state's multi housing industry.

Legislative Recap 2014

 By Todd Liljenquist, Director of Government Relations

The 2014 session of the State Legislature, which ended prior to the date mandated by the state constitution, was imminently successful for the Minnesota Multi Housing Association. We were able to come to agreement with Legal Aid on changes to landlord-tenant law protections for victims of violence.

Sometimes, though, the success of a session is measured in what was not enacted into law and this was one of those sessions.

We successfully opposed a multitude of bills that we believe would be detrimental to rental housing owners and managers and the residents they serve, such as a bill automatically expunging all eviction actions after three years, a bill requiring management to mitigate damages, including allowing an assignment or sublease, and for the second consecutive year, a bill requiring management to provide a resident with written notice and an opportunity to cure or vacate the rental unit seven days prior to filing the eviction action for non-payment of rent.

MHA’s legislative success is due in very large part to the active support and involvement of association members and to the reasonable positions on issues adopted by our Legislative Committee and Board of Directors. Contacting legislators, testifying at legislative hearings, and serving on the Association’s Legislative Committee are vital to MHA’s legislative success. In particular, we want to express our gratitude to Angie French, Lisa Marvin, and Lisa Moe for their tireless assistance with our discussions with Legal Aid, to Cecil Smith for eloquently testifying before legislative committees on several proposals, and to Mark Jossart for thoughtfully chairing the Legislative Committee.

Not only was the session successful for the MHA it was also unique for a number of reasons. Governor Dayton labeled it the “Unsession” in an effort to remove redundant, unnecessary, and outdated laws for the sake of streamlining and improving the efficiency of state government. More than 1,100 Unsession provisions were enacted during the session. The state budget forecast showed a surplus of $1.2 billion which afforded the legislature the unfamiliar luxury of passing a supplemental budget bill that allocated additional funds. Finally, the bonding bill provided an additional $100 million in funds to be awarded competitively by the Minnesota Housing Finance Agency to rehabilitate existing housing and create new housing opportunities for low-income renters.

Detailed explanation of new laws that specifically affect rental housing, as well as a brief discussion of defeated legislation and the ongoing issues they represent follow. 

New Laws

Tenant Remedies for Victims of Violence

The law originally passed in 2007 allowing victims of domestic abuse to terminate their leases in certain circumstances was significantly amended this year. After receiving direction from the Legislative Committee, the Association’s lobbyists, along with several Legislative Committee members, worked with Legal Aid on proposed changes beginning in September 2013. The process was thorough and extensive as the final version of the statutory changes was not agreed upon until March 2014. The current law will apply until the new law becomes effective August 1, 2014. Below is discussion of the major substantive differences between current law and the new law.

 Termination

Current law: Current law provides that the tenancy terminates on the date specified in the written notice only for the resident exercising rights under the statute.

New law: The new law provides that whenever any resident exercises termination rights under the statute the entire tenancy terminates for all the residents in the rental unit. For sole residents, the tenancy still terminates on the date specified in the required written notice. For multiple residents, the tenancy terminates at the latter of the end of the month or the end of the rent interval in which one resident terminates the lease. Residents whose lease was terminated due to a co-resident terminating the lease under the law may reapply to enter into a new lease.

 Payment

Current law: Under current law, the resident must pay “an additional amount equal to one month’s rent” in order to receive the protections provided under the statute.

New law: All residents forfeit all claims for the return of the security deposit under the new law. Even if there are multiple residents on the lease the entire security deposit is forfeited despite the fact that only one resident may be exercising rights under the law. As is true under current law, residents remain responsible for the full month’s rent in which the tenancy terminates and for other amounts owed to management at the time the lease is terminated under the law, including delinquent and unpaid rents.

 Victim types covered

Current law: Only victims of domestic abuse are covered under the current law.

New law: In addition to victims of domestic abuse, the new law covers victims of criminal sexual conduct and victims of stalking.

Documentation

Current law: Under current law, only orders for protection or no contact orders are documents permitted for use under the statutory protections.

New law: In addition to orders for protection or no contact orders, writings produced and signed by court officials, law enforcement officials, and certain qualified third parties will now qualify as permissible documentation under the new law. Qualified third parties include licensed health care professionals, and domestic abuse advocates and sexual assault counselors, as those terms are defined by statute. The statement by a qualified third party must be in the form specified in statute which, in addition to requiring the qualified third party to attest to certain statements, requires disclosure by the third party of their name, business address, and business telephone number.

Written notice

Current law: Residents seeking statutory protection under current law must provide written notice to management stating:

(1)   That the tenant is imminently fearful of domestic abuse from a person named in a no contact order or order for protection.

(2)   That in order to avoid imminent domestic abuse, the tenant needs to terminate the tenancy.

(3)   The specific date the tenancy will terminate.

New law: In addition to the items required under current law, the written notice must now include written instructions for the disposition of any remaining personal property in the rental unit, in accordance with the statute addressing resident’s abandoned personal property.

Management may request the name of the perpetrator if the resident is informed that the name is sought to protect other residents in the building. The resident may decline to provide the name of the perpetrator and disclosure of the name cannot be a precondition of terminating the lease. The new law also provides a means for management to expedite an eviction action by bifurcating the lease and removing a resident engaging in domestic abuse, criminal sexual conduct, or stalking against another resident in the rental unit. Finally, under the new law, management is prohibited from evicting a resident solely on the basis that the resident has been a victim of domestic abuse, criminal sexual conduct, or stalking.

 (Laws of 2014, Chapter 188)

Minimum Wage Increase

Minnesota's minimum wage will increase in a staggered method beginning on August 1, 2014. Under the new law, large employers, defined as those businesses whose annual gross volume of sales exceeds $500,000, will be required to pay its employees a minimum of $8.00/hour beginning on August 1, 2014. That amount will increase to $9.00/hour on August 1, 2015 and then $9.50/hour on August 1, 2016. For small employers, the rate is $6.50/hour beginning on August 1, 2014, $7.25/hour on August 1, 2015, and $7.75/hour on August 1, 2016.

Beginning in 2018, the minimum wage will annually adjust for inflation based on the implicit price deflator. A cap of 2.5% is imposed on the inflationary component and any increase in the minimum wage may be suspended if the Commissioner of the Minnesota Department of Labor & Industry determines that there is a potential for a substantial economic downturn.

 (Laws of 2014, Chapter 166)

Expungements

Criminal Expungements

Significant changes were made to the expungement process and types of criminal records that may be expunged under Minnesota statutory law. Under current law, certain criminal records may be expunged upon petition to the courts and its consideration of a multitude of factors. Effective January 1, 2015, the types of criminal records allowed to be statutorily expunged will expand to include certain records involving criminal proceedings or convictions. Individuals may petition for expungement if a specified period of time has occurred without conviction of a new crime.

Certain types of criminal records may also be expunged without the filing of a petition when the prosecutor agrees to the sealing of the criminal record, unless the court determines that the interests of public safety in keeping the record public outweigh the disadvantages to the subject. In an effort to provide protection for employers and landlords, expunged records may not be introduced in civil litigation against an employer or landlord for alleged misconduct of an employee or tenant, if the records were expunged before the occurrence giving rise to the civil action.

Eviction Expungements

Courts will now have explicit authority to expunge eviction records, upon motion by the resident, at the time judgment is entered in cases where the court finds for the resident. This change will allow residents for whom the court has found in their favor to move for expungement as part of the eviction proceeding rather than bringing a motion in a separate proceeding. The language passed into law is more limited than proposals discussed in previous sessions. Prior bills would have required courts to rule on all expungement motions at the time of the eviction hearing, not just in cases where the court finds for the resident.

 (Laws of 2014, Chapter 246) Various effective dates.

Medical Marijuana

After numerous years of advocates attempting to legalize the use of medical marijuana the legislature passed and the governor signed a bill providing limited use of the substance. The compromise bill between the House and Senate and Governor Dayton allows for the medical use of cannabis in pill, liquid, or by vaporized delivery methods for certain qualifying medical conditions. To obtain the drug, patients will need to be certified as eligible due to a qualifying medical condition by a doctor, physician assistant, or advance practice registered nurse. Examples of qualifying medical conditions include glaucoma, Tourette’s syndrome, ALS, and Crohn’s disease.

Manufacturing of the drug will be performed by two entities with oversight provided by the Minnesota Department of Health. The agency will also start a patient registry for people with these conditions to create an observational study on the impact of medical marijuana. Patients will start to receive treatment in the summer of 2015.

Most notably for our industry, the language does not permit smoking the substance as a form of legal treatment and does not allow access to the substance in plant form. The law also specifically provides that landlords and employers may not discriminate against someone solely based on the person’s status as a patient enrolled in the registry program.

(Laws of 2014, Chapter 311). Effective the day following final enactment.

Women’s Economic Security Act

Numerous employment and labor protections for women were passed by the legislature under the title of the Women’s Economic Security Act (WESA). The law increases unpaid leave for pregnancy and parenting time from 6 weeks to 12 weeks and expands an employee’s use of personal sick leave benefits. Additionally, WESA requires employers to provide certain reasonable accommodations for pregnant and nursing mothers and makes it unlawful for an employer to prohibit employees from disclosing their wages.

 (Laws of 2014, Chapter 239) Various effective dates.

Recycling

Certain businesses and rental properties must ensure that their properties are equipped to collect at least three recyclable materials, such as, but not limited to, paper, glass, plastic, and metal. The new law is limited in its scope as it will only apply to commercial properties, defined as including multifamily residential, located in the seven-county metropolitan area which contract for four cubic yards or more per week of solid waste collection. Many cities and counties in the metropolitan area currently impose recycling requirements on certain multifamily properties.

(Laws of 2014, Chapter 225, Section 4) Effective January 1, 2016.

Right to Judge Demand in Housing Court Eliminated

Parties in Housing Court no longer have the right to demand a judge hear a case rather than a referee assigned to the Housing Court calendar. Findings of the referee must still be confirmed and approved by a district court judge and a party may still request a district court judge to review the referee’s findings.

(Laws of 2014, Chapter 205) Effective the day following final enactment.

Minnesota Revised Uniform Limited Liability Company Act

A new approach to the governance, formation, and contractual arrangements of Limited Liability Companies (LLCs) will be phased in over the next several years. The Minnesota Revised Uniform Liability Company Act (Revised Act) will apply to all LLCs formed on and after August 1, 2015 and to LLCs formed prior to August 1, 2015 that opt-in by amending the appropriate governing documents. Beginning on January 1, 2018, the Revised Act will apply to all LLCs and the existing Minnesota Limited Liability Company Act will be repealed. The Revised Act is intended to bring Minnesota law into closer alignment with LLC laws in other jurisdictions. Under the Revised Act, for example, the duty of care and the duty of loyalty may be modified subject to a not “manifestly unreasonable standard” where current law prohibits variation from the statutory standard, and the Revised Act, unlike current law, specifically imposes a requirement of good faith and fair dealing.

(Laws of 2014, Chapter 157) Effective August 1, 2015.

Property Taxes

Two tax bills were passed by the legislature and signed by the governor this session. The first tax bill was primarily designed to conform certain elements of the state’s individual and corporate tax code to recent changes in the federal tax code. Three business-to-business sales taxes that were enacted in the 2013 session were also repealed, including repair and maintenance of commercial machinery and equipment, telecommunications equipment purchases, and storage and warehousing services. The second tax bill was designed to provide additional property tax relief.

Property tax relief proposals in the 2014 Session looked very similar to those proposals passed during the 2013 Session. In addition to the $80 million increase to local government aid (LGA) provided in 2013 the legislature increased the LGA appropriation by another $7.8 million. Legislation enacted during the 2013 Legislative Session exempted purchases made by cities, counties, and townships from the sales tax. The 2014 Tax Bill extended the sales tax exemption to additional local government units, including all special service districts, city, county, and township instrumentalities, and all joint powers boards and organizations. Finally, all homestead credit refunds and renter property tax refunds were increased.

One issue related to property taxes which we anticipated seeing this session was not discussed at all. Last year, the municipal street improvements districts proposal was included in the House tax bill but was not included in the Senate tax bill. This proposal would grant cities the ability to create specified geographic areas, define them as street improvement districts, and impose fees on properties within the district. One of the many concerns with this type of proposal is that it creates an end-run around the special assessment laws and provides an opportunity for communities to charge different types of properties at different rates with no safeguards in place like those that exist in the statewide property tax system. Cities could charge commercial and industrial and multi-family residential at significantly higher rates than single-family residential. We, along with a large consortium of interest groups, monitored the status of this proposal and were pleased that neither body included the proposal as part of its tax bill. 

Workforce Housing Grant Pilot Program

A pilot program will attempt to address concerns raised by several Greater Minnesota communities that have seen significant job growth due to business expansion and have had difficulty providing housing for the additional workers. The pilot program requires the Commissioner of the Minnesota Department of Employment and Economic Development to establish a workforce housing grant program awarded to cities to be used for financing costs related to the construction of or financing for market-rate apartments. The pilot program is extremely limited in scope. In order for a city to qualify it must have a population of 1,500 or more and be located in Pennington County or Roseau County. Additionally certain requirements relating to the local vacancy rate and deficiencies in the amount of apartments constructed must be met in order to qualify for the program. Funding for the program is $2 million and each grant recipient is limited to the lesser of ten percent of the project cost or $400,000.

(Laws of 2014, Chapter 308, Article 6, Sections 14-15) Effective the date following final enactment.

 
Proposals NOT Enacted into Law

Many of the following proposals were given hearings and passed several committees but ultimately were not enacted into law this session. The proposals represent issues which impact the rental housing industry and may be confronted in future legislative sessions.

 1.      Seven-Day Notice. Once again a bill which would have required management to provide a resident with written notice and an opportunity to cure or vacate the rental unit seven days prior to filing the eviction action for non-payment of rent did not become law. Last session, the bill passed to the House floor but did not receive a hearing in the Senate. It failed to receive a Senate hearing again this year.

2.      Duty to Mitigate Damages. A bill requiring management to mitigate damages when the resident breaches the terms of the lease, including agreeing to an assignment or sublease, passed two committees in the House but failed to proceed any further.

3.      Termination of Lease Due to Infirmity or Illness. A proposal allowing residents to terminate their lease based upon their infirmity or illness with a two months’ notice passed two committees in the House. The author agreed that the language in the proposal was not workable in the form in which it was presented and decided not to pursue the proposal any further this session.

4.      Automatic Expungement of Eviction Actions. Automatic expungement of all eviction actions after three years and prohibited reporting of eviction actions until final disposition of the case failed to become law. The proposal passed one House committee but failed to proceed any further.

5.      Notice of Pest Infestation and Chemical Treatment. A bill requiring management to provide written notice to prospective residents of any pest infestations in the building within the previous twelve months and existing residents of what chemicals are used for extermination received a House committee hearing but did not move out of the committee.

6.      Restrictions on Resident Criminal Background Check. A proposal prohibiting management from requesting criminal background information on the rental application and only allowing management to request the information once a rental unit is offered contingent on the criminal background check did not receive a hearing in either body.

7.      Expansion of Security Deposit Information. A broad expansion of the information required to be included in the written statement when withholding all or a portion of the security deposit did not become law. The bill would have required, among other things, precise details about the nature of the damages and written evidence to support the amount withheld, including estimates, bill, receipts, and invoices.

8.      State Agency Rulemaking. An expansion of the scope of state agency rulemaking authority failed to become law despite passage in the House.

9.      Preventing Solar Energy System Restrictions. A bill preventing any private entity, including a homeowners association, from denying an owner of a single-family home, where the owner is responsible for maintenance, repair, replacement, and insurance of the roof, permission to install, maintain, or use a solar energy system did not become law. The proposal passed both bodies but was ultimately removed from an omnibus energy bill at the request of proponents of the legislation.

10.  Resident On-Bill Repayment of Energy Conservation Improvements. A provision allowing all parties, including utilities, building owners, and commercial or multifamily residential tenants, to voluntarily participate in an on-bill repayment program for energy efficiency improvements was removed from the omnibus energy bill.

11.  Elevator Code Compliance Extension. A bill extending the deadline for elevator code compliance for common interest ownership properties having five or fewer floors to December 31, 2017 did not become law despite being amended on several bills in the Senate.

12.  Sprinkler Requirements in Single-Family Homes. A bill precluding the State Building Code, State Fire Code, or a political subdivision from requiring the installation of fire sprinklers in new or existing single-family detached dwellings did not become law despite being amended on several bills in the Senate. The new State Building Code is proposed to require all new single-family dwellings of 4,500 square feet or more to be equipped with an automatic fire sprinkler system.

13.  Prohibiting Associations from Foreclosing on Liens for Assessments. A bill, similar to one discussed in previous legislative sessions, removing the ability of common interest communities to enforce liens as assessments against owners who violate the association declaration, bylaws, rules, or regulations, was introduced last session in the Senate and once again did not receive a hearing.

14.  Certificates of Rent Paid. The Minnesota Department of Revenue dropped proposed changes to the Certificate of Rent Paid (CRP) prior to the start of session. The proposal would have required owners to electronically submit a copy of the CRP to the department, in addition to giving a copy to the resident, and mandated inclusion of the resident’s social security number on the CRP.

Copyright © 2018 The Minnesota Multi Housing Association | Privacy Statement | Terms Of Use
Powered by eNOAH