Iowa City politicians are rushing to mess up the fragile progress they’ve made at improving the housing market.
The City Council voted this week to approve new rental restrictions, following a new state law outlawing the city’s regulations on non-related roommates. Under the city’s rental caps, some homeowners will be blocked from new rental permits if 30 percent or more neighbors already have permits.
I’ve written before that the government’s meddling in the housing market has helped make Iowa City the most expensive rental market in Iowa. Any policy that makes it harder to offer rental housing will lead to higher costs for renters.
Yet this case is particularly offensive. Council members say they want to balance long-term and short-term residents, but they hardly try to hide their actual goal — to restrict the areas where groups of young people can live.
“Just in my block, three of the homes ... they’ve become rental properties, and maybe they’re not listed as rental properties, and two of those three are quite obviously college students,” council member Pauline Taylor said during a meeting last month.
Several University of Iowa student leaders asked the council to reconsider the new rules, warning they will push some students even further from campus. Rather than heed that input, council members decided at the same meeting to make the rental cap more restrictive than originally proposed.
Any legitimate public interest can be protected through the city’s existing tools, like zoning and nuisance policies. It’s not a crime to be young or poor, yet governments often treat those groups as pests whose impacts must be mitigated.
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To city leaders’ credit, they cleared the way for more housing supply in recent years. Nearly 3,000 apartment bedrooms are newly available or under construction. However, I worry rental restrictions will jeopardize that momentum.
The good news is the impact of the misguided rental cap may be short-lived. Don’t be surprised if it is tested by the courts or the legislature.
A legal challenge to rental caps made it to the Minnesota Supreme Court in 2014, though the court decided not to rule either way. Attorneys with the Institute for Justice argued rental caps violate the state constitution’s protections on private property.
Anthony Sanders, lead counsel in the Minnesota case, said while Iowa’s constitution differs from Minnesota’s, some of the same arguments would likely apply.
“I think there would be an opportunity for someone to challenge the law,” Sanders told me.
Iowa Rep. Zach Nunn, R-Bondurant, sponsored a bill last session to outlaw cities’ restrictions on non-related roommates. He said the legislature may revisit the issue in response to Iowa City.
“It goes against original intent of the law. The idea here is that the cities have plenty in their arsenal if they want to focus on managing properties. Trying to put additional egregious burdens on property owners or people who want to rent in a community doesn’t do any good for the residents,” Nunn said this week.
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