Here’s the latest in an issue we’ve been following.
In Fletcher Properties, Inc. v. City of Minneapolis, No. A23-0191 (July 30, 2025), the Minnesota Supreme Court held that the city barring owners from refusing to rent residential properties to a prospective tenant because the applicant is on public assistance is not a taking.
What is colloquially known as “Section 8” is a federal program “that provides rent subsides to eligible families … to help them pay for housing in the private market.” Slip op. at 2. This is a voluntary program, both for the tenant receiving the assistance as well as the lessor who enters the program by contracting with the public housing authority.
The City of Minneapolis added discrimination based on a tenant’s receipt of Section 8 assistance to the list of forbidden reasons for refusing to rent to a prospective tenants such as “race, creed, religion, ancestry, national origin, sex, sexual orientation, gender identify, disability, [and] marital status.” Slip op. at 4-5. Which seems to have removed the “voluntary” nature of a lessor’s participation. Thus, it probably isn’t surprising that several owners challenged the ordinance, and those challenges included a takings claim, inter alia.
The trial court granted the city summary judgment, and the court of appeals affirmed.
The Minnesota Supreme Court affirmed as well, framing the issue as follows: “whether the City’s requirement that landlords accept public housing renters unless the landlord establishes undue hardship is a taking under the Minnesota Constitution’s Takings Clause.” Slip op. at 9 (footnote omitted). That footnote notes that the challengers did not raise any claims under the U.S. Constitution, only Minnesota’s.
Notwithstanding evaluating the claim solely under Minnesota takings law, that law should look pretty familiar to the rest of us. The court first rejected the claim that the ordinance imposed a physical taking, concluding that Minnesota law adopts the Yee v. City of Escondido theory, which governs here. Minneapolis’s ordinance merely regulates the relationship between a landlord and a tenant, and does not require a landowner to suffer a government-authorized physical invasion by unwanted occupiers. That’s right, we’re back to the theory that by choosing to enter the market as a lessor, an owner foregoes the right to choose whom to include and whom to exclude. This is on you, landlord:
The Ordinance, like the ordinance in Yee, does not authorize an unwanted physical occupation of petitioners’ property; instead, it is a regulation of Fletcher’s voluntary use of their property. Once a Minneapolis landlord voluntarily invites prospective tenants to live in their rental property, the Ordinance regulates how the property may be rented. When a landlord voluntarily rents property to the public, a government entity may regulate the terms under which the landlord leases their property without necessarily effecting a physical taking. We therefore conclude that the Ordinance does not amount to a physical taking on these grounds.
Slip op. at 15.
The court also rejected the regulatory takings claim (Penn Central), primarily because the economic impact of the prohibition is slight, and property lessors do not have any reasonable expectations beyond leasing property to tenants … any tenants, apparently:
The Ordinance does not alter Minneapolis landlords’ primary expectation regarding their property. When landlords buy a rental property, their primary expectation is to lease it to tenants. The Ordinance does not transform Minneapolis landlords’ property into something other than rental property. After application of the Ordinance, the landlords will continue to use their property as they primarily intended—as rental units. Thus, the landlords’ expectations continue to be realized. We therefore conclude that the investment-backed expectations factor weighs against Fletcher.
Slip op. at 22 (citation omitted). To us, that seems like a pretty narrow view of an owner’s expectations when they decide to lease property, and something that should be case-specific, and not decided broad-brush as a matter of law.
The court also muffed the “character” factor, concluding that this cut in the city’s favor because each stated purpose of the ordinance “is a permissible legislative goal.” Slip op. at 24. As we have noted repeatedly, the character inquiry isn’t just the substantive due process / rational basis test repeated. Yet that is precisely how the court views it.
Fletcher Properties, Inc. v. City of Minneapolis, No. A23-0191 (July 30, 2025)