Minneapolis officials get an earful about proposed rules on renter screening, security deposits

Following a series of protests by landlords and rallies by renter-rights groups in Minneapolis, city staff are preparing to release new drafts of ordinances that would change how property owners can screen prospective tenants while also establishing limits for security deposits.

The offices of City Council President Lisa Bender and Council Member Jeremiah Ellison — who are sponsoring the proposed changes as part of a broad push to strengthen renter protections — are writing new language based on a flood of public feedback from landlords, renters and colleagues that followed the release of draft ordinances, Bender said Thursday. 

Along with emails from residents and input from city officials in other metros, she said they are considering comments from the city’s citizen-led Advisory Committee on Housing, which met Thursday in City Hall to formalize its recommendations for the proposals and forward that feedback to council members.

In addition to the cap on security deposits, the proposed policy package would limit what aspects of renters’ credit, criminal and eviction histories landlords could consider. Supporters of those provisions argue the changes are necessary because the current process can include facts that are not indicative of a person’s ability to be a good tenant, though landlords can use that information to deny applications. 

“Everybody deserves housing,” said committee member Brenda Marcos. “It doesn’t matter where you’re coming from, who you are — you deserve safe and affordable housing.”

Meanwhile, a group of property owners has pushed back against both proposals, describing them as a misguided effort to increase renters’ access to housing — one that could have unintended consequences for the city’s housing market and tenants’ safety. They want the council members to step away from the initiatives all together.

“Our primary responsibility is always the safety of all of our residents and the continued financial viability of our property,” said Cecil Smith, a property owner who is also a part of the city’s advisory committee. “That [proposed change] imposes a one-size-fits-all solution that doesn’t understand that screening criteria are there to manage risk.”

What’s being proposed

Under the current tenant-screening proposal, property owners would not be able to use felony convictions that occurred more than five years ago, or misdemeanor offenses that are more than two years old, to determine applicants’ eligibility. They also wouldn’t be able to use vacated or expunged convictions; arrests that did not result in convictions; or juvenile convictions. 

“There is data to suggest that crimes more than 5 years old made no impact on people’s ability to be a good tenant — some of those lower level offenses should no longer apply,” Ellison, whose Ward 5 covers much of north Minneapolis, said in an interview last month.

Under the proposal, however, property owners would maintain the ability to deny tenants with certain high-level criminal convictions, including sex offenses against minors and crimes involving methamphetamine. Ellison said he and Bender are open to adding to that list of exceptions.

The ordinance would also prohibit landlords from denying people due to their lack of credit, as well as implement protections for prospective tenants with a minimum credit score of 500. Property owners also wouldn’t be able to consider previous eviction judgements — technically called unlawful detainer (UDs) — that are three years or older.

Landlords would have the option to not adopt the screening standards if they conducted individual assessments, which would have to consider additional information from applicants before making decisions. According to the draft ordinance, that could include information such as documentation proving six or more months of job or income stability; the completion or enrollment in job training; six or more months of on-time rent payments; the completion of credit counseling, or “any other evidence that the applicant believes mitigates the significance of the specific barriers identified in an applicants history.” The advisory committee on Thursday requested more clarification on that part of the proposal.

As part of a separate proposal, the council members also want to disallow landlords from collecting security deposits that are more than half one month’s rent in cases where applications already require first and last month’s rent, as well as deposits that are more than one month’s rent in cases where applicants don’t have to pay last month’s rent. The ordinance would also allow tenants to pay security deposits in installments over a three-month period in some cases and prohibit landlords from collecting more than 25 percent of one month’s rent for pet damage deposits.

Landlord group: proposals don’t get to the root of housing issues

Opposition to the possible changes is being spearheaded by the Minnesota Multi Housing Association (MHA), which advocates on behalf of some 1,900 property owners and whose campaign against the proposals features hot pink, yellow and orange yard signs calling for SAFE & AFFORDABLE NEIGHBORHOODS MINNEAPOLIS. 

Leaders of the group argue that if the city limits the criteria available to screen potential tenants, some landlords will find alternative ways to bar applicants. They also say the proposals could raise the costs of insurance, further restraining housing development.

Smith, who previously chaired the MHA, said the group understands the challenges for people hunting for housing in today’s market, and that some of those people face barriers due to their credit and criminal histories. But the proposed ordinances do not get to the root of those issues, he said, which is a lack of affordable housing that fits all lifestyles. 

“Rather than just changing the entire market by adjusting the screening criteria … we need to get production going,” Smith said. “Right now, we have either homelessness or an apartment and there may be some sort of transitional housing in between, but there is no spectrum of housing opportunities.”

As owner of Cornerstone Property Professionals, a Minneapolis real-estate property company, Smith said he considers applicants’ criminal history within a window of five to 10 years of incarceration. He said he screens for high-level offenses, including arson, sexual misconduct and behaviors that would make neighbors feel unsafe or nervous. Smith also stressed that landlords already must follow federal standards that ensure the protection of certain classes defined under discrimination laws.

In terms of how landlords use credit scores to determine eligibility, Smith said every property manager “manages their own risk” and sets their own criteria for credit histories, though he emphasized that credit scores below 500 carry a 70 percent chance of delinquency, according to the Federal Deposit Insurance Corporation (FDIC).

Advisory committee weighs in

Bender  and Ellison are making the push for changes, in part, as a response to the city’s shifting demographics. Renters now making up 53 percent of all households in Minneapolis, and the shortage of housing at all income levels is raising prices and competition among prospective tenants.

Those trends led to the creation of the 21-member advisory committee appointed by Mayor Jacob Frey and the council, and includes experts in business and homeownership disparities. Each member serves a two-year term, and the committee meets monthly to discuss possible ideas for the mayor and City Council to consider while writing new housing policies.

On Thursday, some committee members said they want council members to think bigger about how they can eliminate housing barriers for certain groups of people, such as victims of domestic violence, or implement pilot programs to test new ideas.

Smith has advocated for market-driven solutions instead of the current proposals. He said the city should focus on removing regulatory barriers that keep alternative forms of housing — such as co-living buildings where tenants share bathrooms and other amenities, tiny houses and home sharing — from having a stronger role in the market. He also advocated for the launch of an online system for submitting all applications for low-income housing. Portland, for example, uses a program called OneApp that screens renters against landlords’ individualized sets of criteria to show the tenants where exactly they qualify.

“The intention of the ordinance is to go against egregious practices, but the scope of the ordinance makes [the screening criteria] too restrictive,” he said.

Dr. Brittany Lewis, who is a senior research associate at the University of Minnesota’s Center for Urban and Regional Affairs (CURA), is a member of the committee, too. In her remarks Thursday, she pointed to her findings in a 2019 CURA report that studied the disproportionate impact of rent hikes and evictions in north Minneapolis neighborhoods; The communities account for only 8 percent of Hennepin County’s rental units, but they tally half of the county’s eviction cases, the study showed. 

She also questioned how, or to what extent, the city would enforce the ordinances. During background checks, for instance, property owners could uncover felonies that are more than five years old, and they could find reasons to deny those applicants on a different basis.

“On paper all of this sounds good,” she said. “But in reality there are evictions records still showing up … same with criminal background.”

For Marcos, another member of the advisory group, the debate is personal. About three months ago, as she was filling out applications for new housing in Minneapolis, she said landlords repeatedly denied her because of a felony on her criminal record, which she said she received as a victim of sex trafficking 18 years ago in Texas. 

On Thursday afternoon, shortly before the advisory committee meeting, she joined about two dozen supporters for a rally near the light-rail platform outside City Hall.

“I’m a survivor of sex trafficking and homelessness,” Marcos told the crowd. “I live in a small little room that I rent for $750 a month because it was all I could get. …I have a lot of things going in my life — I’m a student at Metro State — but I can’t rent your apartment? It’s so sad. And I can see why people would go, ‘What’s the use of trying?’ and, you know, a lot of people give up.”

What’s next

In their recommendations to Bender and Ellison, several members of the advisory committee voiced support for the draft ordinances as they are written, or asked for minor technical clarification on certain details — including if, or to what extent, the policy changes would affect public housing.

Bender said city staff anticipate releasing new versions of the draft ordinances before the end of the month. After that, the council will schedule a public hearing on the proposed changes. The council president said she hopes to finalize the policies in late summer or fall.