Lexington council workshop refers proposed moratorium on single-family rentals to planning commission

Councilmember Mahr urged the City of Lexington on July 16 to consider a moratorium on licensing future single-family homes as rental properties, saying corporate buyers now own many of the city’s affordable houses. The council agreed to send the proposal to the Planning and Zoning Commission for study and a recommendation back to the council.

Mahr told the workshop that single-family properties in Lexington increasingly are held as rentals rather than owner-occupied homes and that corporations are buying many of those affordable units. City Administrator Bill Petracek said those owners pose enforcement and maintenance problems: “these corporate venture capitalists that buy these homes are difficult to deal with when it involves the rental licensing process, property maintenance, etc.,” he said.

City Attorney Kurt Glaser advised that the city’s authority is limited when it comes to restricting who may buy residential property. “The City can’t restrict homeowners from selling to these corporations,” Glaser said, “but the City can put restrictive barriers in place to make it difficult for these companies to rent these properties.” He cited the City of Wabasha’s rental property ordinance as an example of restrictive regulations that have been tested in court and prevailed.

Councilmembers discussed whether existing single-family rentals would be grandfathered if the council adopts new rules. Glaser stated that any single-family homes that are licensed and rented would need to comply with new regulations incorporated into the rental housing ordinance, indicating limited scope for exemptions.

The council reached consensus to forward the matter to the Planning and Zoning Commission for study and a formal recommendation. No staff comments were offered during the staff-input portion of the meeting. Councilmember Mahr moved to adjourn at 7:34 p.m.; Councilmember DeVries seconded. The motion carried 5-0.

Next steps: the Planning and Zoning Commission will study the potential moratorium and report back to the council; no ordinance or formal restriction was adopted at the workshop.