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Duluth City Council considers new rental restrictions in zone near colleges

Brett Glawe is frustrated that his home near the University of Minnesota Duluth campus has been on the market for almost a year.

He bought the four-bedroom, two-bath corner property in May 2006 while in medical school. But when his interests shifted from general practice to surgery, he had to transfer out of state and looked to sell his home in March.

The house has sat idle since.

"I can't get rid of it or even rent it out to cover my mortgage expenses," said Glawe, who could not get a rental license because of the 300-foot rule.

When the Duluth City Council voted in December to rescind the rule that banned the rental of conventional homes and duplexes within 300 feet of existing rental housing, Glawe thought his odds of selling were looking up. But worries of new restrictions coming to the UMD area have given buyers "cold feet," said Len Sarvela, an agent with Real Estate Masters who's showing the home.

Those worries may become reality. The City Council will take up a proposal to put new limitations on rental properties in the UMD neighborhood that would create a "protection zone." In it, no new multi-tenant rental licenses would be issued, probably guaranteeing a halt to new college rentals.

"It's a temporary measure so this issue can be addressed," City Councilor Sharla Gardner said. "We want homeowners, the university, rental property owners, students and city planners to be involved. Everyone needs to have a seat at the table."

The protection zone would be in effect until a "small area plan," focusing on appropriate development, is completed, said Gardner, who along with Councilor Patrick Boyle is proposing the zone.

Patrice Bradley, a member of the Campus Neighbors Advisory Group, said she strongly supports the protection zone idea, but she's not opposed to students being part of the mix.

"We need students, and we need to make them feel welcome. But we also need to have a balance," she said. "We can't have our neighborhoods completely flip. If they do, who are your kids going to play with, and where are you going to park?"

Dave Montgomery, Duluth's chief administrative officer, said there's a key difference between the 300-foot rule and the protection zone. The latter "is much more narrowly drawn."

Montgomery said that properties in the protection zone still would be eligible to receive single-tenant rental permits initially, while the 300-foot rule blocked rental licensing of any type. He also noted that the restrictions would remain in effect only long enough to allow for the completion of a small area plan, which he hopes to complete by mid-2011.

If the process gets bogged down, the protection zone would automatically expire at the end of the year, Montgomery said.

Neighborhoods that are already 80 to 90 percent rental would be excluded from the protection area.

Gardner said she envisions development at the site of the soon-to-be-closed Woodland Middle School and the Fourth Street corridor along the lines of Dinkytown in Minneapolis. The result could be reduced pressure on existing residential campus neighborhoods.

Still, the mere prospect of further restrictions on rental properties has had a chilling effect on home sales, according to City Councilor Todd Fedora. He said he's already heard of three home sales falling through as a result of uncertainty fostered by proposed new rules.

"We would be restricting market dynamics and would again be cutting down the market," he said, predicting that lower prices and slower sales will result.

Glawe said he's been forced to pick up the tab for his empty house in Duluth, while also paying for a place in Des Moines, where he's completing his residency. He figures housing costs now consume 50 to 60 percent of his total income.

Even if he eventually is able to sell his home in Duluth, Glawe said his recent experiences will leave him with "a bad taste in my mouth" for a community he had once held in high esteem.

"I'd look a lot of other places before I'd ever consider taking a job in Duluth now," he said.

The council is likely to vote on the proposed protection zone at its Feb. 14 meeting.