The city says not more than 30 percent of the homes on a block can be rentals, but some homeowners say that rule is illegal and unconstitutional. They say the city is unfairly restricting what they can do with their property and not giving them equal opportunity to obtain rental licenses.

The new ordinance would limit landlords who convert single-family homes into multi-tenant properties to a maximum of four bedrooms in the future.

The Minnesota Court of Appeals ruled Monday that the property rights group challenging Red Wing’s rental code did not prove it is unconstitutional. Under the ordinance, landlords must have their properties inspected by city officials, even if there's no probable cause to believe there are violations. Minnesota Public Radio has more on the appellate ruling.

A shift away from neighborhoods full of homeowners has become a phenomenon in Minneapolis and St. Paul as investors turn single-family homes into rentals to take advantage of a tight rental market. Housing experts say the resulting drop-off in single-family homeownership can destabilize neighborhoods.

The Burnsville Fire Marshal is revoking the rental license for the Country Village Apartments after it failed to fix several code violations. WCCO reports 40 to 60 families at the apartment complex are being notified they need to find a new home. The City of Burnsville also inspected the property and found more than 100 code violations, including mold and rodent infestations.

The city conducted a survey last year that found multi-family rental properties were nearly 100 percent occupied. The demand will continue to increase when MSU closes the 1,200-bed Gage Towers in the fall. The Free Press reports construction of two apartment buildings will add 60 units to the area this summer. Another 48-unit building is expected to be ready next year.