An owner of 17 low-income properties in St. Paul has filed a federal complaint against the city, according to KSTP.
Raven Financial is challenging the city's order in early 2013 to either improve or tear down a six-bedroom duplex.
The company says that St. Paul's strict code enforcement exceeds state standards, and makes it too expensive to provide affordable housing to the poor.
The complaint was filed with the Department of Housing and Urban Development against St. Paul, the Minnesota Housing Finance Agency and the Payne-Phalen District 5 Planning Council.
The Pioneer Press reports the property and others in the complaint are in a high-poverty neighborhood on the city's East Side. City officials say housing inspectors have found many rental units with no heat, mice infestations and other evidence that the poor are being taken advantage of by unscrupulous landlords eager to get federal housing vouchers.
But Raven Financial's attorney, John Shoemaker, said costs for unnecessary repairs are unfair and would be passed on to tenants through rent hikes.
"The city's housing policies act as a major disincentive to continuing to provide low-income housing in St. Paul," Shoemaker wrote in a statement.
Raven Financial says it has sold off rental units in order to keep up with repair costs, fees and property taxes.
The city's website lists some of the properties and orders for repair.
The complaints mean HUD will have to decide whether St. Paul may continue its practice of forcing housing improvements and ordering demolitions of problem properties.