Mpls. City Council cracks down on apartment developers after Dinkytown preleasing fiasco

Minneapolis residents soon may be able to break their leases without penalty, if their new apartment building isn't finished by the time they're supposed to move in.

That's the upshot of an ordinance approved Thursday by the City Council, the development of which was spurred by myriad complaints University of Minnesota students made against an upscale mixed-use development in Dinkytown that missed its target opening date.

Council Member Robin Wonsley introduced the measure in November, which the full council approved unanimously as part of a package of new ordinances. It now goes to Mayor Jacob Frey, who is expected to sign it.

"This is in response to the Identity Dinkytown fiasco, where over 500 students were displaced because a large-scale developer did not have the units ready as promised," Wonsley said during the meeting.

Renters were previously bound to a lease on an unfinished building as long as the developer provided some form of relief.

U students began sounding the alarm in early August, when the developer of the Identity Dinkytown building — which replaced the McDonald's commonly known as "Drunk Don's" — notified them it wouldn't be ready by month's end.

Instead, property owner CA Student Living offered to either lodge tenants in nearby hotels and include an $80 per diem payment, or pay them $150 per day while they found their own temporary housing. Per diems were provided through virtual credit cards.

However, Identity didn't allow leaseholders to break their rental agreement without penalty, leading a group of tenants to sue the developer. The situation drew the attention of Wonsley, who represents Dinkytown on the City Council.

"We took it seriously and got to work to see what pre-leasing ordinances we can advance," Wonsley said.

The new Minneapolis ordinance gives renters two options if they've pre-leased in a building that isn't done by their move-in date. They may either accept alternative housing offered by the landlord "that is reasonably equivalent to the unit described in the lease agreement," or seek reimbursement by cash or check for any rent they paid for each month the unit isn't habitable.

A four-bedroom unit in the Identity Dinkytown building runs about $4,800 per month.

City officials gave the property the green light to open 162 of its 308 apartments in late September. It's unclear how many have come online since then.

Officials with Identity Dinkytown did not immediately respond Thursday to a request for comment.

Star Tribune staff writer Dave Orrick contributed to this story.