The Minnesota Court of Appeals has upheld Winona's controversial 30 percent rule.
Minnesota Public Radio says Monday the court found the ordinance was constitutional.
The ordinance says no more than 30-percent of homes on any block can be given rental licenses.
A group of local homeowners challenged the ordinance and brought it up with the Court of Appeals.
A Winona County judge had already ruled the law as constitutional earlier in 2012.
MPR reports the homeowner group may take its case to the Minnesota Supreme Court.