Tenant Protection Ordinance would drive up costs for landlords and reduce the availability of affordable housing

By Chad Skally

I am highly disheartened by the work of St. Paul city staff to develop a proposed Tenant Protections Ordinance. Not only did they ignore all of the input from property managers last summer and fall, they developed an ordinance that will ultimately increase property taxes for homeowners and rental rates for tenants and reduce the amount of affordable housing in St. Paul.

There are people who damage apartments and do not pay rent. That is why property management companies have screening criteria. If the city makes it so property management companies can no longer effectively screen prospective tenants, then rents will have to be increased to not only deter people who cannot pay the rent, but to cover the extra costs associated with the effects of the city’s requirements. Changing screening criteria will also cause rental property values to go down and property taxes for homeowners to go up.

The proposed ordinance would limit which criminal offenses may be used to deny a rental application. There are many misdemeanor-level offenses related to sexual attacks and stalking that the proposed ordinance would force property managers to ignore. This would only make it more difficult for low-income renters to find apartments.

Limiting the use of security deposits and prepaid rent will also cause an increase in monthly rents. The extra security deposits and prepaid rent help offset future non-payments from residents who are at higher risk of not paying rent. If these fees are limited, property managers will have to increase the monthly rent to offset future non-payments. In Seattle over 20 percent of landlords that increased rent said that one of the reasons was their city’s similar tenant protection ordinances.

 

What frustrates me about this ordinance is that the city staff and City Council members who put this together most likely did zero research on the impact that these types of ordinances have had in other cities. I am willing to bet that no one read the University of Washington’s 2018 Seattle Housing Rental Study.

Is it right for a landlord who wants to renovate a unit to have to give a resident three months’ notice and pay the resident a relocation amount equal to three times the Metropolitan Council’s affordability limit? (For a one-bedroom apartment, that is three times $1,124, which comes to $3,372.) This will only promote the deterioration of apartments in St. Paul.

 

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I do not believe tenants should be allowed to pay their rent late five months in a year. Nor should a management company be prohibited from giving them notice. If someone consistently pays rent late, that typically means they are in an apartment that is too expensive. This will cause late fees to increase because property owners still must pay their bills. The increased late fees will then lead to more evictions.

Many respectful renters will ultimately choose to move out of St. Paul because tenants who cause trouble at a property will be more difficult to give notice to move. The extra work for owners of affordable rental housing to report a sale and purchase will be a burden that may cause fewer properties to stay or become affordable.

Overall, the proposed ordinance would burden small landlords and cause them to sell to large national companies. That will affect St. Paul’s economy, because small landlords spend more in their community than large companies. My family has managed apartments in St. Paul for over 70 years. I can see this ordinance as a reason for my family and many others to retire from this business. In Seattle about 40 percent of landlords have sold, or plan to sell, their properties in response to their city’s similar ordinances.

Here are my recommendations:

  • If there is not enough affordable housing in St. Paul, the city should focus its efforts on allocating funds to build more.
  • If tenants are having trouble renting because of poor credit scores and criminal histories, provide them with outreach on personal finance and respectful citizenship.
  • If renters have many late payments, work with them to find apartments that they can afford and resources to help them budget their money.

What frustrates me about this ordinance is that the city staff and City Council members who put this together most likely did zero research on the impact that these types of ordinances have had in other cities. I am willing to bet that no one read the University of Washington’s 2018 Seattle Housing Rental Study.

This ordinance was brought to the City Council with zero public input. The city held several public meetings last summer to discuss safe housing, but none of the language in this proposal was discussed at those meetings. If you look at the public comments regarding the proposed ordinance, it is more than apparent that the people involved in developing it did not seek any input from the residents affected by it. I had hoped that since we are a democratic government, our City Council would be more transparent. I now fully expect the City Council to completely ignore all the comments against this ordinance and pass it.

A resident of Highland Park, Chad Skally manages rental properties in downtown St. Paul, Macalester-Groveland, Summit Hill, Summit-University and St. Anthony Park.

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