But city is still trying to figure out just when and how new law will take effect.

Saint Paul voters approved by a 53 to 47 percent margin on November 2 what may be the most stringent rent control ordinance in the country. City officials are now scrambling to figure out what comes next. Meanwhile, landlords and their residential tenants are waiting to learn just when the ordinance will begin affecting them.

With a turnout of 34 percent of registered voters, the rent control measure passed with 30,965 “yes” votes and 27,581 “no” votes. City officials had planned for the ordinance to take effect on May 1, 2022. That date was in the enabling language for the ordinance. However, Saint Paul’s city charter holds that an ordinance adopted by voters in a referendum takes effect immediately. That discrepancy, plus a botched attempt by city staff to provide more details on the ordinance on November 3, has frustrated City Council members.

The ordinance forbids landlords from raising rent on their residential tenants by more than 3 percent per year. Unlike other cities’ rent control measures, Saint Paul’s applies to landlords of any size and to existing as well as newly built housing.

The rigidity of Saint Paul’s ordinance has been criticized. For example, it does not account for inflation, which is now running at about 5 percent annually. While the measure is meant to have a process for landlords to apply for an exemption from the 3 percent cap in the case of expensive improvements or large increases in property taxes, that process has not been formulated. Landlords are also concerned that applying for an exemption will require them to reveal their rental fees, information they consider to be confidential.

   

“Our policy to limit rent increases to 3 percent annually was crafted to eliminate the loopholes that have preferred landlord profit over renter stability in other cities that have passed rent stabilization,” said Margaret Kaplan, president of the Housing Justice Center. “The opposition tried to weaponize the strength and predictability of our policy because they know this is a significant step in rebalancing the outsized power of property owners over tenants.”

The rent control ordinance was promoted by such groups as the Housing Equity Now Saint Paul coalition, TakeAction Minnesota, the ISAIAH coalition and several district planning councils.

“This campaign grew out of decades of organizing in the communities most impacted by housing injustice,” said Tram Hoang, manager of the Keep Saint Paul Home campaign. “Countless renters have told us that something must be done to stop predatory practices and egregious rent spikes that are targeting and disproportionately harming households of color. We knew we would be outspent 20 to 1 by national interests intent on protecting unlimited profits for landlords and real estate speculators, but we were not intimidated. We knew our community needed action now.”

 

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“Our policy to limit rent increases to 3 percent annually was crafted to eliminate the loopholes that have preferred landlord profit over renter stability in other cities that have passed rent stabilization,” said Margaret Kaplan, president of the Housing Justice Center. “The opposition tried to weaponize the strength and predictability of our policy because they know this is a significant step in rebalancing the outsized power of property owners over tenants.”

Opponents contend rent control will discourage development of new housing

Opponents of the rent control ordinance included the Sensible Housing Ballot Committee, a coalition of landlords of all sizes, the Minnesota Multi Housing Association, chambers of commerce and labor unions. The committee spent about $4 million to influence voters in Saint Paul and Minneapolis, which also had a rent control referendum on the ballot on November 2.

The Sensible Housing Ballot Committee stated that it was “deeply disappointed in the results of the referendum in Minneapolis and Saint Paul. Our historic coalition of jobs and housing providers will engage with a new Minneapolis City Council on the policy discussion around rent control. And as Mayor Melvin Carter has said, we need to fix the Saint Paul rent control ordinance that will limit the development of new affordable housing in a region that badly needs it. Rent control will be a major discouragement to new housing investment in our core cities.” 

Local developers are concerned that rent control could affect their efforts to build new housing. They said they are finding that lending institutions are wary of the new restrictions.

Ryan Companies, the master developer of Highland Bridge, held a news conference in the week prior to the election to highlight how the ordinance could hamper its plans to build 3,800 new homes on the site of the former Ford Motor Company assembly plant in Highland Park. Almost all of those homes will be rental units, and 20 percent of them will be affordable to households making 30 to 60 percent of the Twin Cities area’s median income.

City Council members said they have heard from developers who are worried about projects they have in the pipeline and the possibility that those projects need to be revised to remain feasible.

The hurdles between rent control passage and enforcement

The rent control referendum that was passed by voters in Minneapolis authorized their City Council to draft a detailed ordinance and bring it back to citizens for review. That ordinance could then be approved by the mayor and City Council or by Minneapolis voters in another referendum.

The provisions of Saint Paul’s rent control ordinance were largely laid out in the referendum. City Council members said they have been frustrated with Mayor Melvin Carter’s administration for the lack of timely information on rent control, how it will be implemented and enforced, and how it will affect the 2022 city budget. After waiting several weeks for their questions to be answered, council members were dismayed on November 3 to see additional details about rent control pop up on the city’s website only to be almost immediately taken down.

Council president Amy Brendmoen said detailed rent control information should have been available to voters before the election. The council asked the Carter administration repeatedly for that information, but “we were given nothing but vague answers,” she said.

Brendmoen was also unhappy about the lack of estimates about the cost of implementing the rent control ordinance. “We’re passing the 2022 budget without that information, and I think that’s a shame,” she said.

Four of the seven members of the City Council opposed rent control in the form that was approved by voters. Carter supported it, with the caveat that the ordinance needs to be amended. However, the City Council will not be able to repeal or amend the ordinance for at least a year after it takes effect, according to the City Attorney’s Office. Assistant City Attorney Rachel Tierney said that case law on amending an ordinance passed by referendum is not clear. However, she cautioned the council about the risk of litigation if amendments are pursued.

Saint Paul Planning and Economic Development director Nicolle Goodman tried to answer the City Council’s questions on November 3, but conceded that the Carter administration was still looking into the ordinance. Should rent control already be in effect as provided by the city charter, the city has no staff in place to implement it. Nor is it clear which department will enforce it.

— Jane McClure

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