Meanwhile housing justice advocates keep watch for rent hikes as city enforcement lags.

In the wake of the new rent control ordinance adopted by Saint Paul voters in a citywide referendum on November 2, there appear to be more questions than answers. The ordinance, which limits rent increases to no more than 3 percent per year, was approved 53 to 47 percent. It is believed to be the most stringent rent control ordinance in the country. It includes no accounting for inflation, no exemptions for new construction, and no “vacancy decontrol,” which is a relaxation of the rental cap when a tenant moves out.

Developers and their investors are now putting apartment projects in Saint Paul on hold. This includes three six-story apartment buildings at Highland Bridge, the 122-acre development underway at the former Ford Motor Company plant in Highland Park. Highland Bridge master developer Ryan Companies was scheduled to appear before the Saint Paul Board of Zoning Appeals on November 15 seeking variances for those buildings, but that has been delayed.

According to Maureen Michalski, who is leading the Highland Bridge development for Ryan, the internal city staff review of the three buildings has also been delayed. “We won’t expend resources on those projects until there’s more clarity on the rent control ordinance,” she said. “Another market-rate apartment project of ours that was supposed to start construction in early December will be pushed back for the foreseeable future.”

The buildings already under construction at Highland Bridge will be completed. Ground will be broken on a planned medical office building, and the new single-family homes and owner-occupied townhomes will proceed as planned, according to information provided by Ryan to the Highland District Council.

   

City officials are playing catchup with enforcement.

Saint Paul officials are playing catchup following the passage of the ordinance. According to the City Attorney’s Office, rent control took effect immediately upon approval by voters, as provided by the City Charter. However, the city was not expecting to have staff in place to implement and enforce the ordnance until May 1, 2022. That was the effective date included in the enabling language for the referendum, though it was not included in the ballot question itself.

According to the City Charter, the rent control ordinance cannot be changed for a year following its adoption. City officials disagree as to what they can do in the meantime. Two of the seven City Council members—Mitra Jalali and Nelsie Yang— supported the ordinance prior to the election, as did Mayor Melvin Carter. But Carter has also called for amendments. He said he wants to work with the City Council on an exemption for new construction.

In a letter to the City Council, Deputy Mayor Jaime Tincher said exempting new construction is a priority for the mayor. She said a webpage explaining the city’s implementation of the ordinance will be posted soon. A webpage was posted on the day after the election but was quickly taken down because it was accused of raising more questions than answers.

 

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City Council members have questioned whether they can make amendments to the ordinance now, especially one as substantive as an exemption for new construction.

Housing justice advocates are keeping an eye out for steep rent hikes.

The rent control advocacy group Housing Equity Now Saint Paul (HENS) held an online meeting on November 17 to celebrate its victory at the ballot box and to outline where the campaign goes from here. “We did our job, we put it on the ballot and we won,” said HENS organizer Tram Hoang.

Hoang noted that the rent control ordinance was favored by a majority of voters in six of the city’s seven wards. “Housing justice is racial justice,” she said, referring to the great majority of voters who supported rent control in the city’s most diverse precincts.

HENS’s focus in the months ahead will be to reach out to tenants who may face steep rent increases between now and May 1, 2022, Hoang said.

The situation for tenants across the city is being watched closely, according to Margaret Kaplan of the Housing Justice Center. “We’re asking people to report rent hikes,” she said.

Hoang and Kaplan’s fear is that landlords will make steep increases in rent before the city has the resources to implement the ordinance­—to make up for the rent increases they will not be able to make after that time.

How real are the concerns of housing developers?

Hoang and Kaplan pooh-poohed the concerns raised by housing developers and the contention that voters did not realize what they were approving. They both called the shelved projects and development delays “a fear-based disaster narrative.”

Local developers disagree. They said they are losing investors in the wake of the referendum.

“I get calls daily from developers asking if I know what’s going on,” said Ward 3 City Council member Chris Tolbert. “There’s still a lot of uncertainty about this.”

Developer Jim LaValle, whose past projects include the Grove at Snelling and Saint Clair avenues and the Finn at Cleveland Avenue and Highland Parkway, is moving forward with his apartment project at Selby Avenue and Dale Street. However, other projects are on hold, he said.

“I had two deals in the queue to launch in Ward 3 if the new rent control ordinance wasn’t adopted,” LaValle said. “They involve 200-plus units, around $50 million in investments. But that’s all on the shelf. I hope I can do those projects someday, but I guess I’m headed to the ’burbs now.”

Developer Reuter Walton is now nearing completion of its housing development at the corner of University and Fairview avenues, and it is still planning to begin construction next year on a five-story mixed-use building at Grand Avenue and Saint Albans Street. Ari Parritz of Reuter Walton said that as of now, rent control is not forcing any changes to the design or construction at 695 Grand Ave. However, the ordinance is likely to have some impact on rental rates there, he added.

“We’re hopeful that the mayor and City Council will find a way to exempt new construction from the ordinance as quickly as possible,” Parritz said, “and add other common-sense features, including the vacancy decontrol and inflation adjustments that most cities have as essential components of their (rent control) policies.”

—Jane McClure

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