With Saint Paul’s rent control ordinance scheduled to take effect on May 1, three teams of city staff members are busy figuring out how to implement the ordinance approved by voters in a citywide referendum on November 2.
“Saint Paul needs both equity and stability in its housing,” Daniel Yang, senior policy adviser to Mayor Melvin Carter, told the City Council on December 8. That means there are many issues to resolve before rent control can be implemented, he said.
The new ordinance, which is considered to be one of the most restrictive rent control ordinances in the nation, caps rent increases on all residential property at 3 percent per year. It does not exempt small landlords or new construction, as some cities’ ordinances do.
An exemption for new construction
The lack of an exemption for new construction concerns Carter, who has said he would like to amend the ordinance to include such an exemption. It also concerns developers, who have already postponed housing projects because of the loss of investors and the additional challenges the ordinance poses in making a profit.
How much it will cost the city to implement and enforce the ordinance remains to be seen. The 2022 city budget adopted by the City Council on December 8 does not include any money for those purposes. Once those costs are established, however, a budget amendment will be brought to the City Council, according to Yang. The plan, he said, is to keep those costs to a minimum.
The task of drafting an exemption for new construction is being led by Melanie McMahon, Carter’s executive project lead for redevelopment. Under Saint Paul’s city charter, a new ordinance adopted through a referendum cannot be amended for one year after it is approved by voters. However, “the mayor remains committed to signing an exemption for new construction,” Yang said. Developers with projects pending have said they will postpone the projects or drop them altogther if the exemption is not adopted.
Grave impacts for smaller landlords
City Council member Jane Prince is wary of the exemption. City officials should not be seen as helping high-end developers while ignoring the “very grave impacts” of rent control on small and mid-size landlords, she said. Landlords of existing properties face challenges the city also needs to address, according to Prince. One is the practice of landlords to hold down rents for longtime tenants. When the tenants move out, landlords typically raise that unit’s rent to match the rents of other units in the building. The 3 percent cap would not allow that.
“I won’t be happy if we vote in a new-construction exemption before we work out the problems other landlords will face,” Prince said. She described a scenario where older multifamily housing governed by the rent cap is torn down to make way for unrestricted new housing.
New stakeholders task force
A second focus of the city is to convene a group of stakeholders to work on new regulations related to the rent control ordinance, Yang said. The advisory group would include renters, landlords, housing justice advocates and experts in real estate, real estate law and finance. Jon Grebner, Carter’s political director, will oversee that work. City Council members said they would like some influence in who will serve on the advisory group. Yang said the appointment process has not been finalized.
Developing policies and procedures
The city’s Department of Planning and Economic Development and Office of Financial Empowerment are leading the third team of city staff. Their task is to develop the policies, procedures and systems needed to implement the ordinance. Staff will conduct a market analysis, draw up a budget for implementing the regulations and look at ways to implement the recommendations of the advisory group.
One issue the above groups will need to address is how landlords will apply for an exemption to the 3 prercent cap in a year when they need to raise rents more to cover building repairs or a large property tax hike.
More questions than answers
City Council members said they appreciated Yang’s update, but still had more questions than answers. Their constituents have been complaining about the lack of information about rent control. Council members requested a basic fact sheet that they can share with constituents by the end of the year.
Citizens are waiting for answers, according to Ward 3 City Council member Chris Tolbert. “We continue to deal with confusion,” he said.
“Uncertainty is the worst possible thing we can have in our community,” said Ward 2 City Council member Rebecca Noecker.
— Jane McClure
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