Rent control ordinance’s 3% cap will work best without any exemptions

Talking to renters in my daily work, which often involves advocating for tenants in unsafe and unhealthy apartment buildings, I was initially surprised to hear again and again that the threat of rent increases is a bigger concern than poorly maintained apartments. And yet, with more than 20 years of experience in this field, there was nothing I could do to help those renters. That pervasive injustice was entirely legal.

In November, we changed that in Saint Paul. With a majority in six of the city’s seven wards, Saint Paul voters supported the passage of a strong rent stabilization policy. By any measure, it was an unprecedented step for housing justice, rewriting the outdated and unfair rules that give landlords unlimited power to economically exploit their tenants. Now it’s up to city leaders to enact the will of the voters.

Addresses affordability and maintenance

According to a 2021 Metropolitan Council study, there has been almost no new affordable housing built for the lowest-income renters in the Twin Cities in the last five years, and there is very little predicted in the next 10 years. So it is absolutely critical to keep the most vulnerable Saint Paulites in their existing housing to prevent mass displacement and homelessness. Rent stabilization provides reasonable parameters for rent increases and gives households the ability to plan for their future, stopping the catastrophic cycle of uprooting workers, children and families over and over again.

It’s also a way to make sure our neighborhoods have high-quality housing. Too often, landlords use the threat of rent increases to keep tenants from reporting poor housing conditions to city inspectors, and use actual rent increases to punish those who do have the courage to advocate for themselves. Removing that intimidation tactic will give countless renters more agency in their own living conditions and improve our housing stock overall.

Rent stabilization and tenant protection policies work hand-in-hand to keep our neighbors in their homes. The city of Saint Paul recognized the importance of tenant protections for housing stability when the City Council passed the SAFE Housing Ordinance in 2020. Reinstating tenant protections like Just Cause for Evictions is a critical piece of this puzzle.

Keep 3 percent cap on annual rent increases

Why does the policy cap annual rent increases at 3 percent rather than 4 or 5 percent? Why doesn’t it tie the rate to inflation? First, because research from the University of Minnesota’s Center for Urban and Regional Affairs (CURA) showed that median rent increases in Minneapolis have been below 3 percent annually for the past 20 years—meaning responsible property owners in our region have done just fine raising rents at or below that rate.

Second, because this policy is about racial equity. According to CURA, the households of people of color (BIPOC) saw a cumulative rent increase of 32 percent over the past two decades, while white households saw a cumulative increase of just 18 percent. Low-wealth, BIPOC renters are the most likely to experience egregious rent hikes above 3 percent.

And third, because inflation has very little to do with the factor that most heavily influences how much rent costs—the property owner’s mortgage. When a tenant pays the rent, it covers many things, but the mortgage is by far the largest piece of that pie—and it’s immune from inflation by nature of what an amortized mortgage is—a loan with a predictable interest rate.

Vacancy control is key

Vacancy control limits rent increases when an apartment is between tenants, eliminating the potential for predatory investing in rental housing. Without vacancy control, corporate landlords have a clear economic incentive to force out current renters in order to jack up the rent for future tenants. Without vacancy control, we will bleed out affordability whenever someone moves out.

No blanket exemption for new construction

Whether you rent a $1,500 per month micro-unit built in 2020 or a $1,500 one-bedroom built in 1920, no one should be subjected to price gouging. That’s why it’s important that the policy applies to every residential building in Saint Paul, including new construction. When new construction is exempted, it can incentivize developers to tear down older buildings to start all over — reducing affordable housing stock and catalyzing displacement.

And it’s simply not necessary. New construction should have predictable costs from the outset, allowing landlords to set rents in a manner that creates a healthy return on their investment. If it doesn’t, it’s a risky investment that banks don’t want to underwrite and we don’t want in our city. A few developers “pausing” their projects has made headlines and galvanized panic among city leadership. But the ordinance makes clear that this policy is not a rent ceiling or rent freeze, meaning developers can set their rents at whatever level assures them of a reasonable return.

Strong oversight and enforcement

Now that the voters have spoken, it’s the responsibility of city staff and leaders to work together with urgency and transparency to craft solutions that maintain the integrity of the policy that was on the ballot. That includes a strong community-centered implementation and enforcement process that includes provisions like a rental registry and rent stabilization board to monitor landlord compliance, as well as clear and significant penalties for property owners that increase rent beyond 3 percent per year.

A group of Saint Paul residents who have long been left out of the conversation on affordable housing have set forth a proactive policy for housing stabilization, and a majority of Saint Paul voters have agreed on that policy. This is what makes Saint Paul such a great city.