City officials are scrambling to get the policies and processes in place before the May 1 effective date for the new rent control ordinance in Saint Paul. Meanwhile, at the state Capitol, lawmakers are arguing for a bill that would prevent all municipalities in Minnesota from imposing rent control in any form.

The Senate Housing Finance and Policy Committee passed a ban on rent control earlier this spring and sent it to the Senate Local Government Policy Committee. The ban would be retroactive to November 2021, nullifying the successful referendums in Saint Paul and Minneapolis to approve rent control measures. A majority of Saint Paul voters approved the ordinance as it was written. Minneapolis voters directed their City Council to write the ordinance.

A statewide ban on rent control is also included in the Senate housing bill. Senators have added language calling for a study on the impact of rent control globally.

No companion bill in House.

Whether a statewide ban on rent control becomes law remains to be seen. A similar measure was passed last year in committee, but died without receiving more hearings. The House has not produced a companion bill, although the ban is likely to be debated in conference committee as the Republican-controlled Senate and DFL-controlled House try to reach agreement on bills prior to the Legislature’s scheduled adjournment on May 23.

   

Senator Rich Draheim (R-Madison Lake) authored the bill banning rent control this year as well as last year. He contends that rent control simply does not work as a means of providing housing stability and more affordable housing.

Building of 5,000 housing units postponed or canceled.

Saint Paul’s rent control ordinance caps rent increases on all residential housing at 3 percent per year, with provisions for landlords to apply for higher increases in certain circumstances as a way to ensure a reasonable return on their investment.

Saint Paul Mayor Melvin Carter has been among those testifying at the Capitol on the proposed ban on rent control. Carter told the Senate housing committee that the city is 11,000 units short of the housing it needs for a stable market. He has urged the City Council to adopt an exemption from the rent control ordinance for new construction to promote the construction of more housing. However, that exemption could not take effect before November. Saint Paul’s city charter prohibits any exemptions from ordinances adopted by referendum from taking effect for at least a year.

 

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Draheim referred to the affordable housing crisis in arguing for a ban on rent control. He cited news accounts about a dramatic decline in building permit applications for new multi-family housing in Saint Paul. By his count, Saint Paul developers have either postponed or permanently cancelled as many as 5,000 new housing units in the five months since the passage of rent control.

Public testimony before the Saint Paul City Council referenced the steep rent hikes adopted by landlords in the months prior to the implementation of rent control. Draheim cited those increases as another red flag for how rent control works against housing stability.

Rent control ban is backed by industry and trade groups.

The statewide ban on rent control received the support of real estate professionals, multi-family housing trade groups and the construction trade unions at Senate committee hearings this spring.

Cecil Smith, president and CEO of the Minnesota Multi Housing Association, told state legislators that rent control has brought investment in multi-family housing in Saint Paul to a halt. “It’s had a terrible impact on the city,” he said.

Adam Duininck, director of government affairs for the North Central States Regional Council of Carpenters, said that while his organization recognizes the need to address the affordable housing shortage, rent control will not solve the problem.

Duininck said his group was accused of fear mongering when it raised concerns last fall about the unintended consequences of rent control. Since then, “dozens of projects have been shelved,” he said. He expressed frustration that regional leaders did not speak up about the problems with rent control prior to the referendums.

Overriding ‘the will of the people’?

Leaders of Housing Equity Now Saint Paul (HENS), which led the effort to get rent control approved, urged the Senate committee to reject the statewide ban on rent control. So did several Saint Paul tenants. Highland Park resident Betsy Brama, a retired Saint Paul Public Schools teacher, spoke of the young students she taught who struggled with housing instability. “No Minnesotan should have to live this way,” she said. 

Those who spoke before the Senate committee in favor of rent control said they were insulted by the implication that they did not understand the consequences of the rent control ordinance prior to its passage. 

“Don’t cancel our votes,” said rent control advocate and Merriam Park resident Ginny Deluca. She questioned how the state could ban rent control. “How can a few legislative officials override the will of the people?” she asked.

For Draheim, the biggest takeaway from the public testimony he heard at two committee hearings was that the state’s social programs are failing. “We have numerous programs for housing instability,” he said. “Obviously they’re not working. But the main problem we have is that we don’t have enough housing units.”

— Jane McClure

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