To amend or not to amend, that is the question.
Reaching an agreement on a package of amendments to Saint Paul’s new rent control ordinance may be as difficult for the City Council as it was for the Rent Stabilization Stakeholders Group. Following four months of meetings this spring, the 41-member group released a 301-page report earlier this month. If comments at a July 13 public hearing are any indication, deep divisions remain.
B Rosas, a member of the Stakeholders Group, was highly critical of the process. “I felt like there was total disrespect for renters,” Rosas said. According to her, the City Council should respect what Saint Paul voters approved in last November’s referendum and not amend the ordinance.
B Kyle, president and CEO of the Saint Paul Area Chamber of Commerce, said that her organization continues to oppose rent control in any form. She cited the city’s 50-plus percent decline in building permits for new multi-family housing in recent months.
Saint Paul voters approved one of the most stringent rent control ordinances in the country last November with a referendum that received the support of 53 percent of voters. The ordinance, which took effect in May, caps the increases in residential rents at 3 percent per year. It also calls for a process whereby landlords may apply for an exemption to the 3 percent cap if they have invested significant money in improving the property or have been socked with a large increase in property taxes.
The Stakeholders Group recommended that the ordinance retain the 3 percent cap on annual rent increases, but with a 15-year exemption for newly constructed apartments. The group recommended just-cause protection for tenants who face eviction. The group also recommended that the City Council clarify the hardships under which a landlord may be granted an exemption.
Rent control advocates rallied before the July 13 hearing. Among them were representatives of ISAIAH, the Beacon Interfaith Housing Collaborative and the Metropolitan Interfaith Council on Affordable Housing. Those who championed the rent control ballot measure questioned why the city would want to change the ordinance and go against the will of the voters.
Meanwhile, the opponents of rent control said they would like to see the ordinance scrapped. They cited the slowdown in rental housing construction since November and the growing number of small landlords who are getting out of the business and selling their rental properties to large housing management corporations.
Task force recommends several provisions.
Highlights of the 301-page report were presented to the City Council by Ed Goetz, a University of Minnesota professor who heads up the Center for Urban and Regional Affairs. CURA provided research and staff support for the Stakeholders Group. The group, which was appointed by Mayor Melvin Carter, included renters and renter advocates, small and large landlords, developers and leaders of for-profit businesses and nonprofit organizations.
With the required support of 60 percent of its members, the group recommended that the ordinance retain the 3 percent cap on annual rent increases, but with a 15-year exemption from the cap for newly constructed apartments. The group recommended just-cause protection for tenants who face eviction. The group also recommended that the City Council clarify the hardships under which a landlord may be granted an exemption from the 3 percent cap.
The group could not reach agreement on vacancy decontrol. That provision would allow a landlord who does not raise the rent for several years to bank those potential increases and then use them all at once when an apartment becomes vacant. The group did recommend some form of partial vacancy decontrol, but one that still limits how much rent can be increased.
Amendments would take effect early next year.
City Council members have said they would like to have any amendments to Saint Paul’s rent control ordinance in place by early next year. Under the City Charter, changes to ordinances adopted by referendum cannot be made for the first year following the referendum.
Saint Paul’s new rent control ordinance has already been challenged in federal court with a lawsuit filed in June by two landlords. It also faces scrutiny in light of the recent decision by city officials to allow rent hikes higher than 3 percent in some cases. Under the new city rules, landlords may self-certify rent increases of up to 8 percent per year if they provide documentation supporting a claim of hardship.
Also causing consternation was Dominium’s recent announcement that it was imposing a 7.97 percent increase in rent for its market-rate apartments at 808 Berry Place. Dominium maintains that the rents at 808 Berry St. fall under federal regulations because of the use of low-income housing tax credits to construct the building and provide some affordable units within it.
—Jane McClure
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