Amendments to Saint Paul’s new rent control ordinance will be reviewed in a public hearing before the City Council at 3:30 p.m. Wednesday, August 24. The amendments are based on the work of a 41-member Rent Stabilization Stakeholders Group, which met last spring to consider how best to implement the 3 percent cap on annual rent increases approved by voters in a citywide referendum last November.
Ward 3 City Council member Chris Tolbert, who served on the task force, introduced the proposed amendments on August 3. “I think we can all agree that there is a housing crisis in our city,” Tolbert said. He described the amendments as a starting point for resolving any problems that come about as a result of the ordinance. According to him, the proposed amendments are a move toward consensus in how to encourage new housing development, give options to landlords who want to repair or upgrade their properties, and provide additional protections for tenants.
The proposed amendments do not change the ordinance’s maximum annual increase of 3 percent in rents. However, they do establish exemptions to that maximum and clarify the processes for tenants and landlords to appeal decisions made by the city to approve or deny rent increases of more than 3 percent.
The proposed amendments do not change the ordinance’s maximum annual increase of 3 percent in rents. However, they do establish exemptions to that maximum and clarify the processes for tenants and landlords to appeal decisions made by the city to approve or deny rent increases of more than 3 percent.
New exemptions, clarifications and requirements
Highlights of the amendments include the following:
- A 20-year exemption from rent control for new construction. The prospect of rent control has stopped many housing projects in their tracks in Saint Paul, including the construction of rental apartments at the 122-acre Highland Bridge development in Highland Park.
- An exemption for affordable or subsidized housing units that are already regulated by federal, state or local governments.
- A provision allowing landlords to defer or bank annual rent increases until the tenant moves out, at which point the landlord could use two or more of the 3 percent increases at one time. According to Tolbert, without this provision, landlords may be encouraged to impose 3 percent increases every year, to the detriment of tenants who may not have experienced annual rent increases in the past.
- A clarification of what is meant by the “reasonable rate of return” to which landlords are entitled under the ordinance when they spend money to renovate a rental property or bring it up to code. Landlords would be allowed to apply for a rent increase of more than 3 percent to realize a reasonable return on that investment.
- A clarification of the tenant notification requirement when a landlord seeks a rent increase of more than 3 percent.
- A clarification of the “just cause” protections for tenants, which require landlords to state their reasons for not renewing a lease and insulate tenants from retaliation by landlords.
- A strengthening of the notification requirements for tenants whose landlords are permitted by city staff to raise the rent between 3 and 8 percent. Tenants also must be notified if their landlord has requested a hearing before a city legislative hearing officer for a rent increase of more than 8 percent.
City Council divided over exemptions
Ward 4 City Council member Mitra Jalali has raised several objections to the amendments. “Some hard-fought compromises may not feel good to those who are making them,” she said. According to her, any package of amendments to the ordinance need to equally empower renters and landlords. Jalali is particularly concerned about the exemptions to the 3 percent cap. According to her, the city stakeholders group recommended a 15-year exemption for new construction, not 20 years.
Jalali has also objected to the broad exemption to the 3 percent cap for affordable housing. Such programs differ greatly, she said, and “these are the tenants who need rent stability the most.”
City Council members Jane Prince, Rebecca Noecker and Amy Brendmoen agreed with Tolbert that there is a need for some changes to the ordinance. Rent control has slowed housing development in the city, they all said.
“We have a moral imperative to produce new housing, and it’s clear that we’re behind,” Noecker said.
Prince cited the individual housing projects around Saint Paul that have been canceled or delayed. She also noted that some longtime local landlords have decided they cannot work within the confines of rent control and have sold their buildings to larger regional or national property management companies.
The rent control ordinance took effect on May 1. Any amendments adopted by the City Council would take effect on January 1, 2023. The amendments presented on August 3 have the support of Mayor Melvin Carter. They will need four votes on the City Council to be adopted.
— Jane McClure
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