Exemptions OK’d for new construction, vacancy decontrol.

Exemptions to Saint Paul’s new rent control ordinance for new construction, subsidized housing and rental units that have been vacated by their tenants were among the changes approved on September 7 by the City Council. The council is scheduled to vote on the entire package of rent control changes on September 21. If approved, the changes would take effect on January 1, 2023.

City Council members on September 7 and 14 debated eight different amendments to the rent control ordinance. More than 50 people attended the council hearing on September 7, and more than a dozen spoke. Most speakers asked the council not to weaken the ordinance.

Fifty-three percent of Saint Paul voters approved the rent control ordinance in a citywide referendum last November. The ordinance has been called one of the most stringent in the nation, capping increases in the rent charged on all residential units at 3 percent per year.

The amendments approved on September 7 would remove rent control from thousands of units across the city, several speakers said.… Some of the changes would remove rent control from the tenants who need it the most, said Vivian Ihekoronye of the affordable housing group ISAIAH.

The amendments approved on September 7 would remove rent control from thousands of units across the city, several speakers said. Dayna Kennedy, speaking for the Beacon Interfaith Housing Coalition, said the city is getting further and further away from the rent protections voters approved. Vivian Ihekoronye of the affordable housing group ISAIAH called the amendments “completely unacceptable.” Some of the changes would remove rent control from the tenants who need it the most, Ihekoronye said.

Exemption for new construction debated

The City Council on September 7 voted to approve a 20-year exemption for new construction. The exemption applies to the first 20 years of all housing that was built within the last 20 years. Rent control advocates contend that such a measure could lead to more affordable older buildings being torn down to make way for new buildings.

Maureen Michalski, who is leading Ryan Companies’ efforts to redevelop the site of Ford Motor Company’s former assembly plant in Highland Park, said a 20-year exemption may not be enough to entice investors in new housing projects. Developers were asking for a 30-year exemption.

 

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Developers, tenant advocates and city officials have debated rent control’s effect on new housing construction since the ordinance was approved. Developers say they have had to pull out of projects due to the loss of investors discouraged by the uncertain economics of rent control.

A federal Housing and Urban Development report had indicated that building permits were up in Saint Paul. However, that report was based on raw data that may have counted several construction permits for the same project, according to Nicolle Goodman, director of the city’s Department of Planning and Economic
Development.

Revised data show that during the first six months of 2022, housing construction permits in Saint Paul were down 31.4 percent when compared to the four-year average for the same six-month period in 2018-2021. In the entire Twin Cities region, housing construction permits were up almost 40 percent during the first six months of 2022.

“We need new housing,” Goodman said. “We need new housing to move forward.”

City Council member Mitra Jalali argued for a 15-year exemption for new construction, and one that only applied to new housing going forward. That was the exemption recommended by Mayor Melvin Carter’s Rent Stabilization Stakeholders Group, she said. According to Jalali, the 20-year exemption would put too many renters at risk. But only she and fellow council members Russel Balenger and Nelsie Yang supported a switch to 15 years.

Council majority supports full vacancy decontrol

Another hot-button issue was vacancy decontrol. City Council member Chris Tolbert had called for partial vacancy decontrol, allowing landlords to forgo annual 3 percent increases while their tenant remained in a rental unit and then use several of those increases at once after the tenant moves out.

City Council member Jane Prince proposed an amendment calling for full vacancy decontrol. Approved on September 7 on a 4-3 vote, that measure would have set no limit on how much a landlord could raise the rent after a tenant moves out. According to Prince, since rent control took effect, landlords who otherwise would not have raised the rent for longtime tenants were routinely imposing 3 percent increases in anticipation of needing those increases in the future.

Prince was joined in support of full vacancy decontrol by council members Russ Balenger, Amy Brendmoen and Chris Tolbert. Council members Jalali, Rebecca Noecker and Nelsie Yang voted against.

However, affordable housing advocates pushed back, so on September 14 Brendmoen and Tolbert brought forward a compromise that limited how much a landlord could raise the rent on a vacated apartment. That maximum set at 8 percent plus the rate of inflation.

Brendmoen said city officials want to encourage property upgrades through vacancy decontrol. “But what we heard loud and clear was that folks were concerned that we were giving a blank check with (full) vacancy decontrol,” she said.

Other measures won unanimous approval, including two amendments introduced by Noecker. One amendment requires landlords to notify prospective tenants whether or not a dwelling is exempt from rent control. The other amendment clarifies that inflation as measured by the Consumer Price Index can be used by a landlord to justify a rent increase above the 3 percent cap. However, the landlord would still have to get the approval of city staff for the larger increase. 

Jalali won unanimous approval for an amendment requiring landlords to notify tenants before seeking city approval for a rent increase above 3 percent. Under current practice, landlords do not have to notify tenants until after they receive that city approval.

Jalali also won unanimous support to amend the “just causes” required for a landlord to evict a tenant. Tolbert had wanted “disorderly conduct” as one of the just causes. Jalali said that language is too vague and could be misused.

Other just causes, such as property damage and other lease violations, would remain in place.

— Jane McClure

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