Exemptions for new construction and affordable housing and for apartments that become vacant have been added to Saint Paul’s new rent control ordinance. The City Council voted 5-2 on September 21 to adopt the amendments, which will take effect on January 1, 2023. The hope is that the changes will jump-start the construction of new rental housing in the city. However, the changes also brought threats of political reprisal from tenant advocates.
In a final public hearing before the vote, almost two dozen tenant advocates cautioned the City Council that by amending the ordinance, it was rejecting the wishes of the 53 percent of voters who approved rent control in a citywide referendum last November. Several said they will work to oust the council members who supported the changes.
“My fear is that we have some council members who are more accountable to corporate landlords and developers than to the more than half of Saint Paul residents who are renters and people of color,” said Arline Datu of ISAIAH.
“The amended ordinance goes against the democratically passed policy and subverts the will of the people, sowing distrust, disdain and contempt for this elected body,” said Sean Lim, program director for the Minnesota Youth Collective.
“My fear is that we have some council members who are more accountable to corporate landlords and developers than to the more than half of Saint Paul residents who are renters and people of color,” said Arline Datu of ISAIAH.
“I’m heartbroken and furious,” said Katherine Banbury, a tenant who served on the city’s Rent Stabilization Task Force this spring. This summer Banbury’s landlord, Dominium, self-certified rent increases of up to 8 percent under a policy that was adopted by city officials when rent control first took effect in May.
Exemption for new construction and partial vacancy decontrol.
While the City Council has retained the ordinance’s 3 percent cap on annual rent increases, it carved out several exceptions and added provisions to protect tenants. The council approved a 20-year exemption for new construction. That exemption also applies to the first 20 years of all rental housing that was built in the city within the past 20 years.
The council had been contemplating an exemption to the ordinance for apartments that become vacant, allowing landlords in those cases to raise the rent to whatever the market will bear. The policy of full vacancy decontrol was seen as a way to encourage landlords not to raise the rent each year for existing tenants. Ultimately, the council approved partial vacancy decontrol, allowing landlords to raise the rent a maximum of 8 percent plus the rate of inflation when tenants move out on their own or are evicted for just cause.
City review required for rent increases above 3 percent.
Under the amended ordinance, landlords will still be able to self-certify rent increases of between 3 and 8 percent when they need that to realize a reasonable return on their investments. Those increases will be subject to city staff review. For rent increases above 8 percent, landlords will need to apply to the city and have that application approved.
Landlords who seek a rent increase above 3 percent will also be required to notify tenants in advance of such requests. Landlords will be forbidden to begin charging tenants for utilities as a way to supplement a maximum 3 percent increase in rent.
Serving the interests of both landlords and tenants.
While no landlords or developers appeared at the podium on September 21, many spoke at past hearings and sent in written comments asking for a relaxation of the restrictions or even an outright repeal of rent control. Maureen Michalski, vice president of real estate development for Ryan Companies, argued for the longer exemption on new construction. She noted that many lenders will not do business with developers in cities with rent control regulations.
Ryan is the master developer for Highland Bridge, a 122-acre development in Highland Park with 3,800 new dwellings in its master plan, the vast majority of which are rental.
Ward 3 City Council member Chris Tolbert led the effort to amend the rent control ordinance. He expressed hope that the changes will serve the interests of both landlords and tenants. “This isn’t necessarily perfect,” he said, “but it’s a big improvement.”
A need for balance in the law.
Council members Russel Balenger, Amy Brendmoen, Rebecca Noecker and Jane Prince joined Tolbert in voting for the amendments. Mitra Jalali and Nelsie Yang voted against them.
Noecker said she has struggled with how to ensure that rent control protects tenants while encouraging an adequate supply of new housing. While the amendments do not address all concerns, she said, they strike a balance for all involved.
Prince also spoke of the need for balance. She said she has heard from tenants whose rents have increased greatly despite rent control and from small landlords who have sold their rental properties rather than risk financial loss under the new regulations.
Why Jalali and Yang voted ‘no.’
Jalali and Yang believe the amendments will harm renters. According to Yang, the changes go beyond what the mayor’s Rent Stabilization Task Force had recommended. “People are struggling and they need our help,” she said.
Jalali is especially concerned about the amendment that grants an exemption for publicly subsidized housing whose rents are controlled by other government regulations. She also argued for a more modest 15-year exemption for new construction. The approved 20-year exemption, she said, means that thousands of apartments built in her Ward 4 in recent years will be exempt from rent control for years to come.
“I will not vote to take rent stabilization away from my constituents who need it the most,” Jalali said.
Mayor Melvin Carter issued a statement after the City Council vote expressing support for the amendments. “This ordinance protects renters while helping construct the new housing we need for the future,” he wrote. “I thank the community members who helped craft this policy and applaud the council for passing it.”
— Jane McClure
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