The Saint Paul City Council’s first-ever rulings on appeals of rent increases above the 3 percent maximum in the city’s new rent control ordinance had different outcomes for different properties on October 18. Both appeals involved rent increases of close to 8 percent for properties owned by Plymouth-based Dominium. The council denied Hannah Gray’s appeal at Union Flats, 787 Hampden Ave., and it reduced to 6.1 percent the rent increase for Katherine Banbury’s apartment at the Cambric, 720 E. Seventh St.
Landlords can apply for rent increases above the annual 3 percent cap if they meet certain conditions and can provide evidence for why a higher increase is needed. Inflation, increased operating costs, the cost of needed repairs and a reasonable return on investment are all considered legitimate reasons for seeking a higher rent increase. Tenants must be notified by the landlord whenever a higher rent increase is sought.
Increases of up to 8 percent can be self-certified by landlords. Increases above 8 percent are reviewed by a legislative hearing officer and the City Council.
Gray’s and Banbury’s appeals were filed before the City Council amended the rent control ordinance. The changes, which do not take effect until January 1, 2023, include exemptions from the 3 percent cap for affordable housing and for new construction.
Both buildings involved in the appeals fall under the exemption for affordable housing as well as the exemption for new construction. The 20-year exemption for new construction is retroactive to the first 20 years of any apartment building. Union Flats was built in 2018-19. The Cambric was built in 2015-16.
Dominium representatives testified at the hearings about an array of increased operating expenses. Expenses at Union Flats have gone up by more than 9 percent, they said.
The issues concerning the Cambric were more complicated. Dominium used the costs of maintaining comparable properties and then applied those costs to their other buildings that were also subsidized with low-income housing tax credits. Legislative hearing officer Marcia Moermond said that analysis was not applicable to the Cambric. Instead, city staff recommended a 6.1 percent rent increase.
Both tenants were represented by Jack Cann of the Housing Justice Center. Cann objected to the rationale used for the Cambric, saying Dominium is well over its projections for return on investment. “They are not hurting,” he said.
— Jane McClure
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