St. Paul Revises Rent Stabilization Ordinance

St. Paul, Minnesota’s city council will amend the city’s rent stabilization ordinance after critics complained about the new rules, which would have been the strictest in the nation. According to an article by Bill Lindeke in the Minneapolis Post, “the proposed changes are not bad news for renters because the on-the-ground reality is more complicated than the campaign rhetoric.”

In Lindeke’s view, “the amendments keep the good parts of the ballot ordinance (even adding some new benefits, like just cause eviction protections) while shedding the provisions that have already caused disinvestment in St. Paul housing.”

Lindeke points out that, for example, the 3 percent cap on rent increases included in the original ordinance was subject to a series of exceptions that would let landlords raise rent by as much as 8 percent per year. “The legalistic bait-and-switch between the symbolic and actual rent caps has the added effect of being opaque and confusing, likely to alienate anyone who’s not into computing interest on an amortized investment, using the average rate from Freddie Mac over the last thirty years plus two percent.”

In spite of this, the ordinance has had a chilling effect on new housing construction, with new construction dropping by anywhere from 35 to 75 percent since its implementation. In Lindeke’s opinion, “The obvious solution has always been to pass an exemption for new construction, and the City Council proposal sets a rolling exemption window for twenty years, meaning that apartments in a building built today would enter the city’s rent control system in 2042.”

Lindeke argues that rent control is not an effective tool “in a country predicated on private market housing.” However, “ thanks to the City Council amendments, the end result of this long process is that the city will have a strong rent stabilization policy that focuses on renter stability, a more achievable goal.”