Debate over St. Paul's rent control heats up as City Council considers changes

The fierce debate over rent control in St. Paul is coming to a head as the City Council considers amendments to the ordinance voters approved last November.

Dozens of tenants, landlords, developers, labor unions, nonprofits and other community members have written to council members and on Wednesday packed the council chamber for a three-hour public hearing, making a range of conflicting claims and pleas to the seven-person elected body.

"This issue has put neighbors, friends, builders at odds with one another artificially," said B Kyle, president and CEO of the St. Paul Area Chamber, which has opposed rent control.

The St. Paul law, which caps annual residential rent increases at 3%, has been a source of controversy since a grassroots group of tenant advocates petitioned to place the ordinance on last fall's ballot. Minnesota prohibits local governments from enacting rent regulations unless approved by voters.

Even before the measure passed 53% of the vote, making St. Paul the first city in the Midwest to enact rent control, some city officials were vocal about their desire to change the policy. At the crux of current council discussions is a proposal to exempt affordable housing and new construction from the ordinance, which is considered among the most stringent policies of its kind in the country.

More than a dozen local developers wrote to council members saying the existing policy has prompted financiers to pause or cancel projects in St. Paul, which is already experiencing a housing shortage.

"If the City is unable to fully repeal the rent stabilization policy adopted in November 2021, it must swiftly amend the ordinance in order to neutralize the negative impact and disinvestment stemming from this policy," wrote Maureen Michalski, vice president of real estate for Ryan Cos., which has paused some housing projects on St. Paul's Highland Bridge development.

But even more tenants, including those who campaigned for the ordinance, urged the council not to alter the law that voters said they wanted. Exempting affordable units and new construction would remove protections for thousands of St. Paul renters, they said.

"Tenants who live in affordable housing are disproportionately low-wealth, BIPOC, disabled, queer, immigrant, elderly, and families with young children — these are the people who need renter protections the most," wrote Kristine Knoll, a 75-year-old renter who said her fixed income cannot keep up with rent increases above 3%.

BIPOC is an acronym for Black, Indigenous and people of color.

Council members have brought forward a wide swath of suggested amendments. One proposed change would allow landlords to bank and defer rent increases until a tenant moves out; another would bar them from using utility charges to skirt the law.

At Wednesday's hearing, tenants applauded Council Member Mitra Jalali's proposal to exempt new construction for 15 years — instead of 20, as originally proposed by Council Member Chris Tolbert — and would not apply to properties built before 2023.

Jalali also proposed new protections for tenants in certain scenarios where a landlord terminates a lease, as well as earlier notification for tenants whose landlords are seeking a rent increase of more than 3%.

She also proposed exempting only affordable housing units that have rents based on a percentage of tenants' incomes.

Council Member Jane Prince, on the other hand, presented a proposal sought by landlords and developers that would allow unrestricted rent hikes after tenants move out.

The council will consider a handful of additional changes, some substantial and some technical. If passed, the changes would take effect Jan. 1, though the fate of the policy remains unclear after two landlords challenged it in federal court.

Members will likely vote on a final set of amendments in early September, and Mayor Melvin Carter has said he is eager to sign off on what the council approves.

"Every person at this table cares deeply about having housing stability in the city of St. Paul and also ensuring that we provide quality housing for everybody in the city of St. Paul," Tolbert said.