Rent control vote creates St. Paul mess

On the question of rent control, St. Paul voters have spoken. By a 53% to 47% margin, they approved a 3% cap on annual residential rent increases. But since the votes were counted on Nov. 2, there has been confusion and concern about the implementation of one of the most restrictive rent control policies in the nation.

Communication between Mayor Melvin Carter's office and the City Council has been lacking. Carter said after the vote that he wants to exempt new construction, but council members have expressed surprise and frustration with that stance.

The city also isn't prepared for the administrative changes that must be made to enforce the hardship exemption included in the policy. Information posted on the city's website after the election already has been taken down because it was unclear and confusing.

This week, some developers put holds on projects that are already underway. There is even uncertainty about timing — whether the ordinance goes into effect immediately or on May 1 — and when or if any changes can be made to the original language.

Four of the seven council members had urged a "no" vote. So did the Star Tribune Editorial Board, which pointed out that economists have long considered rent control one of the least successful public policies. It discourages new housing development and gives landlords another reason to convert rental units into owner-occupied housing.

Carter should have joined that chorus before the election, but instead he announced that he would vote for the ballot question. In voicing his support, he said that the policy was imperfect and needed changes but that it was "a start" on improving rental housing affordability.

That was a missed opportunity for leadership. The mayor should have used his campaign platform to inform and educate voters about the very problems the city is now confronting with the ordinance as it was written by advocates.

That said, Carter's postelection interest in exempting new construction from the 3% rent cap merits support. He believes that because the ordinance is silent on new construction, the city could add the exemption as an amendment. There are questions about whether such an amendment would survive almost-certain court challenges, but Carter and the council should keep pushing to limit the damage.

In an e-mail sent to the council this week, Deputy Mayor Jaime Tincher wrote that the "ordinance language as written is silent on new construction and specifically establishes an exemption for a reasonable return on investment. Allowing for a reasonable return on investment is why virtually every other rent control ordinance in effect today exempts new construction."

However, last month the City Attorney's Office said the council likely cannot make "substantive" changes to the ordinance in its first year, and changes after that increase the risk of litigation.

In a city of just over 50% renters, frustrations are understandably high over the supply of affordable housing and rising rents. That's why so many voters approved the ballot question — with the most support in neighborhoods with higher populations of renters. It's a legitimate concern. Still, this ordinance is not the best way to accomplish the goal of providing affordable housing.

Minneapolis voters also passed a rent control ballot measure last week. But it only allows the City Council to consider rent stabilization plans. Hopefully as Minneapolis leaders deliberate the issue, they'll learn from St. Paul's mistakes.