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With draconian chaos at the federal level and belt-tightening at the state Legislature, the future feels more precarious than ever for the many Minnesotans who struggle to make ends meet. But St. Paul Mayor Melvin Carter and a faction of the St. Paul City Council are poised to sell out the housing stability of countless current and future residents. Unfortunately, gutting the will of the voters around stable rents won’t solve St. Paul’s development challenges — and will subject more residents to the insatiable profit motives of the real estate industry.
In a majority-renter city, St. Paulites have clearly demonstrated their values. In 2019, citywide advocacy led to the passage of a comprehensive tenant protections ordinance and, in 2021, more than 53% of St. Paul voters, with majorities in six of seven wards, passed a strong rent stabilization policy. In both cases, the City Council outright repealed or dramatically pared back policies to empower renters because the landlord and developer lobbies didn’t like them. Despite these concessions, St. Paul is facing what amounts to a capital strike — and capitulating yet again by exempting all new construction from rent stabilization is following a playbook that is doomed to fail.
To be sure, St. Paul is facing real development challenges — but we are far from unique. There have been similar precipitous drops in new permits between 2020 and 2024 in similar-sized cities like Minneapolis (88%), Cincinnati (77%), St. Louis (68%), Denver (52%) — the list goes on. But, outside of our city limits, the real estate industry doesn’t have the luxury of blaming rent stabilization for construction challenges.
According to the Joint Center for Housing Studies’ State of the Nation’s Housing 2024 report, multifamily starts nationwide fell 14% in 2023, and that decline has only accelerated. In March 2022, Multifamily Executive reported: “Developers estimate that supply chain issues have caused construction delays up to six months and cost increases as high as 40% over the past year.” “These increases have been driven by commodities markets, transportation cost and the increased demand,” said Joseph DiSalvo, executive vice president of Michaels Construction, as quoted in the article. A year ago, the National Association of Home Builders reported tight lending conditions, high cost of development loans and a shortage of skilled labor as headwinds facing the multifamily market.
Conspicuously absent from the list of new construction constraints: rent stabilization.
That’s not surprising since peer-reviewed, academic research still points to a lack of evidence that rent stabilization slows development. Thirty years ago, we learned this from Boston, where the complete repeal of rent control failed to result in any resurgence in development. Most recently, we learned this from Portland, Maine, where renters passed the now-strongest rent stabilization ordinance in the country in 2020 — with no new construction exemption — and the city saw a 10-year high in development in 2023. That’s why, despite the self-interested millions the land and developer lobbies pour into campaigns to oppose tenant protections, more than 190 jurisdictions have some form of rent stabilization — and the number continues to grow, given the wide-ranging benefits, not just for renters, but entire communities.
