St. Paul leaders poised to limit controversial rent control policy

The St. Paul City Council is poised to vote Wednesday on a set of changes that will water down the rent-control ordinance voters approved less than a year ago.

After months of a fierce citywide debate, the council will consider a suite of proposed amendments that eliminate key components of the original law, including a 20-year exemption for new housing and a provision that would allow landlords to raise rents up to 8% plus inflation if a tenant moves out.

The decision could be among the most controversial in recent history for the seven-member council, all of whom will be up for re-election next year. Rent-control advocates, who championed their ballot box victory over a nearly $4 million opposition campaign, have urged officials to respect the will of the voters.

"These proposed changes cater directly to the scare tactics of the landlord lobby and big developers who want to protect their supposed right to unlimited profits," Juan Luis Rivera-Reyes, coalition organizer with The Alliance, told the council earlier this month. The Minneapolis-based nonprofit was a founding members of the grassroots campaign for rent control.

Many developers and landlords, meanwhile, have said the council's proposed amendments do not go far enough to prevent harmful effects they say rent control is already having on St. Paul's housing market.

"Rent control is a temporary salve for affordability, but will have devastating effects on development of new rental housing," said a letter to the council from the Excelsior Group, a St. Louis Park-based developer that earlier this year canceled plans to purchase a St. Paul site for new apartments.

The council has heard testimony from dozens of community members on the proposed changes. There will be a public hearing before Wednesday's vote.

Leaders divided

Implementing rent control through a referendum was the only option for St. Paul because a 1984 state law prohibits local governments from enacting rent regulations unless approved by voters in a general election.

The ordinance tenant advocates crafted — a 3% cap on annual rent increases, with few exceptions — is considered among the most stringent rent-control policies in the country. The effort was driven by a desire to prevent large rent hikes from displacing St. Paul tenants, particularly low-income renters and people of color.

Ahead of Election Day, Council President Amy Brendmoen and Council Members Jane Prince and Chris Tolbert said they did not support the ordinance. Council Members Mitra Jalali and Nelsie Yang campaigned for the policy, and Council Member Rebecca Noecker did not take a stance.

Former Council Member Dai Thao, who recently gave up his seat to move to Florida, also opposed the policy. It's unclear where Thao's appointed replacement, Russel Balenger, stands on the law and the package of proposed changes.

St. Paul Mayor Melvin Carter, who was running for a second term on the same ballot last year, gave rent control a lukewarm endorsement three weeks before Election Day. He said the policy activists crafted would need to be tweaked but also stated "bold action on our housing and equity goals cannot wait."

Voters approved rent control — the first policy of its kind in the Midwest — in November with 53% in favor.

The months following the election were marked by confusion about how the law, which took effect May 1, would be altered and rolled out. In late February, Carter convened a 41-person stakeholder group to recommend changes to the ordinance.

At the same time, staff from the city's Department of Safety and Inspections was developing a set of rules regulating enforcement and exemptions from the policy. Under the current guidelines, property owners can seek a rent increase up to 15% if they can prove why they need one.

In June, Carter's advisory group issued a set of suggestions for honing the ordinance. Tolbert, a member of the group, in early August presented a set of proposed amendments that mostly aligned with stakeholders' recommendations, though some have criticized deviations that favor landlords and developers.

It also appears that affordable units could be exempted from the policy Wednesday, though the council has indicated they may amend the ordinance later so the exemption is tailored to a smaller subset of affordable properties.

Outcome unclear

Jalali and Yang have both said they will not vote for the package of amendments as it stands.

Jalali said thousands of St. Paul renters — including many who "need rent stabilization the most" — will lose protections if the council's proposed amendments pass.

"We need both growth and racial equity to succeed as a city," she said in a statement. "We should not sacrifice racial equity in the name of growth."

Carter last week said he will sign off on the council's proposed amendments if they pass. Wednesday's vote will also include a suite of more minor changes to the ordinance, including bolstered tenant notification requirements. If passed, all changes to the law would take effect Jan. 1.

"We will adjust this, and every ordinance, according to the conditions and what's happening in our community," Brendmoen said.

Future changes could also be driven by the courts. Two landlords filed a federal lawsuit against the city in June arguing that the ordinance violates their constitutional due process and property rights. Attorneys representing tenants have also indicated that they could challenge individual property owners' requests for large rent hikes in court, and the Housing Justice Center suggested the council's affordable housing exemption could be subject to challenges under fair housing laws.