St. Paul to limit how much landlords can raise rents between tenants

After backlash from tenants and other champions of rent control in St. Paul, the City Council on Wednesday backed down from one of its most controversial proposed changes to the ordinance voters approved last year.

Elected officials were at odds over what policy experts call "vacancy decontrol," an amendment to St. Paul's law that would allow landlords to raise rents beyond the city's 3% cap once a tenant moves out. A divided council last week signaled its support for a change that would let landlords raise rents as much as they want between tenants.

Messages from frustrated constituents flooded council members in the aftermath, saying the decision goes against what voters and a mayoral advisory group wanted.

On Wednesday, Council President Amy Brendmoen and Council Member Chris Tolbert proposed an alternative: Let landlords raise rents by 8% plus inflation if a tenant moves out or is evicted for just cause. The council approved the change unanimously and replaced a previous proposal that would have allowed landlords to bank and defer rent increases.

"We added vacancy decontrol as a mechanism … to incentivize reinvestment in our properties," Brendmoen said. "But what we heard loud and clear was that folks were concerned that we were giving a blank check with an untethered vacancy decontrol."

The decision paves the way for a final vote next week on a suite of substantial changes to the law, which has been a source of uncertainty in St. Paul since it passed through a ballot measure with 53% of the vote in November. Elected officials immediately indicated an intent to tweak the policy, which is considered among the most stringent in the country. But for months, it remained unclear what changes they would make.

Early this year, Mayor Melvin Carter convened a task force of nearly 40 tenants, landlords, developers and housing experts to recommend ways to improve the ordinance. According to the group's report, a majority of task force members supported allowing landlords more flexibility — but not free rein — to raise rents between tenants.

Phillip Cryan, a task force co-chair and leader of Service Employees International Union (SEIU) Healthcare Minnesota, said he was "relieved and very appreciative" that the council responded to residents' concerns.

"It's not perfect," he said of the full package of amendments. "But it's a good-faith set of compromises coming from active discourse."

Tenants and other rent control supporters have protested many of the changes, saying they will remove protections for thousands of St. Paul renters. They said vacancy decontrol in particular could incentivize landlords to drive out tenants to seek greater rent increases.

"Allowing this vacancy decontrol … also makes it more difficult for prospective renters that are looking to move into units," Gabe Zempel, a tenant advocate with Home Line, testified at last week's council meeting. Zempel said he's had to tell renters seeking legal advice from the nonprofit that they may not be able to continue to afford living in St. Paul.

Landlords have said without vacancy decontrol, they will automatically raise rents 3% annually — more than they might have otherwise done — to prepare for potential changes in inflation or future events. The law currently allows property owners to request exemptions from the cap, but they must prove they need it.

Opponents of rent control have also argued that the current policy will prompt some landlords to convert rental units to condos and disincentivize maintenance.

"Making a terrible idea less terrible is not a housing strategy," the Minnesota Multi Housing Association, a landlord trade group, said in a statement calling for the complete repeal of rent control. "While inflation is causing costs to rise, Mayor Carter requested a 15% levy increase, but in the same environment housing has maintenance, energy, and property tax costs that far exceed the 3% rent cap."

The council appears poised to also sign off on an amendment that would exempt new construction from the rent cap for 20 years. Some additional tweaks to the ordinance — including proposals to exempt affordable housing from rent control — will be debated and voted on at a later date.

"Today's vote reflects the will of our voters and the recommendations we received from the stakeholder group this summer," Carter said in a statement Wednesday. "I look forward to signing this ordinance as currently drafted."

The machinations in St. Paul — which is already facing one challenge to its law in federal court — are being watched across the river in Minneapolis, where a new 25-member group is beginning work on its own rent control policy. They hope to deliver a recommendation to the Minneapolis City Council by December, allowing city officials to decide whether to put a policy before voters in 2023.