St. Paul City Council weighs plan to exempt more properties from rent control ordinance

The St. Paul City Council this week is set to vote on a plan to revise the city’s rent stabilization ordinance by allowing exemptions for more properties.

Supporters of the proposed changes say they’re needed to spur much-needed housing development in the city, while opponents say it’s a misguided effort that would put more St. Paul residents at risk of being priced out of their homes.

The city’s rent stabilization ordinance limits how much landlords can increase rent each year. As the ordinance currently stands, new apartment buildings are exempt from those rent controls for the first 20 years.

Mayor Melvin Carter is among those who say the city should permanently exempt all apartments built after 2004 — even after they reach that 20-year mark. Carter said the change would lead to more desperately needed housing.

“I think it’s a smart way to just acknowledge that the economics of building a new building are fundamentally different than the economics of maintaining a building that’s, you know, 30 or 40 years old,” Carter said. He said that even with the changes, “something like 90 percent” of rental units would still have rent controls.

But opponents say that number would shrink over time, if the changes are put in place — and potentially hurt some of St. Paul’s most vulnerable renters. St. Paul’s rent stabilization ordinance came out of a ballot measure that residents narrowly approved four years ago; Tram Hoang was the campaign manager for the rent control effort.

“When we create a date cut-off, we essentially create a problem in our community where, as time goes on, a higher portion of our housing supply is exempt from the protections,” Hoang said. “And what we’d rather do, is do that window of time, right? For 20 years, there’s a block of the housing supply that’s exempt — and therefore, as you proceed through time, you have the same proportion of units that are exempt.”

Scott Cordes of Project for Pride in Living, which develops affordable housing, said not all housing advocates oppose the idea of permanently exempting newer properties from rent controls. Project for Pride in Living has opposed St. Paul’s rent stabilization program from the beginning.

“We’ve seen a chilling effect due to the rent stabilization ordinance, which has inhibited more housing and actually counteracts the benefits that we’re looking for,” Cordes said.

Cordes said an example can be found at the Highland Bridge development on the site of St. Paul’s old Ford Plant. He said 500 planned units of affordable housing are on hold there — and might not be built unless St. Paul changes its rent control policy.

“Those units only get built if the market-rate development occurs and generates what’s called tax increment financing, which becomes a funding source for the affordable housing properties,” Cordes said.

But Housing Justice Center President Margaret Kaplan disputes the notion that changing the rent stabilization ordinance will lead to more development. She said housing development is also lagging in some communities without rent controls in place.

“Development patterns are very cyclical. So they go up, they go down,” Kaplan said. “So, when we say that the cause of a reduction in building permits in St. Paul is due to rent stabilization — why are we not looking at the same reduction in multi-family units permitted in Washington County, or Anoka County, or Minneapolis, or cities around the country? What we’re seeing is a part of a natural cycle.”

The St. Paul City Council is expected to take up the proposal to change the city’s rent control ordinance at its meeting on Wednesday.