As public hearing nears, St. Paul rent cap faces renewed challenge

ST. PAUL, Minn. (FOX 9) - Renters and landlords are lobbying hard ahead of Wednesday's public hearing over a series of changes to St. Paul's rent control ordinance.

The proposals would weaken St. Paul's ordinance, which is widely considered one of the toughest in the country. It caps rent increases at 3 percent a year and includes few specific exemptions. The City Council can soon make major changes after the end of a one-year lockout period from the time voters passed the measure in November 2021.

The proposals sponsored by Councilmember Chris Tolbert and Council President Amy Brendmoen would create exemptions for new construction and affordable housing, while allowing landlords to raise rents more significantly on vacant units by deferring rent increases in previous years.

Since the ordinance took effect in May, developers have paused several projects. Tenants say some landlords are getting around the law by raising utility rates instead or rents, which the new City Council proposals would aim to stop.

But rent control supporters broadly view the proposals as an unwinding of their stunning 2021 election win. The measure passed with 53% of the vote.

"That’s not right and flies in the face of what voters want and voted on," said Arline Datu, a St. Paul renter.

Monday morning, activists and tenants gathered in opposition to the changes.

The affordable housing exemption would cover a wide swath of low- and moderate-income housing units. It comes as Plymouth-based Dominium seeks to raise rents at many of its St. Paul properties by 8% this year. City regulators have not made a decision on the Dominium issue.

"Where that put me was, I can’t afford to live here and I can’t afford to move," said Stephanie Ericsson Hinton, 68, who lives at Dominium-owned Legends at Berry, a senior apartment complex in St. Paul.

The other proposal that frustrates rent control supporters is a 20-year exemption on new construction. A 39-member task force assembled by Mayor Melvin Carter this summer recommended a shorter 15-year exemption.

"Really what it does is it shoots a hole through the heart of the rent stabilization ordinance," Margaret Kaplan, president of the Housing Justice Center, said of the two proposed changes.

Landlords and business groups are doing their own lobbying ahead of Wednesday's hearing.

Developers have said anything less than a 30-year exemption for new construction is unworkable financially.

"Every additional year provides more certainty to developers and investors who would consider building in St. Paul," B Kyle, chief executive of the St. Paul Area Chamber, said at a legislative hearing in July.

Landlords say the ordinance will deepen the shortage of affordable rental units in the city and beyond.

"The clearest path forward to bring back housing projects and preserve rental housing in St. Paul is to repeal this ordinance," said Cecil Smith, chief executive of the Minnesota Multi Housing Association, the state's biggest landlord group.

None of the City Council proposals would change the 3% cap, though it would be in name only under one amendment from Councilmember Rebecca Noecker. Her proposal, which is separate from the Tolbert-Brendmoen package, would let landlords seek larger inflation-adjusted rent increases. 

Voters passed the 3% cap before U.S. inflation surged to a 40-year record this year.

Landlords have said inflation is leading to higher maintenance and insurance costs, exacerbating their issues with the 3% cap. Carter has also proposed a 15% property tax increase in 2023, though some of the increase is to replace a levy that the city has previously imposed.