St. Paul tenants seek appeal as low-income landlord granted rent cap exemptions

Tenants of a low-income apartment building thought their days of massive rent increases were over thanks to a new rent cap rule in St. Paul. But not long after the law went into effect this spring, they discovered their landlord had received an exemption.

ST. PAUL, Minn. (FOX 9) - Tenants of a low-income apartment building thought their days of massive rent increases were over thanks to a new rent cap rule in St. Paul. But not long after the law went into effect this spring, they discovered their landlord had received an exemption.

"It was supposed to be capped at 3 percent," said resident Hannah Gray. "That’s what we voted on."

Renters in St. Paul say they’re not getting what they asked for when it comes to rent stabilization, discovering now that landlords have a way around it.

"I’m not surprised but very angry," said resident Katherine Banbury.

The tenants are two of the first to try and fight exemptions written into the new law, after their rents were recently raised eight percent.

"We’re happy to honor our agreements with the city and the ordinance -- we’re happy to follow," said Dominium Senior Vice President Owen Metz. "We’re following the rules."

St. Paul tenants challenging rent hike

After St. Paul enacted an ordinance to cap rental increases at 3% annually, some tenants in St. Paul are challenging their rental increase of 8% - perhaps the first to test the enforceability of the new ordinance.

Dominium Apartments has more than 1,000 low-income units in St. Paul applying for and being granted exemptions from the 3-percent rent cap arguing, among other things, that operating costs skyrocketed in recent years.

"It's certainly made us consider our options," said Metz.

The developer says the new caps make them think twice about doing business in St. Paul.

"I mean this is a problem and an issue for the market generally of how do we interpret this, how do we accept a yield that’s lower and a risk that’s greater for doing work in St. Paul as opposed to other communities," added Metz.

The renters are concerned what will happen if they don’t win their appeal.

"If Dominium can come in and re-write the rules in their favor, the process is clearly not working," said Gray.

No decision was made in that appeal hearing on Tuesday. City staff requested additional documentation and scheduled all parties to come back to city hall in September. But this will not be the last time this issue comes up with many developers and landlords filing for this same exemption.