St. Paul City Council Approves Changes to Rent Stabilization Policy

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The 3% annual cap passed by voters last year, considered one of the toughest rent controls in the country, will have new regulations and limits.

SAINT PAUL, Minn. — The St. Paul City Council on Wednesday approved a set of amendments to the rent stabilization measure that voters approved last November, providing exceptions for new construction and giving landlords more leeway. when their tenants change, among other important moves.

The council’s 5-2 vote does not change the 3% annual cap that 53% of voters favored in the 2021 mayoral election, considered one of the toughest rent controls in the United States . However, the amendments impose new regulations and limitations around rent control policy, easing developers’ worries about economic development while angering tenants who say their election measure has been “drained”.

Most notably, the council approved a 20-year exemption for new construction, with a so-called “look-back” period. This means that owners of any building built between 2003 and around 2043 will be able to raise rents as high as they see fit, without having to respect rent stabilization. Additionally, if tenants leave an apartment vacant, landlords will be able to increase rents by up to 8% plus inflation on the next tenant.

“We’ve spent so much time in politics to protect tenants,” said Clara Ware, a tenant from St. Paul’s East Side. “I’m so angry today.”

However, Mayor Melvin Carter signaled he would sign the measure, telling KARE 11 in a statement Wednesday that “this ordinance protects tenants while helping build the new homes we need for the future. Thank you all community members who helped develop this policy and commend the Board for adopting it.”

Ward 3 councilman Chris Tolbert was among the biggest supporters of the changes, pointing to a slowdown in development since voters passed the rent stabilization measure. Major developers, such as Ryan Companies, have raised concerns and even suspended some projects over the “negative” impact of rent control on economic development.

“I think this order, and the improvements we’ve made to it, will hopefully help address the issues that brought rent stabilization to the ballot – protecting tenants and protecting against rent spikes,” he said. Tolbert said, “while also hoping to minimize the negative consequences of the policy that we’ve seen and I believe we’ll continue to see without these amendments. And that’s important.”

It is difficult to quantify the impact of rent control on construction in St. Paul, with various figures presented by various agencies to the city council in recent weeks. However, the city’s Department of Planning and Economic Development shared new figures with KARE 11 on Wednesday, revealing that the number of building permits issued from January 2022 to July 2022 fell 31.4% from the previous year. previous four-year average.

Ward 2 council member Rebecca Noecker voted in favor of the package of amendments, which she said “strikes the right balance.”

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“We all want more housing so that current tenants, as well as future tenants, can live here in St. Paul, and we want housing so that tenants have more choice, more affordability and more power” , said Noecker. “The issues that I think we’ve been arguing with very visibly … are how do we make sure that this ordinance does both. That it protects tenants and provides housing supply. And I actually think those are both sides of the same coin.”

Several council members pointed out that the amendments add certain clauses to protect tenants, including a requirement that landlords must notify tenants if they are requesting an exemption from the 3% cap. Since taking effect, the rent control policy has allowed landlords to request up to an 8% increase if they can prove they have made improvements to their buildings.

Ward 4 council member Mitra Jalali, a strong supporter of rent stabilization, voted against the package of amendments.

“I know we have to build our city and build more housing. The problem is that we can’t do it on the backs of people who need rent stabilization and who are already here,” Jalali said. “We can’t pass a new building exemption that doesn’t qualify with nothing we get.”

On the contrary, some developers had actually claimed a 30-year exemption, rather than the 20-year policy adopted by the board.

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“We believe a new 30-year building exemption would bring some of these groups back to Saint Paul, as it would demonstrate that the city is serious about growth and progress,” Ryan Companies told KARE 11 in a statement. after Wednesday’s vote. “We cannot force lenders and investors to invest in Saint Paul. If adequate investment is not made, Saint Paul will have less new housing and therefore likely higher housing costs.”

The council said on Wednesday it may seek additional changes in the future, to further clarify rent control policies. Council member Jane Prince, who supported the amendments, said she specifically took issue with the self-certification process which gives owners the right to apply for exemptions from the 3% annual cap.

St. Paul tenant Clara Ware, meanwhile, noted that all council members are eligible for re-election in 2023.

“I think they’re not doing their job,” Ware said. “Anyone who disagrees with us will be eliminated next year…if I have to run for city council myself.”

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