St. Paul ‘in a holding pattern’ over rent stabilization

What does it mean? How will it work? Confusion reigns.

On Election Day, St. Paul residents voted in favor of a rent stabilization ordinance. The next day, with developers calling the City to place projects on hold, Mayor Melvin Carter asked the city council to exempt new construction from the terms of the ordinance.

Margaret Kaplan, president of the Housing Justice Center and part of the coalition that drafted the ordinance, called the reaction “a disaster narrative. The corporations and industries who fought against rent stabilization are still campaigning against it, but in a different way,” said Kaplan at a Nov. 17 Housing Equity Now Saint Paul (HENS) webinar.

St. Paul’s rent stabilization ordinance caps annual rent increases to 3% of monthly rent. The cap includes newly constructed buildings, which opponents say threatens the viability of building new housing in the city.

Minneapolis-based Ryan Companies said they pulled applications for three buildings as they try to navigate  the yet-to-be-determined implementation process of the ordinance. This includes the highly anticipated Ford site redevelopment—3,800 units of market-rate and affordable housing.

“The rent control policy threatens the funding sources for market-rate projects and therefore the overall finance plan for the development,” said Tony Barranco, North Region president of Ryan Companies, in a statement. 

Kaplan said that without an implementation process in place yet, many developer concerns are speculative. “Is there a real issue that is based on facts, data and information? And if there is a real issue, what is the way we can work to address real problems?” she asked.

At time of publication, Barranco was not available to elaborate on what threatened funding sources. The Minnesota Multi Housing Coalition, strong opponents to the ordinance prior to elections, said they are not doing interviews at this time. The St. Paul Office of Planning and Economic Development also did not have data on how many housing projects are still continuing. 

Early in September the Center for Urban and Regional Affairs (CURA) released a rent stabilization report for Minneapolis that found little evidence that rent control policies negatively impact new construction. It said construction rates were instead “highly dependent on localized economic cycles and credit markets.”

HENS Campaign Manager Tram Hoang noted that with St. Paul’s most racially and economically diverse wards voting yes on the ordinance, any changes to the plan would require community engagement. “It’s…inherently racist for folks to be saying that the people didn’t know what they voted for. That voters are too dumb to understand housing policy.”

An issue of process

Without much precedent before them, St. Paul City officials are still trying to figure out what a rent control ordinance means and how to make it work for everyone. At a meeting after Election Day, St. Paul City Council members echoed community confusion and frustration about a lack of answers around implementation and related budget or administrative needs, given that the City had the ordinance language available to them for months prior.

 “That we have done none of this work is shocking to me,” said Councilmember Amy Brendmoen. In an email to the MSR, she said about the implementation process: “Right now we’re sort of in a holding pattern waiting to hear back from the city attorney‘s office and considering options.”

“We’re in a bit of a unique circumstance here,” said Deputy City Attorney Rachel Tierney to the council in an October meeting. With little case law to draw from, she said in coming weeks the office will be examining proposed changes and drawing examples from similar ordinances across the country “with the lens of making sure that we haven’t altered the will of the voters.”

She pointed to confusing points like the ordinance language calling for May 2022 implementation whereas the St. Paul City Charter calls for ordinances to go into effect the day after a vote. Tierney said amendments or supplements—like Mayor Carter’s new-construction exemption—run the risk of litigation and a court ruling overturning the action, which they want to avoid.

Like the HENS organizers, City officials acknowledged possibly conflicting goals.  Department of Planning and Economic Development Director Nicolle Goodman, at a Nov. 3 city council meeting, said, “We need to build the table around the conversation to discuss how to balance those goals of both equity and growth. 

“We’ll be inviting stakeholders, stakeholder groups, starting with city council, to earnestly participate in the conversation that doesn’t pit renters against landlords, doesn’t pit growth against equity and affordability.” 

HENS organizers encourage St. Paul renters facing rent hikes before the May implementation deadline to reach out to housing advocates to share their experiences: https://www.housingequitystp.org/rent_hike_form.