Cecil Smith, CEO and president of the Minnesota Multi Housing Association, announces a campaign with support from business and labor groups to defeat rent control ballot initiatives in Minneapolis and St. Paul in front of the Carpenter’s Local 322 on Oct. 5, 2021. Photo by Max Nesterak/Minnesota Reformer.
Groups representing landlords, realtors and union laborers urged voters in Minneapolis and St. Paul to reject rent control ballot initiatives, saying they will hamstring development amid an ongoing housing shortage.
“The answer to affordability is supply, and this will have a chilling effect on supply,” said Adam Duininck, director of government affairs for the North Central Regional Council of Carpenters and former chair of the Metropolitan Council.
Proponents of the rent stabilization measures argue that even with efforts to increase development, many low-income renters are subject to exploitative rent hikes and have no legal recourse.
The newly formed coalition of business and labor interests announced their campaign “Think Twice about Rent Control” on Tuesday in front of the Carpenters Local 322 union hall in St. Paul.
Their pitch: Rent control will backfire by exacerbating the housing shortage as developers look elsewhere to build new homes and landlords convert their units to condominiums or owner-occupied homes.
“If we’re looking for solutions to housing affordability, then rent control is probably the worst solution one could propose,” said Cecil Smith, CEO and president of the Minnesota Multi Housing Association, a trade group for property managers.
Smith said some investors have paused buying properties until after Election Day in case the ballot initiatives pass.
“Markets react to regulation. And they’re acting soundly and reasonably and rationally because the measure in St. Paul is draconian,” Smith said.
The ordinance proposed in St. Paul is one of the most stringent in the country, limiting rent increases to 3% annually without exemptions for new construction. Landlords also would not be able to raise rents beyond 3% even between renters.
The St. Paul proposal of a maximum 3% annual increase would be among the lowest caps in the country — California and Oregon, for example, allow annual increases of 5% plus inflation and 7% plus inflation, respectively. Advocates say it’s less than the median rent increase over the past 20 years in Minneapolis.
Unlike St. Paul, Minneapolis does not allow voters to pass ordinances through referendum so it’s following a two-step process. If approved, the ballot initiative would allow the Minneapolis City Council to draft a rent control ordinance, which it could either enact or put before voters in 2022. Under state law, cities may only enact rent control if approved by voters in a general election.
Rent control is a politically dicey issue in both cities that can divide even progressive voters. St. Paul Mayor Melvin Carter has resisted taking a position on the ballot initiative, while a slim majority of St. Paul council members have quietly come out against it in recent weeks.
Council Member Jane Prince was the sole council member to join the group in front of the Carpenter’s Union Hall to show her opposition to the ballot initiative.
She said the policy going before voters in St. Paul is too severe and suggested she would be supportive of a policy tied to inflation and with exemptions for new construction.
“The problem is that what is before the voters in St. Paul is a very blunt instrument,” Prince said. “The ordinance would cover properties at all income levels. For the life of me I can’t understand why we would be putting rent control in higher-income luxury apartments.”
Prince said the city needs more public investment to build more affordable housing.
Rent control advocates point to the fact that nearly half of renter households in Minnesota spend more than 30% of their income on rent, with an even greater share of Black, Latino and Native households paying more than they can afford on housing each month.
With early voting already underway, the campaign to defeat rent control will have to work quickly to catch up to supporters of the initiatives who have been door-knocking all summer and have a significant cash advantage.
The pro-rent control group, Keep St. Paul Home, reported just over $60,000 in contributions, according to the latest finance report filed in September.
The opposition group Sensible Housing Ballot Committee has reported just one contribution in St. Paul of $18,000 from a single donor — the Minnesota Multi Housing Association. It hasn’t taken in or spent any money yet in Minneapolis.
The group includes carpenters and heavy equipment operators unions, as well as landlords, realtors and other business groups.
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