The Potluck

St. Paul mayor faces skeptical GOP senators, says rent control going forward May 1

By: - March 3, 2022 4:25 pm

St. Paul Mayor Melvin Carter briefed the state Senate Housing Finance and Policy Committee on March 3 on the city’s rent control ordinance set to to take effect in less than two months.

In less than two months, St. Paul must implement one of the most stringent rent control policies in the country, capping rent increases at 3% annually on all units across the city.

But Mayor Melvin Carter told state lawmakers on Thursday that key details have yet to be worked out.

For example, city leaders haven’t yet decided what constitutes “rent” — if it includes increases to parking fees, utilities and other itemized costs or not.

The city also doesn’t know how much implementing the ordinance will cost, how many people they will need to hire, how landlords will be able to petition for an exemption to the rule or how the city will monitor for compliance.

“While much work remains, we are diligently moving forward,” Carter told the state Senate’s Housing Finance and Policy Committee.

Since St. Paul voters approved a citizen-led ballot initiative with 53% support in November, city leaders and staff have been scrambling to enact a policy they didn’t write.

When it does take effect on May 1, as required by state law, St. Paul will have the only rent control policy in the Midwest. Unlike virtually all other rent stabilization policies in the country, the ordinance approved by voters doesn’t exempt new construction and doesn’t take inflation into account.

Developers say the vote has scared off investors and forced them to put projects on ice, including affordable housing projects and parts of the massive Highland Bridge project on the site of the old Ford plant.

Carter told the committee he is pushing for the City Council to amend the law to exempt new construction from rent control for 15 years.

Asked about developers canceling housing projects, Carter told lawmakers that he thinks housing development will continue once the city exempts new construction.

“(Developers’) energy, their excitement, and their ability to finance projects in St. Paul will absolutely continue,” Carter said.

Carter, who offered a tepid endorsement of the ballot initiative shortly before Election Day, stood by the need for rent stabilization to protect families from skyrocketing rents. He argued that it’s possible to thread the needle of increasing supply while also capping rent increases.

“I think we know enough that we’re able to reject some of the end-of-days scenarios that we hear from folks,” Carter said.

That view was not shared by Republicans members of the committee, although the tone of the hearing remained cordial, with members wishing Carter’s daughter a happy second birthday.

Housing Finance and Policy Chair Sen. Rich Draheim, R-Madison Lake, repeated a well-worn quote from Swedish economist Assar Lindbeck: “In many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”

Draheim tried unsuccessfully to ban cities from enacting rent control last year. State law already prohibits cities from implementing rent control policies unless approved by a majority of voters in a general election, which voters in Minneapolis also did by a large margin in November.

The Minneapolis City Council is now crafting the specifics of a rent stabilization policy that will likely go before voters again for approval.

Carter told the committee he believes city leaders have the power to significantly alter the ordinance passed by voters, changing everything from how much the annual increase can be to who the law applies to.

St. Paul’s charter says ordinances passed through citizen petitions can’t be repealed for at least a year but is silent about changes.

Carter formed a 41-member working group to advise him on enacting the rent stabilization policy last month. He didn’t provide a clear answer to lawmakers who asked if their recommendations would be ready before the law takes effect in May.

“I expect that work to be over — never. I expect that work to be ongoing,” Carter said.

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Max Nesterak
Max Nesterak

Max Nesterak is the deputy editor of the Reformer and reports on labor and housing. Most recently he was an associate producer for Minnesota Public Radio after a stint at NPR. He also co-founded the Behavioral Scientist and was a Fulbright Scholar to Berlin, Germany.