After seeing the detrimental impacts of its draconian rent control ordinance, St. Paul is scaling back their policy.
On September 21, 2022, the St. Paul, Minn. City Council voted to make significant amendments to the city’s draconian rent control ordinance. This is welcome news given that the city’s rent control policy was unprecedented in its inflexibility, capping rent increases at 3 percent annually with almost no exceptions.
Since the ordinance passed last November, St. Paul has seen a 30 percent decline in housing starts, compared to the city’s four-year average. Such an effect is not surprising given the exhaustive research on rent control’s stifling impact on local economies.
What has changed?
With the City Council’s recent vote, St. Paul will now provide a 20-year exemption from rent control for new construction. This new amendment also applies retroactively to buildings constructed within the past 20 years. Certain types of affordable housing are also exempt.
The amended ordinance also allows for partial vacancy decontrol through which a housing provider may increase a unit’s rent by up to eight percent plus inflation in order to catch up with market rates. However, this increased rate is only allowed if there is a “just cause vacancy.” As specified by the new law, a just cause vacancy includes a tenant’s refusal to renew, repeated late or non-payment of rent, non-compliance with the lease and renovation of the unit, among others.
The new text of the ordinance also clarifies the process for accepting and reviewing applications for an exception to the rent control law.
St. Paul Mayor Melvin Carter is expected to sign the ordinance into law, which will become effective on January 1, 2023.
While the amendments to St. Paul’s rent control ordinance will alleviate some pressures for developers, housing providers and renters in the city, it doesn’t change the fact that rent control is a failed policy that ultimately works against housing affordability.
The National Apartment Association (NAA) and its network of affiliated associations will continue to educate the public on the harmful effects of rent control and instead advocate for sustainable and proven solutions that support low-income renters with their ongoing housing needs and promote housing development at all price points.
For more information about rent control, please contact Ben Harrold, NAA’s Manager of Public Policy.