St. Paul City Council votes 4-3 to roll back rent control ordinance

St. Paul City Council rolls back rent control

The St. Paul City Council voted to remove rent caps for any structure built in 2005 and later. FOX 9's Leon Purvis has the full report.

ST. PAUL, Minn. (FOX 9) - The St. Paul City Council voted Wednesday 4-3 to pass an amendment rolling back its rent control ordinance that was put into effect just three years ago.

Rent control in St. Paul

St. Paul City Council votes on rent control ordinance [RAW]

The St. Paul City Council voted 4-3 on Wednesday to pass an ordinance rolling back rent control put in place in 2021.

The backstory:

The St. Paul Rent Stabilization Ordinance was approved by the city council in November 2021 and took effect in May 2022.

The ordinance puts a 3% cap on yearly rent increases, which drew from measures passed in other cities. A city task force, made up of renters, housing advocates, and developers, later recommended the ordinance remain in effect.

The council later added an exemption for new construction projects and a framework for appeals in September 2022.

What could change?:

The amendments under consideration by the council would extend the exemption for new construction projects.

It would remove the language granting only a 20-year exemption for new builds. Instead, the city would extend exemptions for any property built after December 31, 2004. That amendment failed by a 4-3 vote.

City officials say the change wouldn't affect the lion's share of current rental properties in the city.

The St. Paul City Council also voted 4-3 Wednesday against requiring developers to pay prevailing wages on construction of multi-family buildings that benefit from the new rent control exemption. The prevailing wage mandate would apply to properties with at least 12 residential units that are newly constructed or had a change in occupancy classification from commercial to residential.

Landlords would have to verify that all construction workers on a project had been paid the prevailing wage, as defined by the city’s administrative code.

What the city council is saying

What they're saying:

"The 2004 date, aligns with our current 20-year exemption. Building protected now will be protected tomorrow. A vast majority of the tenants in the City of St. Paul will retain rent stabilizing decades into the future. Investors will no longer will have a reason to balk at projects in our city," said Saura Jost, St. Paul Ward 3 Councilmember.

"To me, my biggest concern is, with the permanent exemption in place, basically what we’re going to be seeing more of working-class folks, front-line workers, living in buildings that are old. While new shiny construction buildings are here perpetuating gentrification in our communities and having rents that are extremely unaffordable," said Nelsie Yang, St. Paul Ward 6 Councilmember.

St. Paul Mayor Melvin Carter also issued a statement Wednesday night.

"Our housing equity goals cannot be achieved without building more homes. I applaud the council for adopting these policies, which I proposed to advance these critical goals together."

Why is St. Paul rolling back its rent control law?

What we know:

During a meeting last month, city staff showed a chart showing a falloff in new housing units being built in St. Paul starting in 2024 after a boom in new units between 2012 and 2023. The council appears to be trying to thread the needle by maintaining protections for most renters but giving greater incentive to new developers.

A 2024 study by the Urban Institute found that rent control led to a reduction in unit supply in cities but came with an increase in affordable units.

A 2018 analysis by the Brookings Institute found that rent control helps "current tenants in the short run, [but] in the long run it decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood." The analysis also showed that landlords will often end up responding to rent control by either redeveloping their building to become exempt or accept the measure and stop putting money and maintenance into their properties.

The change is similar to policies in place in other major cities with rent control, officials said, including New York and San Francisco.