Owners of Raymond Avenue Apartment Building Allowed 15% Rent Increase

On Wednesday, the St. Paul City Council voted unanimously (5-0) to approve a request by two Raymond Avenue property owners to raise rates in their apartment building by 15%, or more than five times the current rent-control cap for the city, but not more. And the total must include the price of utilities, which were once included in rent.

Jim Lindquist and his son Matthew Lindquist contested the city’s new 3 percent rent restriction at 1029 Raymond Ave., a 12-unit, two-story apartment building they bought in April, citing a planned renovation of apartment units that are desperately in need of long-delayed upkeep.

The proposal is the first challenge to the new rent-control cap to be heard by the city council before it is officially approved.

Speaking to the council on Wednesday, Jim Lindquist stated, “We’re not trying to gouge anybody.”

Rents have not increased recently, according to neighborhood council member Mitra Jalali, and the plea was supported by convincing proof of that.

In addition, Jalali remarked, “I personally care very passionately about creating a norm and tone with property owners… (and) a clear legal foundation why exceptions be made.”

Wednesday saw the absence of council members Dai Thao and Nelsie Yang.

Landlords are permitted to “self-certify” increases between 3 percent and 8 percent by providing paperwork that demonstrates rent increases below 3 percent would not be sufficient to pay for costs or yield a respectable rate of return. Property owners are required to appear in an appeal hearing before a legislative hearing officer if the tax rate is over 8%.

Marcia Moermond, a legislative hearing officer, informed the council on Wednesday that she had visited with the Lindquist family to discuss their three rent-control appeals. She advised granting their initial request, a 15 percent rent increase for the entire building, but insisted that the cost of utilities that the landlord had previously paid for must be included to the total.

She stated, “These costs are to be incorporated for a total rise of 15%, not more. “Water, sewage, and natural gas” are the three items that are being disconnected.

The Lindquists, according to Moermond, were already working on a roof repair, remodeling the laundry room, and making plans to upgrade the garages. They informed her that more future upgrades would involve installing new carpet, flooring, and appliances that the previous owner had overlooked.

She stated in her July 12 recommendations that “The Lindquists plan a full makeover of most apartments over the next three years and say these changes would primarily be undertaken at the time the units ‘turn over’ and units are empty between renters.

The Lindquists’ debt accrued in purchasing 1029 Raymond Ave. was not quite obvious to be a legitimate “maintenance and operating” expenditure for the purposes of constructing an acceptable exemption to the city’s new rent-control statute, according to Moermond.

However, she pointed out that “the mortgage is sufficiently significant to transform the return on investment from the property from about 25% in 2020 to a predicted loss in 2022” in the absence of a waiver from the city’s 3 percent rent-control ceiling.

The Lindquists requested a delayed exemption to the 3 percent rent cap as well, anticipating rent increases of between 2 and 15 percent per unit in 2023–2024.

They predicted that average monthly rentals will rise to $1,300 from the current average of $985. Moermond suggested that the council prepare a recommendation by March 1, 2023, and revisit such increases when the time comes.

The Lindquists then requested that the monthly rent for Unit 4, which had previously undergone remodeling, be raised by more than 15% in a third appeal. Moermond advised opposing the proposal and capping rent increases at 15%.

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