The city’s new rent control law will probably not apply to the thousands of rental housing units built in St. Paul during the last 20 years, nor will new development for another 20 years. Additionally, after a tenant vacates an apartment, landlords may soon be able to increase the rent on vacant apartments to market rate, which would be a significant increase above the city’s current 3 percent rent restriction.
The St. Paul City Council, which is sharply split in the face of strong public opinion in favor of and against rent control, hinted Wednesday that it would likely repeal significant portions of the “rent stabilization” legislation, which was supported by voters, next week.
The specifics of the city’s new “rent stabilization” legislation went into effect in May after being passed by St. Paul voters in a 53-47 percent vote in November. As a result, a number of property developers have claimed they have halted planned housing construction in St. Paul, sold off existing units, or abandoned future plans.
Officials have come to divergent conclusions regarding the level of construction activity around the city based on data supplied by two distinct municipal agencies that compare this year’s building permit applications and actual permits granted to prior years.
St. Paul Planning and Economic Development Director Nicolle Goodman informed the council on Wednesday that housing starts were down 30% from the city’s four-year average as determined by real residential construction permits granted by the city from January through July.
In light of these worries, the city council will vote on a master rent control amendment on September 14 that would remove new home development from the city’s 3 percent rent ceiling for 20 years. The proposal was written by council member Chris Tolbert.
A 20-year “lookback” term under the comprehensive Tolbert amendment is expected to result in the removal of rent control for thousands of the city’s current tenants. In addition, Tolbert had included a clause known as “vacancy decontrol,” which permits landlords to only partially increase the rent on vacant properties once a tenant vacates.
The city council voted 4-3 on Wednesday to further change that wording, enabling complete vacancy decontrol on vacant apartments, at the request of Council Member Jane Prince. In other words, after a tenant moves out, a landlord would not be restricted in how much rent it might increase.
According to Prince, since voters adopted rent control, landlords have sometimes increased rates beyond what they would have otherwise done because of concern that they won’t ever be able to make up for postponed increases.
“I’ve spoken with a lot of landlords who claim, ‘I’ve had renters for 5, 10, or 15 years. I don’t increase their rent because I know I can do so after the flat is departed, Prince added. We have placed landlords in a situation where they feel they must increase rents by 3% annually, which is more (than they would have without rent control).
Prince said, “Since this passed, it’s been terribly horrible for my ward. “When a developer walked out, I lost 100 inexpensive flats right away.”
The council was informed by Vivian Ihekoronye of the interfaith advocacy group ISAIAH that rent control had been essentially abolished for a major portion of the city. Ihekoronye expressed her frustration for the thousands of individuals who would no longer be able to take advantage of the rent stabilization legislation. The situation is completely intolerable.
The council approved a total of eight more amendments to Tolbert’s master amendment plan, which will be discussed again next week. The council rejected a number of initiatives put up by Council Member Mitra Jalali that would have narrowed its scope in a series of 4-3 votes.
The eight modifications were:
• Jalali proposed an amendment to remove affordable housing from the exemption, keeping affordable units subject to rent control, in an effort to reduce Tolbert’s 20-year exemption for new housing construction. Tolbert, Prince, Council President Amy Brendmoen, and Rebecca Noecker voted against her amendment, which was defeated 4-3. Russel Balenger, Nelsie Yang, and Jalali cast yes votes.
• Noecker proposed a change that would compel landlords to let tenants know that their rental property is subject to rent control before they sign a lease. The change was accepted 7-0.
• Jalali mandated that renters be informed by the city when a landlord requests a rent control exemption rather than only being informed after the exemption has been granted. Jalali informed the council that it was really too late for tenants to make a significant contribution to the process. “Tenants are already at a disadvantage in the power dynamic that is intrinsic to the landlord-tenant relationship.” Her change was accepted 7-0.
• Noecker proposed an amendment that made it clear that “unavoidable rise… in maintenance or running expenditures” is a legitimate justification for requesting a one-year rent control exemption, as determined by changes to the consumer price index. She made it clear that the exception would not be given automatically but would still be subject to municipal approval. Her suggestion was approved 7-0.
• Tolbert’s master amendment provides a few “just cause” grounds for evicting a tenant before enacting a rent increase over 3 percent on an empty unit, with the goal of eliminating forced tenant relocations. Jalali suggested eliminating “disorderly conduct” as one of the “just cause” safeguards because it is too general and might be used to any activity that seems to be out of control. She pointed out that other clauses, including lease infractions, would already encompass property damage or aggressive conduct. Her suggestion was accepted 7-0.
• If landlords are permitted to “bank,” or postpone rent increases for a number of years, and then implement a significant, cumulative rent increase in the future, Jalali suggested requiring landlords to pay for tenant relocation assistance. According to Yang, who spoke in support of the proposal, “I had an apartment building on White Bear (Avenue) where practically all of the elderly residents were no longer there and they did not move out voluntarily.” “They were chased away.” Jalali’s motion was defeated 4-3, with Jalali, Yang, and Noecker voting in favor and Tolbert, Prince, Brendmoen, and Balenger voting against.
• Prince suggested full vacancy decontrol, allowing landlords to “reset rent” to market rate once a tenant vacates, noting that allowing landlords to “bank” unused rent hikes would probably necessitate the city’s Department of Safety and Inspections maintaining onerous rent increase records on practically every landlord in the city. Prince, Brendmoen, Tolbert, and Belanger cast the deciding votes in favor of her, while Jalali, Yang, and Noecker abstained.
Jalali then suggested deleting the 20-year lookback period and cutting Tolbert’s planned 20-year exemption for new building to 15 years. Prince, Tolbert, Noecker, Brendmoen, and Jalali voted against the measure, while Yang, Belanger, and Noecker supported it.
I think 20 years is a decent number. Brendmoen said that 30 years would be preferable, describing the absence of clearly visible construction cranes in the city as frightening. “I have no interest in reducing my age to 15.” The data that (city planning) provided to us is alarming.
What you don’t want to have, Noecker said, “is a new construction exemption that doesn’t go far enough to encourage building. The minimum appears to be 20 years. I consider it quite crucial to increase those housing numbers.
Brendmoen said that she would need additional time to perfect a proposed amendment that would mandate that landlords seeking one-year exemptions from rent control pay their contractors prevailing wages, rather than introducing it on Wednesday. Jalali said that she will subsequently submit further revisions.
Yang underlined that the mayor organized a stakeholder group of 41 people on rent control who had suggested excluding new development for no more than 15 years, pointing to the council vote set on September 14. In several instances, the council’s actions on Wednesday went well beyond the task force’s recommendations.
A stakeholder group was formed. and I won’t be supporting any rent stabilization amendments that don’t at anyway acknowledge that effort, Yang added.
Marcus Troy, a proponent for the West Side who served on the mayor’s task force, said during a public hearing held after the vote that taken together, the revisions effectively nullify the work of the work group.
Troy said, “It appears like that’s out the door. The reason we enacted an ordinance was. We need accessible homes. We didn’t vote for what you’re doing.
Brendmoen stressed that the city wanted to increase the amount of houses being built. We need additional units, she said. “More. As many as we can construct.