St. Paul’s Rent-Control Task Force Recommends 15-Year Exemptions to Cover New Construction

Little more than two months before the implementation of rent control on May 1, St. Paul Mayor Melvin Carter selected 41 members of a stakeholder task group assembled to make amendments to the municipal legislation that had been passed by the voters. The task committee sent the mayor’s office its comprehensive recommendations in June, and the final report recommends keeping the current 3 percent annual rent rise restriction while adding a 15-year exception for new building.

Beyond that, some members would have preferred more specific proposals.

Marcus Troy, a tenant on the West Side, said that discussion groups within the task force groups made up of renters, landlords, and developers were frequently at odds with one another and claimed that “no one came away entirely satisfied.” We all left with the impression that the other group had gotten a little bit more than they deserved.

Part of the reason for this is because the members were frequently divided on specifics, such as whether a landlord should be permitted to “save” unused rent increases and then impose them all at once once a rental unit is unoccupied.

While this “vacancy decontrol” approach is widespread in rent-controlled housing markets, it is now prohibited by the St. Paul law.

These are suggestions based on the notion that “60% of the participants agreed on this. To be honest, the group was quite split, much like the city, according to task force co-chair Tony Sanneh. The main lesson I learned was how much tenants need to be protected.

Housing advocates put together the city’s new “rent stabilization” law, which was put on the ballot for St. Paul in November 2021 and passed with 53% of the vote. Practically speaking, the legislation went into effect on May 1, giving the city roughly six months to prepare a financial plan and administrative framework for the new regulations, which may have an impact on as many as 60,000 housing units in the nation’s capital.

Carter has proposed for changing the legislation to exclude new residential development from rent control for 15 years after becoming concerned about a noticeable halt in new building permits. While some renters and housing activists argued for no exemption at all, several housing developers on the task team supported a 30-year exemption. In the end, the group chose to support the mayor’s suggestion.

Further clarification and a more straightforward application procedure for hardship exemptions have been requested by several property owners. The work committee decided against exempting modest homes with four units or less.

The city council and Carter’s office will study the suggestions, and it is anticipated that the municipal legislation will alter in early 2023. Chris Tolbert, a council member and the head of the city’s Housing and Redevelopment Authority, has started working hard for the council.

Tolbert stated that he wants to safeguard tenants against increases in rent while making sure that landlords have plenty of incentives to make investments in high-quality market-rate and affordable housing. He anticipates pushing forward with one significant ordinance change this summer.

We won’t cover each subject separately, Tolbert declared. “We’re going to provide a worldwide ordinance based on the most accurate data we have from the past nine months or so.”

Some mom-and-pop landlords willingly maintain rates reasonably consistent for their low- to moderate-income renter, knowing they can hike rents up to market rate later after the tenant moves out. This is because finding trustworthy tenants they like and trust may be expensive and time-consuming. Without having an effect on the tenant, this preserves the flat a desirable financial asset for both the owner and possible buyers.

The concept of “vacancy decontrol,” which has been formalized in cities like New York, is restricted in terms of how much of an increase a landlord may apply to an empty apartment.

Having renters for a longer period of time really benefits the landlord, according to Sanneh. But if that’s the only method to raise rents, people are quite concerned that landlords would evict tenants in order to do so.

Some localities permit a certain amount of vacancy decontrol, subject to requirements such evidence that the landlord has kept the flat in good shape or that the tenant was not forced to move out.

The St. Paul task force had a series of votes on the issue of whether a landlord can raise rents to, or closer to, market rate on a vacant flat during their last meeting on June 7. 20 members initially voted in favor of partial vacancy decontrol, while 15 members favored full vacancy decontrol. In following votes, 15 of the 34 voting members supported complete vacancy decontrol, while 29 of the 35 voting members supported partial vacancy decontrol.

The task team admitted that they had little further information to share that everyone could agree upon. The majority of the members opposed calling another meeting to debate policies.

The paper states that there is a wide range of potential applications for “partial vacancy decontrol,” ranging from the rejected polar opposites of complete vacancy decontrol and full vacancy control. “83 percent of the group members who cast votes approved the suggestion for some kind of partial vacancy decontrol.”

In addition to dividing housing activists concerned about the halt in new home development, the rent-control debate has generated a hornet’s nest of administrative headaches at City Hall, where staff has struggled to put a policy into practice that they had no input over. In June, two building owners from Bloomington and Minnetonka filed a federal lawsuit against the city, claiming, among other things, that there isn’t enough personnel to properly implement the legislation and handle appeals.

In the past, litigation challenging rent control haven’t gained much momentum across the country. Property owners in St. Paul who are applying for hardship exemptions may self-certify rent hikes of between 3 percent and 8 percent under administrative regulations that the city released in April. In the middle of June, the city’s Department of Safety and Inspections recruited two experts to examine those applications and reach conclusions.

The city’s legislative hearing officer, Marcia Moermond, has started holding appeal hearings for landlords whose applications are denied or who want to raise rents by between 8 and 15 percent. The city’s public hearings on a request made by Matthew and Jim Lindquist, who want an exemption for their property at 1029 Raymond Ave., started on June 21. The property owners are asking for an increase of 15%.

According to the minutes of the meeting, the subject will be forwarded to the municipal council with a recommendation from the hearing officer still waiting.

Moermond’s position is probably transient, and other personnel will be employed to assist with appeals. Additionally, tenants have started contesting rent hikes they feel are unreasonable. “We’re not sure of the volume we’re looking at. The first instance is here, Moermond said. We are still developing the procedure.

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