St. Paul was once one of the nation’s leaders in the rent control movement. But landlords are surely celebrating as the Minnesota municipality rolls back its ordinance.
The St. Paul City Council voted by slim majority to exempt new construction from the city’s 3 percent cap on annual rent increases, the Minnesota Reformer reported. The vote also exempts rentals built after 2004.
Voters approved the rent control ordinance in 2021 and saw it implemented the following year. But the measure quickly coincided with a dramatic fall in construction in St. Paul, which developers tied to the ordinance.
Last year, 80 percent fewer housing units were built in St. Paul compared to the average of the last three years, according to an analysis by nonprofit publication MinnPost. Interestingly, construction dropped even more drastically in Minneapolis, where the City Council is empowered to enact rent control but has not actually done so.
The same year rent control was enacted in St. Paul, the city walked some of it back after local developers fled.
In 2022, the city started letting landlords raise rents on rent-controlled apartments after a tenant moves out. Additionally, it permanently exempted new affordable housing developments from the price hike cap and handed new construction landlords a 20-year exemption.
Landlords in the city also have the ability to request exceeding the 3 percent cap if expenses rise significantly. St. Paul has approved a majority of those requests.
Rent control often ends up being posited as a battle between tenants and landlords. For tenants, rent control is a way to limit costs by curtailing rent increases, allowing for housing stability and ensuring tenancy. For landlords, however, it’s a cap on revenue and could force difficult decisions about building maintenance and future development.
Most states in the Midwest have banned local rent control ordinances, but plenty of municipalities and states are still testing out policies.
Last week, the governor of Washington signed a bill that immediately instituted rent control measures across the state, according to KIRO 7 News.
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