In Minneapolis, voters are likely to face two questions about rent stabilization in November, though neither question in and of itself would impose any changes to how rental property is regulated in the city. Instead, if passed they would give the city the ability to do so — either via the City Council or by citizen initiative.
The effort in St. Paul, however, goes further, with voters potentially weighing in on a ballot measure that — if passed — would institute a specific cap on rent increases in the city. Here’s a look at where the initiative came from, what it would do, and what landlords are saying about it.
Where did the push for a St. Paul rent control measure come from?
Housing has become increasingly unaffordable in the Twin Cities. Though the University of Minnesota’s Center for Urban and Regional Affairs found the average rent went up in Minneapolis by 2.7 percent between 2013-2018, some rent increases went up by an average of 9 percent during that time. And the pandemic has made things worse. The Minneapolis St. Paul Regional Economic Development Partnership said the metro housing market is “skewing toward higher-priced homes,” and that the share of homes for sale they deem affordable has dropped more than 15 percent since 2019. Between 2015 and 2018, homelessness in Minnesota has jumped 10 percent.
In response to those trends, housing advocates and city officials in both Minneapolis and St. Paul have explored policy options that could help people keep their homes, including imposing rent stabilization measures, which have been barred by state law for more than 40 years.
Behind the campaign in St. Paul is Housing Equity Now St. Paul (HENS), a coalition of neighborhood groups and affordable housing advocates who collected more than 9,000 resident signatures — nearly double the 5,000 needed — to put a rent stabilization measure on St. Paul’s municipal election ballot this November.
“There was a very strategic decision about making the move to go on the ballot,” said Danielle Swift, a member of the St. Paul Area Association of Realtors and community organizer with the Frogtown Neighborhood Association, one of the organizations in HENS. “That’s to avoid the fight that we see happen within political realms and going directly to the people, to be able to take the decision-making power into their own hands.”
What would the St. Paul proposal do?
The St. Paul city attorney’s office is still finalizing the ballot language, but — if approved — the measure would impose a cap of 3 percent on rent increases for most rental units in the city, starting in May of 2022.
It needs to be on the ballot because the city— like Minneapolis — needs to satisfy an exception in Minnesota law governing any rent control measure, a provision that says that charter cities in the state can engage in “controlling rent on private residential property” only if “the ordinance, charter amendment, or law that controls rents is approved in a general election.”
HENS’ proposed cap does not put a limit on the cost of rent in St. Paul; it only impacts rent increases. “We’re saying rent can start where it is; it just can’t grow faster than a certain percent,” said Tram Hoang, policy advocate for The Alliance, one of the organizations in the HENS housing coalition.
The ordinance comes with a provision that allows landlords to file a request to be exempt from the cap. There is no current list of specific exceptions, just a mechanism for the city to field requests and determine if a landlord should be able to increase rent by more than 3 percent.
HENS also said its aim is to stop large, sudden increases in rent that happen most often when new amenities come to a neighborhood, like new grocery stores or transit options. The coalition says the rent cap will help secure St. Paul’s entire rental market but will be most beneficial to renters of color and low-wage earners.
“It’s something we know happens to many people in month-to-month leases,” said Hoang. “Our goal is to make sure that, as the cost of housing increases, it does so at a rate that’s humane, that keeps people in place, that allows people to grow in their communities.”
Why 3 percent?
HENS bases its proposed 3 percent cap on research from the University of Minnesota that found that, over the past 20 years, median rent increases did not surpass 3 percent. Hoang said the data indicate to her that landlords should be able to afford unit upkeep while keeping rent increases below that threshold.
At the same time, the 3 percent limit would protect many of the most vulnerable renters, said Mai Chong, a staffer for City Council Member Dai Thao. “Three percent is the average of rent increase across the metro,” said Chong. “But, disproportionately for BIPOC (Black, Indigenous, people of color) households, they were actually receiving higher rent increases.”
City Council Member Mitra Jalali herself experienced being pushed out of a rental after multiple rent increases. After sharing notes with her neighbors, she found others forced to find new housing, puzzled by the continued rent increases. “[A rent cap] would have helped us stay there,” said Jalali.
“In all of the consensus about housing policy across communities grappling with what we are grappling with is — you need a combination of an abundance of new homes at a whole range of income levels, and then protections for people at the very bottom of the market,” said Jalali.
What do landlords in St. Paul say about the ballot question?
Both a state housing association and the St. Paul Area Association of Realtors have voiced opposition to the idea of a cap on rent increases. “The position of SPAAR, and I share this personally — I own rentals and I’m an agent and I work with a lot of other investors — nobody doesn’t want housing affordability,” said Mark Mason, president SPAAR. “We just don’t think capping rent is the best way to achieve that.”
Mason said rent control has failed around the country, even when championed by well-meaning activists and government officials who thought they could find the right regulatory formula to keep rents from skyrocketing. He pointed to escalating rents in places with rent control, like San Francisco and New York, and said the same would happen in St. Paul.
Imposing rent control would hamstring landlords facing surprise repair costs or jumps in property taxes, Mason said, resulting in those landlords leaving their units in disrepair or converting the units from rental to private ownership.
“You might get people who do [apartment to] condo conversions,” said Mason. “‘Hey, I’m done owning this 40 unit apartment, I’m gonna do condo conversion,’ which is extremely counterintuitive to what you are trying to achieve with rent stabilization. You get a lot of people who own one, two, or three properties who are like, ‘I can’t increase my rent, I can’t improve my property, I can’t maintain it properly. I’m just gonna sell it.’”
Cecil Smith, president and CEO of the Minnesota Multi Housing Association, said making life harder for landlords will also shrink future development of rental housing in the city. Choking off supply, he said, would make St. Paul’s rental market more competitive and jack up rents.
Smith suggests St. Paul avoids such pitfalls and concentrates housing affordability efforts on investing in the production of more housing and the preservation of “healthy, dignified, livable housing stock” in city communities.
What happens now?
St. Paul’s city attorney’s office is currently working to prepare ballot language. The city charter mandates that, in order to be placed on the ballot in November, the question language must be approved by the City Council and sent to Ramsey County by Aug. 20.
In the meantime, HENS, as well as City Council members who are in support of the rent cap, are campaigning to persuade St. Paul voters to approve the measure this November.
As Election Day nears, expect both the campaign in favor of the rent cap — and those who oppose it — to ratchet up. Though the Minnesota Multi Housing Association has yet to begin a mailer campaign yet, Smith said St. Paul residents should “stay tuned.”
