Two apartment operators filed a federal lawsuit against the City of St. Paul over its rent stabilization policy in June. In November 2021, St. Paul voters approved a rent control ordinance considered the strictest in the nation.

The two apartment operators, Lofts at Farmers Market, LLC and Woodstone Limited Partnership, are seeking a declaration that St. Paul’s rent control program violates both the state and federal constitutions.

According to the complaint, St. Paul’s rent control measure amounts to a regulatory taking and is detrimentally impacting the city’s housing market. “The sudden depreciation in property values, coupled with the withdrawal from the market of many significant developments that would have included affordable housing, is predicted to significantly worsen, rather than alleviate, the affordable housing crisis plaguing St. Paul,” the complaint reads.

Under the ordinance that went into effect on May 1, rent increases are capped at 3% each year and cannot be indexed with inflation.