St. Paul revisits rent control after federal lawsuit and decline in production

The city of St. Paul has taken steps to amend the city’s voter-approved rent control ordinance that took effect in May.

After a citywide slowdown in housing construction and a federal lawsuit, the city of St. Paul has taken steps to amend the city’s voter-approved rent-control ordinance that took effect in May.

In November 2021, St. Paul residents approved the nation’s strictest rent control measure. St. Paul’s rent control policy capped rent increases to 3%, and unlike many such ordinances enacted across the country, St. Paul’s policy included any new for-rent projects in the city. Since its approval by voters, the policy has had an adverse impact on the construction of new housing in the city, with some housing projects that were in the works in the city halting construction.

The city of St. Paul has also found itself in Federal Court over the policy. Two building managers sued, alleging the St. Paul policy violates the U.S. Constitution. The lawsuit, the inability to recoup costs due to inflation and the devastating impact on new construction caused the city to reexamine the policy.

In several hearings, the city of St. Paul has proposed amendments to the city’s rent control policy, including new construction having a 20-year exemption to the policy, changes to how much rates could increase after a “just cause” vacancy and the ability to index rent increases with inflation.

“We appreciate the effort and intention of each of the [amendment] authors but depending upon what passes, this only makes rent control slightly less terrible in St. Paul,” said Cecil Smith, president and CEO of Minnesota Multi-Housing Association, in testimony to the city of St. Paul. “Rent control never works. If it did, we would be modeling this policy on a successful formula. But none exists.”

A vote on the new policy was scheduled for late September. The results were not available at the time of printing.