Independent St. Paul landlords call city’s evolving rent control ordinance ‘worst of both worlds’

Once again, St. Paul City Council will likely be assessing proposed changes to the city’s rent control ordinance this fall. 

But the changes proposed by St. Paul Mayor Melvin Carter aren’t going over well among small landlords with aging buildings. 

The once sweeping rent control cap that limits rent increases to no more than 3% in a 12-month period passed via 2021 city referendum has already been whittled down by previous city councils that enacted a 20-year exemption for new development. Now Carter is proposing a change to the policy that would make all properties built after Dec. 31 of 2004 exempt from rent control indefinitely.

The city estimates approximately 95% of its rental units with a Fire Certificate of Occupancy were built prior to 2005, according to Ramsey County Parcel data reviewed by St. Paul Department of Planning and Economic Development and Department of Safety and Inspection staff.

Joe Hughes, owns and works to lease “naturally occurring affordable housing” for Union Park Management in St. Paul. Naturally occurring affordable housing refers to residential properties that are considered affordable but are not federally subsidized. Generally these are older buildings such as brownstones. 

Hughes sees the proposed change as great for large-scale developers, but not so much for small local landlords. Looking at the whittled down ordinance, Hughes asks: “Who is this ordinance really helping?”

Related | Subtle change in St. Paul’s new rent control proposal sets firm exemption cutoff date, hopes to boost housing

Many of the properties that would still be under rent control if Carter’s proposal was adopted are aging and in need of repair, he said.  At one point, Union Park Management bought a building “substantially below what it was worth because of rent control.” A one-bedroom in the apartment once ran for about $450, he said. But the building was “falling apart” and needed substantial repairs. Because of this, the company was able to apply for an exemption and still raise rent substantially. So often, even older buildings are caught under an exemption. There is fear that not raising rent now on theses St. Paul buildings means not being able to make necessary repairs in the future, he said.

“What it comes down to is, the days of having tenants with a substantially below market-rate rent deal are over,” Hughes said, claiming landlords are penalized now for offering low rent.  

Nate Hood is a member of the city’s planning commission and the owner of a small duplex in St. Paul, which was built in the early 1900s. This property would not be exempt from the rent control ordinance under Carter’s proposal. Outside of his role on the planning commission, Hood works in urban planning and economic development and helped start a group called Sustain St. Paul, a development, sustainability and affordable housing advocacy group. 

“The rent control policy that we have right now is really the worst of both worlds because there are enough exemptions where it doesn’t necessarily protect renters. However, it is strict enough for developers and new investors not to feel comfortable putting new capital into the system here,” Hood said. 

Hood said because his property would not be exempt, he’s actually raised rent by 3% every year rather than keeping it flat. Previously, Hood would keep the rent flat until the tenant moved out, then reset the rent to the market rate for the new tenant. There was a 2023 amendment made to the ordinance to allow for “partial vacancy decontrol,” which allows landlords to increase rents by up to 8% plus inflation, measured by Consumer Price Index, after a “just cause” vacancy. But for many, this isn’t enough not to increase rent, Hood said.   

“I always have to be increasing rents and it kind of stinks because I like tenants and I don’t want to put them out. I want them to be happy,” Hood said. 

Meanwhile, large developers have remained relatively quiet about the proposed change to rent control. When asked for comment on Carter’s proposal, Ryan Companies, the lead developer of the Highland Bridge project, sent the following statement from Maureen Michalski, the executive overseeing the site: “We look forward to learning more about the specifics of Mayor Carter’s comprehensive housing proposal and how it might impact developments like Highland Bridge. Our priority remains to contribute to the city’s vision for sustainable and inclusive growth.”

Last year, Ryan paused housing development at Highland Bridge, claiming the pause was due to an inability to find financing after St. Paul’s implementation of rent control. At the time, Michalski said, short of a full repeal, Ryan would advocate for a 30-year new construction exemption rather than the current 20-year. Notably, that is not the mayor’s current proposal. 

This proposal of course still needs to go to St. Paul City Council and, while the body has talked with the Carter administration about changes to rent stabilization in the past, Council President Mitra Jalali said these conversations were always “very high level.” 

Far more conversation and data needs to be shared before the council can make a decision on how any changes to rent control would work, Jalali said. 

“Ultimately our council sets policy in the city, our council is the only thing that can connect with the ordinance, our council needs to be looking at the full scope of housing and moving holistically,” she said. 

The council president also pointed out that rent control is only one factor in lowered housing development. For example, inflation and high interest rates deter development, which are outside the city’s control, Jalali pointed out. 

“I think we should understand the factors that are unique to St. Paul,” Jalali said. “I’m also careful not to prescribe the issue entirely to our ordinance.”

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