What we’re hearing: Ideas to improve rent control in Saint Paul

With just over a month to go until Saint Paul’s controversial rent stabilization ordinance goes into effect, the path forward seems murkier than ever.

The Mayor’s 41-member advisory panel might represent some opportunity to improve the ordinance and ensure it delivers on its promises. Time is running out quickly to adhere to the May 1st required implementation date.

As the Mayor himself stated, “effective policy can always withstand thoughtful questioning”. In that spirit, we present (without endorsement) ideas we’ve heard in response to our SPNN forum that we’d invite the readers to consider and ask you to respond with additional Comment or Ideas below:

  • Include Inclusive Zoning with a new construction exemption request or require acceptance of a certain number of Section 8 vouchers.
  • Eliminate Capital Gains Tax when a Mom & Pop landlord sells to a non-profit that agrees to keep rents affordable for those at 30% AMI, but with a ten-year claw-back if the rents exceed 30% AMI.
  • Only grant a new construction exemption if the developer agrees to build in a 1% margin on “luxury” unit rents and dedicate that 1% to a deeply affordable housing fund.
  • Replace the existing ordinance with a new one that targets rent control based on tenant’s income.
  • Allow developers to create higher density housing if they agree to keep rent increases under 3% for a certain number of units within the building. 
  • Require landlords to disclose their financial records when asking for exemptions. Watch out for creative accounting such as putting in shill tenants before May 1 to raise rents or changing to “net leases” (to exclude utilities).
  • Start a good landlord / tenant registry. Such a registry could be an effective means to incentivize good behavior, reducing the risks (and costs) to both tenants and landlords.
  • Require landlords to offer at least 3 year leases, with annual renewals at stated rates. Tenants would have the option to terminate in any prior year for any reason. This would allow tenants to plan ahead, knowing what their housing costs will be well ahead of time and choose whether to accept them or move.
  • Bond tax revenues from new market rate developments and use them to fund affordable projects. This would work similar to TIF, but would allow captured market rate taxes within Saint Paul to subsidize developments that could be up to 100% affordable, including more deeply affordable units.
  • Lobby for the inclusion of rent control provisions in Freddie Mac loans to developers.
  • Tap into or extend existing programs to help small landlords maintain their properties. This might include a 0% renovation loan program for small landlords. Landlords could qualify for these programs in exchange for agreeing to voluntary rent caps.
  • Use a new construction exemption to fund deeply affordable housing. Any rent increases over 3% would be subject to additional taxation, to be put into a fund for new deeply affordable projects.
  • Help mom & pops sell up. Provide tax relief and other incentives to small landlords if they sell their properties to non-profits that promise to hold down rents.
  • Charge a fee for exemptions. Recoup administrative costs and discourage unwarranted exemption applications.
  • Start a relocation fund for evicted tenants. Where tenants do find themselves homeless, provide financial assistance to help them get resettled in a new home.
  • Make rents a part of a Contract-for-Deed. This would work like a rent to own agreement.
  • Establish and fund Community Land Trusts as a model for equitable housing ownership.
  • Use American Rescue Plan funds to invest in affordable housing. This funding represents a once in a generation opportunity to build affordable housing.
  • Use the tax code to incentivize affordable housing. Follow the example of Federal Opportunity Zones to direct affordable development to areas with the highest need.
  • Track what happens after May 1. Partner with academic institutions to study the effects of the ordinance to inform future changes.
  • Use fines to enforce the ordinance. Fines set at the right level would create flexibility for new construction and major renovation to keep rents below 3% or raise rents in line with the market rate and accept the fine.

As a non-partisan group, our goal is to improve the quality of public discourse on an issue that has profound implications for everyone who wants to live in our city. We hope that the rent control panel will give thoughtful consideration to these ideas and others over the coming months. We welcome further ideas and discussion for publication.

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2 thoughts on “What we’re hearing: Ideas to improve rent control in Saint Paul”

  1. Idea: “Only grant a new construction exemption if the developer agrees to build in a 1% margin on “luxury” unit rents and dedicate that 1% to a deeply affordable housing fund.”

    Response: I think we need to know when and for how long payments of 1% would be made. While this is one way to help increase the supply of affordable housing, it looks like it would only have a small impact on the supply problem. If a developer builds 100 market rate units, with average rents of $2000/mo., it would initially generate only $24,000 per year for affordable housing on the entire development. This also would need to be subsidized from other sources.

  2. I’m surprised that out of the ideas presented so far not a one addresses inflation. The rent control measure adopted last November seems pretty fair to me so long as inflation is low. However, it’s no longer low. This year, with inflation at 6 percent, a landlord who raises rent by the allowed 3 percent is actually lowering rent by 3percent in real dollars. If the Fed is able to bring inflation down quickly, that’s one thing, but if inflation continues to spiral out of control for a period of time, the rent control measure as it stands will be a formula for disinvestment.

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