In first test, St. Paul housing rent control has limited impact

St. Paul’s City Council fended off challenges from raising rents above a three percent limit set by voters last fall, allowing increases to more than double go forward.

In Wednesday’s 6-0 decision (council chairwoman Amy Brendmoen was absent), council upheld an administrative finding that an 8% rent increase was warranted for a tenant in Union Flats, a building in Midway district belonging to the developer Dominium.

The council also upheld an administrative finding allowing a 6.1% increase — reducing a proposed 8% hike — for a tenant at Dominium’s Cambric Senior Apartments, near the Metro State University campus on the city’s east side.

Cambric tenant Katherine Banbury called it a small victory as she addressed City Council on Wednesday.

“Having used the rent stabilization appeals process, I am heartened that tenants like me have legal recourse, and I am all the more determined to make the process stronger and more accessible to all tenants,” she said.

Dominium said Thursday it would respect the council’s decision for other tenants in that building.

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The two appellants still ended up paying double the cap proposed in the ballot voted last year.

That’s because the city has included a series of exemptions, accounting for inflation, landlords’ return on investment, capital improvements and other financial factors that allow landlords to increase rents by more. 3% per year.

The city’s process also allows landlords to “self-certify” the need for rent increases of up to 8% and file formal requests with the city for rent increases of 8-12%.

The two St. Paul tenants who appealed, represented by the Housing Justice Center, did so against “self-certified” increases imposed by Dominium.

The company has a wide range of accommodation in the Twin Cities, many of which benefit from tax subsidies to keep them affordable. Dominium argued in administrative hearings that its grants and development agreements had built-in rent escalation controls and that city contracts replaced the rent control ordinance.

The city did not address the issue, but said the rent control process in place allowed for the increases.

The administrative recommendation, and council’s ratification in both cases, sets a key precedent for the fate of the rent control measure, establishing broad power for landlords to raise rents.

This is in addition to the exemption for new housing, retroactive to decades, that the city added to the rent control ordinance in recent weeks. The city will also allow landlords to raise rents for vacant units by up to eight percent plus inflation.

Rent control advocates like St. Paul City Council member Mitra Jalali have taken the reduction in the Cambric case as a sign that at least some control can be imposed.

“These increases have been analyzed; they have been audited. And at the end of the day, we see a lower increase than it would be in a pure, unregulated situation,” Jalali said. “I think this self-certification process is problematic at times, allowing for a reasonable rate of return. people. And I think we see that in the way it plays out.

It may also have even broader implications, as Minneapolis is still figuring out how to define and implement a rent control measure that voters also approved last year.

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