Rent Stabilization has St. Paul Renters and Landlords Wondering: What’s Next?

Consider these three apparently competing truths:

A prevailing assumption behind these realities — that what is good for renters, who now constitute a majority of St. Paul residents, is necessarily bad for the business of landlords — has left people on all sides of the issue with questions and frustrations, and turned rent stabilization into a zero-sum game.

Tenants wonder whether landlords can jack up their rents before the new 3 percent rent cap takes effect. Landlords ask if the cap will apply to buildings they have recently updated and renovated. Everyone wants clarity on when the ordinance will take effect, and emotions — from anger and fear to hope and optimism — are running high.

Contact Ward 4 City Councilmember Mitra Jalali at 651-266-8640 or ward4@ci.stpaul.mn.us.

Ward 4 City Councilmember Mitra Jalali, a vocal and visible advocate of the rent stabilization ordinance, is directing her constituents to a new city hotline and email address: 651-266-8553 and rent-stabilization@ci.stpaul.mn.us. An informational website, removed shortly after the election, will be available again soon, according to city Communications Director Peter Leggett.

Jalali was the youngest person, only renter and only woman of color when she was elected to the St. Paul City Council in fall 2018. She has been a strong, consistent voice on behalf of housing equity, calling rent stabilization “a policy designed to center and address the experiences of low-wealth renters, overwhelmingly renters of color, who are experiencing exploitative and extractive rent hikes.”

Being pro-renter, however, need not equate to being anti-landlord. Given the amount of new construction and development in her ward, Jalali says she is “well aware of realities [that] developers and investors are navigating.” The councilmember urges all Ward 4 constituents — homeowners, renters and landlords alike — to contact her office with questions and concerns.

District council offices want more information, too. “I need to know what I’m supposed to tell people,” says an executive director of one of the city’s 17 district councils, which channel neighborhood feedback to the City Council. “If a renter signs a lease next week and their rent went up 10 percent and that proves to be illegal, it’s going to be a tough situation.”

What qualifies as ‘rent’?

Words matter: Those who opposed the rental ordinance tend to call it “rent control,” while advocates reflect the actual language of Chapter 193A of the Legislative Code, which calls the measure “rent stabilization.”

For Casey Gordon, 39, a renter who lives on the northern edge of the prosperous, largely white, primarily homeowner-occupied Macalester-Groveland neighborhood, the ballot initiative was simply the next right step.

Gordon, who is white and has never owned her own home, moved to Mac-Groveland from Harlem. Having seen her friends benefit from rent control during her 15 years in New York City, she says “it seemed really easy” to vote for rent stabilization, even though critics — and some who voted for the measure — were uneasy about a mandate that doesn’t exempt new properties or consider inflation in its rental cap.

Renter Casey Gordon lived in a rent-stabilized city for 15 years and is “excited to see what can happen” from St. Paul’s new rent stabilization measure.

She views the ordinance less as a “silver bullet” — the single answer to the persistent shortfall of safe, affordable and dignified housing options in St. Paul — than as a citizen-driven action. More than 9,000 signatures put the initiative on the November ballot, and almost 53 percent of St. Paul voters filled in the “yes” box on November 2. “I kept thinking about the oppression of perfectionism,” says Gordon, who pays $965 for a one-bedroom apartment, plus laundry fees. “Waiting for something perfect means that we might never take action on affordable housing.”

Like other renters in the city, Gordon is holding her breath between now and May, when the city officially will cap rent increases at 3 percent, including when a unit turns over to new tenants. Her building on Grand Avenue just sold, and the new owners charged Gordon a fee to fix her bathroom sink. “I’d never had that before,” she says. Being on a month-to-month lease makes her feel vulnerable to a rent increase. So, she decided to “keep my head down” and not dispute the charge.

One attorney at Home Line, a nonprofit tenant advocacy organization based in Bloomington, is concerned about such fees. Renters in both St. Paul and Minneapolis — where a vote to authorize rent control passed in November by a similar margin — are calling Home Line to report a growing number of landlord fees. “Fees will become the new way to raise rents,” says the attorney, who asked not to be named.

He notes the difference between an “optional” fee, for pets or use of a garage, and “non-optional” fees, for signing or renewing a lease or because it’s January: “I’m not making that up,” the attorney says. “It’s basically just rent. They’re just putting it in a different category.”

Landlord queries and confusion

I interface with over 250 landlords in my community relations role at the University of St. Thomas. Some rent a house or two to college students as passive income; others make their living by renting a variety of properties to families or other adults.

The Saint Paul Area Chamber of Commerce is among the entities that opposed rent stabilization.

A number of landlords jumped to answer my recent query: What questions do you have about rent stabilization for city officials?

  • “Wouldn’t a rent subsidy to underprivileged renters be more effective?”
  • “How does this ordinance address the significant inflationary pressures we are facing as a community, state and country?”
  • “How does this affect the leases that tenants have already signed for next year?”
  • “If I have a two-year lease with tenants, can I increase rent by 6 percent after the second year expires?”
  • “Can we exclude utilities and property taxes and let those adjust with the actual costs incurred?”
  • “Are we turning in our leases? How will the city know what our rents are?”
  • “Since landlords are limited to a 3 percent rise in rent, would the city consider limiting their property tax rate increases to 3 percent?”
  • “What will the waiver process look like?”
  • “Could the city provide benchmark guidelines that will establish what improvements automatically qualify for exception to the cap? This would encourage making improvements and upgrades to the property.”

I brought one of the most common concerns I’ve heard — Won’t this rent cap hurt small landlords who have tried to keep tenants by keeping rents low? — to a “We Won! What Now?” webinar sponsored by Housing Equity Now St. Paul on November 17.

Margaret Kaplan, president of the Housing Justice Center in St. Paul, promised “engagement with small-scale landlords.” She urged attendees to differentiate between the so-called mom-and-pop owners — people like Danette Lincoln, a Merriam Park resident who rents her two duplexes at below-market rates and pays the heat for her tenants — and “the large-scale REITs [real estate investment trusts] who control a lot of the single-family housing stock.”

Renters may call 612-728-5767 for free legal advice.

The Home Line attorney cautions that keeping rents low often is about more than altruism. Landlords “are doing that in part because it’s a good business decision,” he says. “Turnover is an enemy for landlords,” costing them, he estimates, the equivalent of one month’s rent. “There’s nothing more valuable to a landlord than a good tenant.”

Councilmember Jalali offers reassurances and resources to stakeholders while the city figures out a process for how this significant change will work.

‘We all do better when we all do better’

During a recent public conversation with Dr. Yohuru Williams hosted by the University of St. Thomas, where I work, St. Paul Mayor Melvin Carter referenced “a city of great opportunity and great prosperity.” He also warned of a city of “enormous, embarrassing, pervasive disparities. We have folks who live in penthouses and folks who live in the shadows of these tall buildings being built.”

The mayor quoted the late Senator Paul Wellstone: “We all do better when all do better.” St. Paul resident Dan Fowlds, a real estate broker and mid-sized landlord, likes that mantra, too, although it didn’t persuade him to vote for rent stabilization.

Design by Amy Rice

As a Democrat who supports progressive policies and “gave a lot of money to Bernie Sanders,” Fowlds says it pained him to vote against an ordinance that his party was pushing. But he couldnt square it with the type of housing provider he tries to be, one who cares about his tenants and often deals with maintenance requests on weekends. Fowlds business model includes buying and renovating “sad” buildings, raising rent but improving peoples living conditions.

Concerns about “debt service coverage ratios” and banks being less willing to lend money for projects in St. Paul prompted Fowlds to meet with rent stabilization advocates prior to the November vote. “You’ll just work through the exemption process” for unexpected expenses such as property tax hikes and certain capital improvements, he says they told him.

“Maybe,” Fowlds says. “We’ll see how that works.”

For Councilmember Jalali, the strongest consideration is “advancing racial equity in a housing system that has been so steeped in discrimination, during a time in which people are hungry for meaningful systemic change.” Her work on tenant protection policies shows her that victimized renters often are afraid to speak up.

Leggett, the city’s communications director, says the administration is “encouraged that community members are eager to engage and help answer critical questions” and will be commissioning a group to move rent stabilization forward.



About Amy Gage

Amy Gage is director of neighborhood and community relations at the University of St. Thomas and a member of the Union Park District Council board. A former journalist, she writes a blog about women and aging: https://themiddlestages.com

9 thoughts on “Rent Stabilization has St. Paul Renters and Landlords Wondering: What’s Next?

  1. Eric AnondsonEric Anondson

    It will be fascinating to see if car storage gets shifted off too a fee and not included in rent.

  2. Mike

    I ‘ve seen the “exception process” cited as the policies answer to many valid questions about with this super strict policy how landlords can cope given the lack of an inflation modifier and the low ceiling- what happens though when thousands of landlords apply to the city for this relief?

    St paul has almost 60,000 renter households – thats almost 60,000 homes and apartments that are potentially triggers to request relieft.

    Imagine the owner of a 8 plex with leases expiring throught the year – will each lease expiration require an exemption request? what will the city turn around time be? will you have to apply 2-3 months before it expires for an exemption? Will the city take a yes/no approach or will they set their own acceptable limits? is the city staffed to process thousands of these?

    I don’t see how this process can be held out as the answer when there has been so little work on defining how it will work or who will execute it…

    1. Joe

      There’s also the issue of sophistication for navigating the exemption process. Small landlords who are less likely to deal with maintenance or upgrades that qualify for exemptions will be unfamiliar with the process, compared to larger landlords that routinely apply for exemptions. I would have thought that, of all people, affordable housing advocates would have been sensitive to the complexities of navigating bureaucratic processes.

  3. Bill LindekeBill LindekeModerator  

    For the landlord / renter dynamic, there are certainly a lot of questions about how an inflexible 3% cap will play out: default 3% increases, fees for many more things, etc., not to mention long-term investment impacts. I think a lot of problems could be avoided if the City Council adds a vacancy decontrol provision, along with taking another stab at strengthening renter protections in the city.

    To my mind, the development / new construction question is a completely separate issue from that negotiation and should not be lumped in to this conversation. There are questions about how rent control will impact already existing apartments in Saint Paul, but there’s a completely different set of questions about how we get new apartments that don’t yet exist built in Saint Paul. This distinction is important because the people involved, and the ways that they look at decision making, are very different. Daniel Herriges wrote up a good explainer of why this is a while back that I recommend (https://www.strongtowns.org/journal/2021/9/2/landlords-are-not-developers-and-vice-versa). Vacancy rates will probably tighten in the city as new apartments stop coming online, and that will likely make these existing tensions between landlords and renters worse.

  4. CL

    As an owner of a 4 plex in Mac Groveland whom had 4 tenant’s on month to month leases we’ve offered all 4 a year lease. Parking in our 4 car garage, trash, heat, water and sewage, storage in the basement are now all additional expenses for the renters. If all 4 don’t sign we had a bid for a condo conversion and we’ll do that. We also got the leases to be aligned and if any year in the future if we don’t get 4 leases signed we’ll do the condo conversions at that point. If we end up doing the condo conversions we’ll do a 1039 exchange and buy investment properties outside of st paul

    1. Bill LindekeBill Lindeke

      This sounds a lot like what the guy who owns the duplex on my block told me. He is going to have renters start paying for heat and other things…

  5. CL

    Sorry, 1031 exchange. And I am quite curious how the property tax levy battles will go down in future years. Most of my friends are homeowners in St Paul and they are all Democrats (as am I) and all are very concerned about what the trajectory for their property taxes will look like. Someone will need to pay for these extremist activist policies, and I doubt HENS will step up to fill budget gaps. The new projects aren’t just trickier now, they are all done. There won’t be a private rental project done in STP full stop. This is going to blow a giant hole in the cities budget, and either bankrupt STP or make for some excruciating decisions for city leaders. While they are downsizing St Paul schools, do we consider if we want to be in the school business at all? Police? Fire? Dirt roads instead of paved ones? Get out of having unionized city employees? I missed the part where St Paul was a rich city filled with Scrooge-like landlords. It isn’t, that city is just west of St. Paul 🙂
    This policy just created a big list of problems fixing something that wasn’t a problem (1.8% annual rent appreciation citywide over the last 20 years without dilapidated buildings everywhere is pretty close to a market in a fair equilibrium)
    It’s really going to be harmful for the city, most of all for the poorer renters whom will see 3% annual increases and also need to pay for heat, water, trash, etc.

  6. Ian Gaida

    As a long-time renter (albeit not in St Paul) a lot of the concerns/criticisms from landlords ring hollow for me, as their threats are either things they can do regardless like separate charges for utilities, or effect renters to an equal if not greater degree, like inflation. Granted I’m not well versed in the landlord culture of St Paul, but I think the idea that “hey others are doing it, why can’t we?” would take over sooner or later, with or without this ordinance. Most if not all of my utilities are already charged separately, garages optional at ~$50/mo. and rent still goes up at about 5-7% a year. So all else equal, that guarantee would entice me to live in St Paul over other cities. Assuming I understand supply and demand correctly, builders are gonna build where people want to live, and in about 6 months when I’m looking to move, St Paul will definitely be high on my list.

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