Consider these three apparently competing truths:
- St. Paul voters approved the most stringent rent control ordinance in the nation this past November.
- Developers who previously saw opportunity in St. Paul are now threatening to pull out of the state’s capital city and move their projects — and accompanying tax revenue — elsewhere.
- Rent stabilization advocates are calling the measure, which passed by a comfortable 6-point margin, “part of our journey together to achieve housing justice in St. Paul,” according to Tram Hoang, campaign manager of the Keep St. Paul Home ballot initiative.
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.
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 [email protected]. 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.
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.
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.”
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.
- Renters already have protections under the federal Fair Housing Act, enacted in 1968. The fair housing laws administered by the city’s Department of Human Rights and Equal Economic Opportunity (HREEO) forbid discrimination “on the basis of race, gender or other legally protected identity,” Jalali says. Renters can file complaints through her Ward 4 office or the HREEO: 651-266-8996 or [email protected].
- Housing Equity Now St. Paul, the engine that drove the ballot initiative, has a web page where renters can report rent hikes of more than 3 percent. Home Line is sending renters to that site as well.
- The Minnesota Attorney General’s office provides digital, printable and downloadable versions of Landlords and Tenants: Rights and Responsibilities. Or users may request hard-copy booklets. Home Line also sells a landlords’ guide to Minnesota law.
‘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.
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 couldn’t 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 people’s 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.