Fixed cap of 3%, exceptions for new construction among the proposals of the rent stabilization group

St. Paul’s Rent Stabilization Stakeholder Group presented its final recommendations to City Council on Wednesday on how to proceed with the ballot measure approved by voters in November.

The wording of this ballot question created an ordinance that caps annual rent increases at 3% whether or not there is a change in occupancy, but allows city council to create a process for landlords to apply for a exemption “based on the right to a reasonable return on investment.

The ordinance went into effect in its original form on May 5, but in February Mayor Melvin Carter announced he was convening the stakeholder group to refine the city’s approach to rent stabilization.

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At Wednesday’s meeting, University of Minnesota professor Edward Goetz of the Center for Urban and Regional Affairs summarized the results of 15 meetings over 16 weeks among the task force’s 39 members: a mix of landlords , tenants, developers and representatives of community organizations.

Goetz prefaced the presentation by saying the group came together knowing that a rent stabilization order would go into effect, but not in the exact form that was passed by more than 3,000 votes.

The recommendations presented on Wednesday maintained the 3% cap on rent increases, but allow for “partial vacancy release”, a provision that allows landlords to impose rent increases above the 3% cap – with restrictions upper limits – when there is a new vacancy.

Worried that the recommendation to partially remove vacancy control could incentivize evictions, the task force also called on city council to enshrine protections against evictions for just cause for tenants.

Provisions have been included to address concerns about the impact a rent cap could have on the bottom line of developers and investors, such as continued rent stabilization to allow for a reasonable rate of return and continued exemption from 15 years for new constructions. The task force also suggested that landlords should be able to cash in rent increases if their annual increases are below the 3% cap.

Goetz said the recommendations were intended to provide a framework for the final, more detailed ordinance that city council would ultimately vote on.

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Following Goetz’s presentation and some remarks from Stakeholder Group Co-Chairs Tony Sanneh and Phillip Cryan, the Board opened the floor for public comment.

The vast majority of those on the podium expressed their anger at the city council’s dismantling of voters’ will: a 3% rent cap with no exceptions. Others said rent stabilization in any form would discourage development in a city that desperately needs more housing.

Council took no action on the recommendations at Wednesday’s hearing, and City Council President Amy Brendmoen said the matter would be discussed in more detail at future meetings.

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