St. Paul is poised to significantly weaken its rent control ordinance this spring, even as the city aims to beef up tenants' rights.

The City Council is reviewing revisions to the voter-passed rent stabilization ordinance but hopes new tenant protections will soften the blow for St. Paul's renters.

Rent stabilization, which limits rent increases to 3% a year for tenants of buildings 20 years old or older, is one of the factors blamed for the city's lack of new apartment buildings and rising rents.

Developers say banks won't loan them money to build apartment buildings that will have to limit their rent increases in the future, even if that limit wouldn't set in until the 2040s.

Now, the council is weighing the possibility of exempting all buildings that have opened after 2004 from rent control — forever.

Proponents of the change hope it will spur more construction, driving down rents by increasing supply, and say the overwhelming majority of St. Paul's apartments will still be subject to rent stabilization.

But those who support rent stabilization wonder if St. Paul's construction slump might be attributable to macroeconomic factors beyond the capital city.

The story so far

St. Paul's voters passed a rent stabilization referendum in 2021, and it took effect in May 2022.

Almost right away, the City Council started chipping away at the controls. By September 2022, St. Paul had softened the ordinance to let buildings newer than 20 years old out of rent control.

Minneapolis also voted on a rent control issue in 2021, with voters backing a charter amendment to open up a study of the issue. Minneapolis formed a work group that proposed two frameworks for rent stabilization, but after a 2023 report from city staff declared rent control would limit new apartment construction, those proposals have languished.

St. Paul Mayor Melvin Carter voiced tepid support for the ballot measure in the final days of the campaign but has since become one of the most vocal rent control critics at City Hall.

Carter supported weakening rent stabilization in 2022 by exempting new buildings for 20 years and is now pressing the City Council to exempt any building built since 2004 from rent control.

What will help renters?

A majority of St. Paulites rent their homes, according to the city.

But fewer new apartments are being built, with construction slowing down every year since 2020, according to HousingLink.

Carter and other proponents of softening rent control hope exempting new buildings from rent stabilization would mean more new buildings are developed and that the increase in supply would mean less competition for each unit, pushing landlords to decrease rents.

But not everyone is convinced the supply and demand of Economics 101 will play out that way in the real world.

Tram Hoang, a key organizer in the 2021 rent stabilization referendum who now works with progressive think tank PolicyLink, said during a March 26 presentation to the Housing and Redevelopment Authority that the end of rent control in other cities did not unleash a wave of new apartments.

Hoang also presented a nationwide survey of developers who cited lingering COVID-era supply-chain problems and the high cost of labor as the reason they were building less.

Tariffs pushed by President Donald Trump could further increase the cost of construction materials.

Tenant protections

New rights for renters are the carrot for progressives offered by Carter and Council President Rebecca Noecker, in exchange for softening rent stabilization.

Landlords sued to block tenant-protection ordinances in 2021, the last time St. Paul tried to pass these rules, and the city backed down after a judge issued a preliminary injunction favoring landlords.

Some provisions in those 2021 rules, including giving tenants advance notice when a building will be sold, became state law in 2024.

St. Paul is also proposing a limit on security deposits to one month's rent — already the law in Minneapolis — and protection for renters trying to use their rights from retaliation from landlords.

"Weakening rent stabilization will not address the need for more deeply affordable housing," said Council Vice President Hwa Jeong Kim in a statement. "We also have an opportunity to pass robust tenant protections, another necessary tool for long term housing stability which ensures vitality for our residents and city."

The City Council expects to vote on softening rent control and strengthening tenant protections at a May 7 meeting.