(FOX 9) – Voters in Minneapolis and St. Paul will decide in November whether the two cities should restrict rent increases, though the proposals are drastically different.
Both ballot questions come in response to a nationwide housing shortage. But while supporters say the proposals will protect tenants from price spikes, critics argue they will only worsen the existing housing crisis.
What’s on the ballot?
Under Minnesota law, only voters can approve rent control measures.
In Minneapolis, a yes vote on Question 3 will change the city’s charter and allow city council to order price controls in the future, either by vote or by submitting a specific proposal to voters. The language of authorization does not cap rent increases at a certain percentage.
The constituents of St. Paul are considering a much more specific plan. A yes vote on Question 1 will prohibit landlords from increasing rents by more than 3% over a 12-month period, whether or not there is a change in occupancy. The owners could apply for an exemption.
How did we get here?
Minnesota will run out of 40,000 housing units over the next five years due to a growing population coupled with a lack of construction following the 2008 crash, the Minnesota Housing Finance Agency estimated.
The Twin Cities region now has one of the lowest vacancy rates among the largest metropolitan areas in the United States, said Jonathan Schroeder, a researcher at the Institute for Social Research and Data Innovation. ‘University of Minnesota which analyzed US Census data.
Will rent control help?
Advocates of rent control say some landlords have taken advantage of low vacancy rates with big rent increases. Price controls will provide a safety net for low-income tenants whose lives can be turned upside down by a rent increase, they say.
“If you are a tenant and you have no idea what will happen to you in 6 months – your rent could go up by $ 1,000 because nothing is stopping it – then a good policy is a good policy for someone. one who wants security, âsaid Tram Hoang, campaign manager for Keep St. Paul Home, the group pushing St. Paul’s ballot proposal.
But critics – including Minnesota homeowners, realtors and the North Central States Regional Carpenters Council – say the price controls will undo development and exacerbate the existing housing shortage.
âSome purchase contracts are on hold until Nov. 3 (election day),â said Cecil Smith, general manager of Minnesota Multi-Housing homeowners group. “There are purchase contracts which contain written clauses that if these measures are adopted, the purchase contract is null and void.”
What does the research say?
Researchers at the Center for Urban and Regional Affairs at the University of Minnesota found that 200 US cities and two states have adopted some form of rent stabilization policy.
Many municipalities that have policies use the Consumer Price Index to set their rent increase caps. Berkeley, California has one of the most restrictive policies, at 65% of the CPI. Oregon has a more relaxed policy, with the CPI over 7 percent, the researchers found.
Overall, the policies help keep rent levels below the market and price increases more moderate, according to the study. The researchers also determined that rent control policies generally do not have a negative impact on new construction.
But the researchers said most cities have exemptions for new construction, allowing developers to avoid price controls for a set period of time or forever. The ordinance proposed by St. Paul does not include a specific exemption for new construction and does not take inflation into account.
Ordinance of St. Paul
While St. Paul’s proposal directs the city to put in place a process to request exemptions, critics have said that the lack of initial exemptions on high-income housing, vacant housing and new construction is “draconian”.
“The problem is, what is in front of the constituents of St. Paul is a very brutal instrument that will seriously damage the prospects for housing,” Council member Jane Prince said at a press conference this week.
Supporters of St. Paul’s rent control proposal have defended their decision to include a hard cap of 3%, saying it would be easier to understand for tenants and landlords than a benchmark change. inflation. Hoang likened the 3% cap to a fixed rate mortgage, which she called one of the best forms of housing price stabilization.
âIt’s something we’ve learned from other cities,â she said. âImplementation can be difficult when the numbers are constantly changing. “
Hoang said the new price controls would affect few homeowners. Most have raised rents to less than 3% per year over the past two decades, she said.
Missing campaign finance reports
Due to Minnesota’s lax campaign finance timelines and lack of regulatory bite, it’s unclear how much money is being spent on ballot matters in Minneapolis and St. Paul, even though political groups cover both. courier towns.
Rent control supporters have two political committees called Home To Stay Mpls and Keep St. Paul Home. Opponents formed under the banner of the Sensible Housing Ballot Committee, a political group active in Minneapolis and St. Paul.
Home To Stay Mpls and Sensible Housing Ballot Committee registered with Hennepin County after the most recent reporting deadline, meaning they won’t need to file reports until October 26 – a week after on polling day, said Ginny Gelms, county electoral officer.
In St. Paul, the Sensible Housing Ballot Committee brought in just $ 18,000 from a single donor, the state’s largest homeowner group – and that was two months ago. Keep St. Paul Home said it raised and spent approximately $ 60,000 before Labor Day. The next report in Ramsey County is due on October 19.
At this week’s press conference, the Reasonable Housing Voting Committee declined to say how much it plans to spend on opposition to polling questions.
Local political committees don’t have to file a case with the state this year, but that changes in 2023 for groups operating in Hennepin County. Transparency will increase as groups must file five times that year under new state law, said Jeff Sigurdson, executive director of the Minnesota Campaign Finance Board.