The case for a St. Paul rent stabilization ordinance

By Joe Krivit

In 2015, a powerful area real estate developer purchased an apartment complex in Richfield. The new owner rebranded the property, “Concierge,” raised rents and instituted income- and credit-score requirements for new tenants. For—at the time—current tenants of the building, this meant eviction.

Nearly 670 households were displaced as a result of this “up-marketing.” One hundred ninety-five of the tenants filed a class-action lawsuit and eventually won a $605,000 settlement in federal court. In reality, this amounted to about $1,600 in recovery per tenant after legal fees were distributed. That was little more than the current monthly rent at the Concierge apartments for a one-bedroom apartment. (The apartment complex is now owned by a California based holding company.)

Under a proposed rent stabilization ballot initiative by the group Housing Equity Now Saint Paul (or HENS as they colloquially call themselves), the egregious example of gentrification at the Concierge would not have occurred.

HENS is seeking to garner enough petition signatures to place the initiative in front of St. Paul voters in the 2021 municipal election in November that would cap rent increases at 3 to 5 percent year-over -year for all St. Paul properties (the organization is still deciding what the exact percentage will be).

To place the rent stabilization issue on the ballot, HENS will need the endorsement of 8 percent of the number of registered St. Paul voters who voted in the previous mayoral election, or about 5,000 people. If the petition is successful and voters approve the ballot initiative in November, it would be the most progressive protection against the displacement caused by “free market” housing in the state of Minnesota. It would put St. Paul on par with peers like New York City, Los Angeles, Oakland and Washington, D.C.

Critics of the initiative—and you can bet there will be plenty who are backed by the city’s powerful real estate developers—will cite the “bad economics” of price controls that they say will limit supply and lead to urban blight.

One need not look farther than our current housing crisis to see that it is not market controls that are the problem but the free market for housing itself. Their error comes from believing that the housing market operates as a single, monolithic market, when in fact it operates as a handful of markets with different price brackets.

While the national and regional housing market has been booming for high-rent and high-margin luxury apartments that are suitable for middle class renters and families, the supply of housing that is 30 percent or less of income for a working class renter or family has shrunk considerably.

The 2019 Minnesota State of the State’s Housing Report found that 25 percent of renters in Ramsey County were severely housing burdened, paying more than 50 percent of their income in rent. The same report showed that while rent has increased an average of 9 percent in the county from 2010 to 2017, renters’ incomes have actually decreased by 10 percent during the same period. The consequences of this have never been more apparent than in the shameful rise in the number of homeless encampments in the Twin Cities, whose residents are disproportionately people of color and the disabled.

However, critics will further insist that such a rent stabilization policy will discourage future real estate investments in St. Paul. Another way to think about this proposed ordinance is that it will clear out the city of price gouging landlords who are placing their bottom lines ahead of the livelihoods of their tenants and the health of our communities.

A 3 to 5 percent increase in rents still allows for a landlord to profit, but it asks for that profitability to be balanced with the affordability of the essential human right of housing.

Furthermore, any gap in the supply of housing that is caused by this market control should only increase the call for the city and county to step in to provide more public housing, a conversation that will certainly be welcome among housing advocates.

Privileged St. Paul residents are quick to demonstrate their philosophy of progressivism. I saw no shortage of “Black Lives Matter” lawn signs in the wake of George Floyd’s death this past summer. The time has never been more urgent than now for us to put our money where our mouths are: Sign the HENS petition and vote “yes” on rent stabilization in November.

Joe Krivit, a secondary social studies teacher for an international school, is a St. Anthony Park resident.

2 Responses

  1. Dave

    I am a small landlord in St. Paul. What these “progressive ” people do not understand is the crazy high property taxes we pay. If you think the City will in turn work with Ramsey Counts for a tax break, think again. They can’t spend your money fast enough!

  2. Liam JT

    Saint Paul is becoming a slum. Rent control will increase the problem. It’s counterintuitive to what people would think but let me break it down.
    1. Most landlords are ma and pa types running on very small margins. It’s simple math. Rent – Mortgage- upkeep = very little margins.
    a. because of this, it is hard to provide upkeep, and housing will stay in poor conditions.
    2. The housing stock in Saint Paul is around 100 years old, so upkeep is very expensive. I paid 500$ for an hours time of a plumber. That would be all the margin of profit on a single family house for the rent/mortgage ratio. Think about everything else, countertops, leaking sinks/ toilets, floor damage, etc. With tight margins there is no reason to re-invest in properties.
    3. Most people that write these Op/Eds have zero experience as a landlord and they think that landlords are vultures- not true, landlords may work two jobs for years to get the capitol together to take a risk to buy an investment property- an angry tenet throws cement in your drains- poof, five years of hard work and heartache gone.
    4. Unfortunately, the truth is there are many many many people that are not good people and that want to take advantage of anyone, especially landlords because they think they are rich. I recommend moving from super cushy Saint Anthony Park to the North End/ Frogtown. After a year there you will understand how scary people can be. Do you want them to rent your property? Do you want them to sell meth from your property? Saint Anthony Park is far from reality- far far from it.
    5. Please please please- if you are going write Op-Eds, interview your landlords, friends that are landlords, go for walks in the impoverished neighborhoods, read “Evicted,” try to do handiwork yourselves such as snaking a sewage drain, installing a toilet, fixing a washing machine, etc. Look up the prices for these items.
    6. Find out how much it costs to evict someone, my friend payed $8000 to a lawyer.

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