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.