Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.
The St. Paul City Council is moving in the right direction on necessary modifications to the rent control ordinance approved last fall.
Last week, council members sensibly approved a provision allowing landlords to raise rents by 8% plus inflation if a tenant moves out or is evicted with just cause.
The unanimously approved amendment replaced a previous plan that would have permitted landlords to accumulate and defer rent increases. It also would have allowed unlimited rent increases if tenants move or are evicted — a policy experts call "vacancy decontrol." The council ultimately landed on the 8%-plus-inflation limit as a compromise.
"We added vacancy decontrol as a mechanism … to incentivize reinvestment in our properties," Council President Amy Brendmoen said. "But what we heard loud and clear was that folks were concerned that we were giving a blank check with an untethered vacancy decontrol."
Elected officials, opponents and supporters of rent control have debated the policy's details since 53% of St. Paul voters approved rent limits in November. Rent control supporters have argued against changes that they believe reverse what voters approved. Opponents have contended that the ordinance adopted via the ballot was too restrictive and would be more harmful than helpful in keeping rents affordable.
The Star Tribune Editorial Board opposed the original ballot language, arguing that research has shown that strict rent control fails to achieve the affordability goal. Price controls tend to distort the market and create incentives for landlords to sell off rental properties or convert them to market-rate condos — further reducing the inventory of reasonably priced rentals.
A 3% cap might have benefited some St. Paul renters in the short term, but not over time if demand for rental units outpaced supply.
It's important to note that St. Paul city leaders will soon consider a mayoral budget request to increase the property tax levy by 15% next year. That makes it especially unreasonable for rental property owners to be limited to 3% rent increases.
It was evident in the weeks after the vote that the policy was more of a detriment than a positive for the city's rental market. Some rental housing developers either backed out of projects or put building plans on hold. Some landlords raised rents preemptively, while others sought exemptions to the cap.
The 8%-plus-inflation change is certainly better than allowing the 3% limit to stand; council members should support it when they take a final vote this week.
City leaders should also adopt other modifications to the ordinance that would make it less restrictive for developers and landlords — including an amendment that would exempt new construction from the rent cap for 20 years.
At this point, the city's goal should be to make St. Paul's rent control policy something that both renters and landlords can live with.