A pair of companies based in Bloomington and Minnetonka on Thursday filed a federal lawsuit against St. Paul, arguing the city's new rent control ordinance violates their constitutional due process and property rights.
In a 59-page complaint, attorneys for Woodstone Limited Partnership and the Lofts at Farmers Market LLC asked the court to stop the city from enforcing a 3% annual cap on residential rent hikes voters approved last fall.
Woodstone Limited Partnership owns an interest in an apartment building in St. Paul's Highland Park neighborhood, while the Lofts at Farmers Market LLC owns an apartment building in Lowertown.
The complaint lists lost revenue, as well as a lost ability to enforce leases and seek redress in court, among the harm the two companies say they have suffered as a result of the law.
"Affordable housing is a community-wide problem that property owners, like Plaintiffs, as opposed to the community at large, are being forced to subsidize and remedy," the complaint said, while arguing the law violates the Fifth Amendment.
It also argues that the ordinance violates the Fourteenth Amendment because it is not tied to inflation. Additionally, the lawsuit characterizes the city's process for property owners to seek exemptions as complicated and arbitrary, alleging that St. Paul does not have enough staff or resources to handle requests.
In all, the complaint lists six counts against the city, including alleged violations of the state constitution, and seeks a jury trial.
"The purpose of the ordinance is to create more affordable housing for people in St. Paul. This … has the opposite effect," Joseph Anthony, an attorney for the property owners, said in an interview Friday.
The St. Paul City Council, Mayor Melvin Carter and Department of Safety and Inspections Director Angie Wiese were also named as defendants.
Kamal Baker, press secretary for Carter, said the city had not been served the lawsuit as of Friday afternoon.
"As the City works to implement this ordinance in response to the will of St. Paul voters, we remain committed to supporting safe, stable and affordable housing options for all our residents," Baker said in a statement.
Landlords successfully challenged another St. Paul policy aimed at protecting tenants in federal court last year, when a 2020 law passed by the City Council to limit background screening of potential renters was deemed unconstitutional.
St. Paul's rent control ordinance is considered to be among the most stringent policies of its kind because it does not allow landlords to raise rents once a tenant moves out, does not exempt new construction and is not tied to inflation.
However, changes could be on the horizon. Carter convened a 41-person stakeholder committee earlier this year to discuss potential amendments to the law. A final report from that group is expected in the coming weeks.
