Minnesota Article

Local Housing Market in Turmoil After St. Paul Rent Control Vote

Local Housing Market in Turmoil After St. Paul Rent Control Vote

In November 2021, residents of St. Paul, Minnesota, voted to pass a rent control ballot initiative by a margin of 53 percent to 47 percent. The new ordinance will limit rent increases by three percent annually, without exemptions for inflation or new construction, making it the strictest rent control ordinance in the nation. While the effective date is not until May 2022, the ramifications of the bill were immediately felt across the city. Multiple housing developers opted to halt construction as investors pulled out from projects that were already underway, putting hundreds of new and much-needed housing units at risk.


In many geographies where artificial caps on rent exist, housing underdevelopment has resulted. Given its failed history, it comes as no surprise that the passage of rent control in St. Paul yielded immediate negative consequences.


City leaders are now desperate to find solutions as the harmful implications of the ordinance begin to materialize. St. Paul Mayor Melvin Carter III is now reconsidering the clause on the ordinance that addresses new construction. However, there is confusion around whether the bill can still be amended now that it has passed. The law prevents the City Council from making any changes to it until one year after its effective date.


Editorial board and other housing experts have weighed in…


“If a city’s housing supply can’t grow to meet demand, the natural result is that prices go up. Artificial caps then produce shortages and other distortions, such as dilapidated properties that landlords don’t have an incentive to renovate.” – Wall Street Journal Editorial Board



“What rent control won’t do is encourage builders to construct new apartments in St. Paul … High rents aren’t pleasant, but they send a signal to developers that new housing units are needed. This leads to more housing, which creates a downward pressure on prices. When government central planners keep prices artificially low, developers have less incentive to create new housing units, and small landlords have less incentive to enter the market. Limited inventories create an artificial housing shortage.” – Las Vegas Review-Journal Editorial Board



“Opponents of St. Paul’s rent control initiative warned before the vote that developers and financial investors would pull the plug on projects if the ballot measure were to pass. And that appears to be exactly what’s transpired.” ­– National Review



“We, like everybody else, are re-evaluating what—if any—future business activity we’ll be doing in St. Paul.” – Jim Stolpestad, founder of development company Exeter, Minneapolis Star-Tribune.



“I can’t [make sense of it] and that’s the problem. I looked at this when it was first proposed and I had a ton of questions on it. This rent control ordinance really didn’t consider the larger picture of what needs to be done.” – David Schultz, chair of the National Multifamily Housing Council, for KARE



“If they can invest in Nashville or St. Louis or Milwaukee where they don’t have rent control, why would they take the risk of investing $20-plus million in St. Paul and take the risk of inflation destroying their investment?” – Bob Lux, principal and founder of Alatus, Minneapolis Star-Tribune


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