Reject efforts to add rent control
Opinion editor’s note: The Star Tribune editorial board operates separately from the newsroom, and no editor or reporter was involved in the approval process.
Just over half of the households in Minneapolis and St. Paul pay rent. Although rent increases have risen slightly for most of them for years, low-income tenants have faced larger jumps both in percentage terms (sometimes blatantly, anecdotally) and in terms of size. proportion of their income growth. Economic and racial equity, especially in recent years, has become a matter of intense concern. Not to mention the fact that inflation in the United States is accelerating.
In this environment come questions of the ballot in the two cities paving the way for limits on the amount of rents that can increase. Considering the above factors, the idea may sound appealing. Nonetheless, voters should reject both initiatives – in St. Paul because the ballot question tells voters exactly what it would do, and that’s worrying; in Minneapolis because it isn’t, which is worrying; and in both cities because any short-term benefits are likely to be undermined in the long term by broader economic forces.
Before continuing, a few words on the language. Depending on who is speaking, you will hear proposals described – for both historical and marketing reasons – as seeking either stability of rents or control of rents. Stability for tenants is indeed the aspiration, but control is the means to pursue it. The latter term applies regardless of the outcome, so it is the one the Editorial Board will use in this discussion.
Plus, a bit of background. Economists have long considered rent control to be one of the least effective public policies. Simply put, this discourages investment, resulting in less new rental housing where it is needed most and less maintenance for existing units. It encourages landlords to convert rental housing into owner-occupied housing. It is a market distortion. It’s friction.
The biggest horror stories stem from strict rent control policies that were long repealed. Those implemented across the country in recent years have been more lenient. This second wave often caps increases based on the Consumer Price Index plus a generous cushion, with exemptions for new or newer construction, and with allowances for base rent on housing that need to be reset to rates. of the market when they are renewed.
St. Paul’s proposal could be described as a third wave in reverse. It imposes a strict annual limit of 3% on all rent increases, regardless of inflation. It does not exempt new construction from annual caps and does not allow resets.
Is such a policy really necessary in the Twin Cities? Advocates are keen to say that a 3% limit would not affect most landlords, whose typical rent increases have remained below that limit. They say the policy is designed to help tenants least able to absorb rent increases, including those under the umbrella term BIPOC – Blacks, Aboriginals and people of color.
In this regard, the information available to voters is imperfect. University of Minnesota’s Center for Urban and Regional Affairs (CURA) report, commissioned by Minneapolis City Council, finds members of groups advocates seek to help have indeed faced cumulative rent increases higher, but it does not detail the data, and voters might infer that income is as much at issue as rents. Either way, that’s the Minneapolis data, and St. Paul voters should extrapolate.
The CURA report also provides a comprehensive overview suggesting more nuance than is generally assumed regarding the effects of rent control policies. Nonetheless, he acknowledges “a considerable debate in the empirical literature on whether the majority of the benefits of rent stabilization go to the most needy households”.
The number of communities with rent control policies in the United States is approaching 200. Advocates for St. Paul say they have developed a proposal that learns from shortcomings elsewhere. Yet if reverting to strict policies that seem more likely to have consequences is really what it takes for rent control to work effectively, residents of St. Paul should ask themselves if they really want to be the peak of this experience.
Minneapolis’ proposal differs from St. Paul’s in that it only asks permission from city council to pursue a policy of rent control. If approved, voters may or may not have another chance to vote directly, an aspect of the charter amendment that may prompt legal action. (The reason rent control is on the ballots is a Minnesota law requiring a city-wide vote in a general election before implementation.)
It is possible that the end result in Minneapolis will be less aggressive than the proposal in St. Paul. However, advocates say they would push for identical policies. Either way, it’s hard to imagine how the Twin Cities could benefit from disparate rent caps, or why such policies in central cities wouldn’t push investment to suburbs that don’t.
In addition, the two cities are expected to put in place structures to enforce any new rent policy and allow landlords to appeal for relief. In either case, this language will come later.
It’s reasonable to look at the disparities in housing affordability and ask: if it’s not rent control, then what? Basically, rents are a matter of supply and demand. Simply put, the Twin Cities region needs more housing supply, and rent control is a policy that defies that.
Rent control is the only ballot initiative this year for voters in St. Paul. For Minneapolis voters, this is one of three ballot questions, each proposing an amendment to the city’s charter. The editorial board previously recommended that Minneapolitans approve a charter amendment on the structure of municipal government and reject one regarding the structure of public safety efforts. Endorsements for the mayor, city council and other races will appear in the coming days. All board approvals are collected at startribune.com/package-opinion-endorsements.
The precise voting language for questions on rent is as follows:
Saint-Paul (City Question 1)
Whether or not to adopt a residential rent stabilization order
Should the City adopt the draft ordinance limiting rent increases? The ordinance limits the increase in residential rents to a maximum of 3% over a 12-month period, whether or not there is a change in occupancy. The ordinance also directs the City to create a process for homeowners to request an exception to the 3% limit based on the right to a reasonable return on investment. A “yes” is a vote in favor of limiting rent increases. A “no” is a vote against limiting rent increases.
Minneapolis (City Question 3)
Authorization of the city council to issue a rent control ordinance
Should the City of Minneapolis Charter be amended to authorize City Council to regulate rents on private residential properties in the City of Minneapolis, the general nature of the changes being noted in the explanatory note below, which is part of this poll?
1. Authorize city council to regulate rents on private residential properties in the city of Minneapolis by ordinance.
2. Provide that an ordinance regulating the rents of private residential properties could be promulgated in two different and independent ways:
a. The municipal council can take the ordinance.
b. The city council can return the ordinance as a voting matter to be decided by voters for approval in an election. If more than half of the votes cast on the question of the ballot are in favor of its passage, the ordinance would take effect 30 days after the election, or at any time provided for in the ordinance.