A Quick Note on the Rent Control Amendment Debate

[From here.]

Despite the apparent fury on display at City Hall this week, my take on the debate over rent control amendments is pretty straightforward. Almost all of the changes are minor and there's not that much disagreement at the City Council level. It seems unfortunate to me that affordable housing advocates have been whipped up into a seeming fury over minor policy changes, most (or all?) of which will end up helping the city’s renters.

For example:

There’s unanimous (?) support for a new construction exemption of some length, and for good reason.* I don’t know enough about the inner workings of housing financing to be able to tell you whether 15 or 20 years would be more effective rolling window -- only bankers and developers would know the answer to that -- but I can tell you that difference between a 15- or 20-year window is small potatoes and will not trigger an avalanche of displacement. Given the wide gulf between housing markets in St. Paul and California (where extreme prices make new construction displacement into a problem), I think the concerns of advocates about the new construction exemption are seriously overblown. 

The "rent banking" proposed by Council Member Tolbert is even more of a no brainer, and leaves me seriously scratching my head as to why the Housing Justice Center is opposing it. For one thing, this policy is not vacancy decontrol, and should never have been given that moniker. "Vacancy decontrol" implies that when a tenant moves out, rents would go up past a theoretical 3% annual cap. This policy doesn’t allow that to happen; rents would remain capped at a 3% annual increase. (I.e., rent increases could not exceed 9% over a three-year timeframe, etc.)

All this does is remove the “use it or lose it” incentive from the current policy, which is a problem with the rules currently on the books. Right now, both anecdotally and in the rental data, many of the city’s landlords are automatically increasing rents at 3% a year for all their units, no matter the context.  That’s likely why, for the first time ever, average St. Paul rents have risen faster than those in neighboring, more wealthy Minneapolis.

Council Member Tolbert's banking provision simply removes that incentive, making it much more likely that landlords will keep rents flat for their existing tenants. If you care about renter stability, that’s a good thing! 

Finally, the debate over whether or not to exempt Federally subsidized and regulated apartments seems weird to me. At first glance, it’s doesn't seem legal? We’re talking about rents that are already regulated and controlled by Federal policy. It will surely end in a lawsuit, so that's good for the lawyers, I guess... At second glance, isn’t it possible this decreases subsidized housing production in St. Paul? 

But basically, all the proposals I've seen, with the notable exception of Council Member Prince’s vacancy decontrol amendment, are benign tweaks that leave the bulk of the city’s rent control policy in place. 

(Personally, I don't think these proposals go far enough, and won’t fix the structural problems with the existing ordinance, but that's a story for another day. I already wrote 4,000 words detailing my prescription for that. I'm glad that Council Member Prince is introducing actual vacancy decontrol, which I believe is the most effective and simplest way to fix the city’s policy.)

In short, having some sort of new construction exemption in the policy is a must. Given the deep need for the city to attract investment in housing, I would prefer to see the City Council erring on the side of caution and going with 20 years. But in general, it’s good that a Council majority is on board with some sort of exemption! 

The rest of the changes, with the exception of Council Member Prince’s amendment, seem pretty minor. I guess I’m disappointed that these small tweaks have become so politicized, because the Tolbert amendments are benign changes that should be widely embraced by city leaders. 

* The city housing data on display from Department of Safety and Inspections (DSI) at the meeting sure seems fishy, and I’d be willing to bet a good sum of money that it is incorrect. I’m digging into why that table contradicts the numbers from HUD, and will be sure to clarify this when I can. Unless there’s some error in recent reporting from the city, the broad trends in the HUD dataset, which covers every city and county in the country, are likely to be correct, so I’m guessing the problem lies in the city statistics. No offense to the hard-working folks at DSI, but they are not exactly known for their data analysis acumen.