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IPFS News Link • Economy - Economics USA

The Results of St. Paul's Rent Control Experiment Are In--and They're Disastrous

•, Jon Miltimore

In November, FEE Policy Correspondent Brad Polumbo wrote about a new policy in St. Paul, Minnesota which stood to implement the strictest rent control policy in the United States.

"The city just approved a rent control measure that will limit landlords' ability to increase rents on its 65,000+ rental properties," wrote Polumbo. "They will not be able to increase prices by more than 3 percent each year under the new law. Controversially, the initiative does not account for inflation and applies to new construction, not just existing properties. This makes the St. Paul rent control measure one of the strictest in the US—if not the world."

The policy, which does not go into effect until May, was passed with the support of St. Paul Mayor Melvin Carter, a Democrat in his second term. After the policy passed, however, Carter announced he was seeking to exempt new developments, saying the law would cause a housing shortage.

"Turning off our supply of new housing would be disastrous for us as a community," Carter said in an interview following his successful reelection.

In February, Carter renewed his plea to create an exemption to the housing policy he supported.

"Every single city that we can find with the rent stabilization policy in place provides an exemption to incentivize construction of new housing units, and so should St. Paul," Carter said, according to MPR News. "We cannot afford to lose the thousands of housing units currently on pause while we wait for bureaucratic processes at City Hall to run their course."

He was rebuffed by housing advocates, however.

"This appears to be something that is kind of gutting a large part of the ordinance that was passed by the voters," said Margaret Kaplan, president of the St. Paul-based Housing Justice Center. "I don't understand what a backward-looking exemption, what kind of problem that's trying to solve at all. It's not that the developers are going to unbuild the buildings that they have."