It’s only been a week since voters in St. Paul, Minnesota, approved a sweeping rent control ballot initiative, but developers are already pausing projects while city leaders scramble to amend the most harmful aspects of the new law.
In last Tuesday’s municipal election, 52 percent of voters approved Question 1, an ordinance that puts a hard annual 3 percent cap on rent increases. It makes no allowances for inflation or exemptions for vacant apartments and new construction that are typical in other rent control policies.
The new ordinance doesn’t go into effect until May 2022. Nevertheless, several real estate companies with large projects in the works have already announced that they’re pulling their permit applications.
That includes Ryan Companies. Local NBC affiliate KARE 11 reports that the company pulled applications for three buildings in its proposed 3,800-unit Highland Bridge project.
“The City and Ryan took great care in creating a finance plan that leveraged market rate developments to provide funding to support deeply affordable housing creation both at Highland Bridge and throughout Saint Paul,” said a company executive in a statement to KARE 11. “The rent control policy threatens the funding sources for market rate projects and therefore the overall finance plan for the development.”
Other developers are singing a similar tune.