Comments about Minneapolis and St Paul rent control initiatives

[Bruce Runn]

Wondering what thoughts people have on the very different rent stabilization initiatives on the ballot in Minneapolis and St. Paul?

[Evan Kraljic]

Do you know if there has been any specifics to a rent stabilization initiative in Minneapolis @Bruce Runn? My understanding was that for the ballot it is a vote to allow the council to craft their own policy without having to have the ordinance be voted on by residents? 

I'll start off by saying that I think Saint Paul proposal definitely went too far. I'm not in favor of rent control in general based on what I've read up about it being enacted elsewhere but not including a vacancy decontrol so landlords can raise rent to market when a tenant leaves, or exempting new building supply from the rent stabilization policy were the two most frustrating inclusions to me. Also I believe they put a hard cap at 3% and did not tie to inflation at all. If new building supply is not exempt I'd expect less development which would exacerbate the affordable housing supply issue. Vacancy decontrol makes sense because as a landlord myself, I would like to have the ability to not raise rent on my tenants but if they decide to leave, rerent at fair market value. With no vacancy decontrol, I think my hands would be tied to increasing rent at the maximum allowable number (unless they put it around 7-10%, I wouldn't go that high) each year so I don't fall behind the curve. 

I will say that as a left leaning person I used to believe that rent control could be fine if properly implemented, and most landlords opposition to it was strictly out of greed. Having read up on it more, I don't think it's a particularly helpful solution to our affordable housing issues, and I definitely do not trust the Minneapolis City Council to craft a reasonable ordinance regarding it. My thinking is that they will go the opposite way (similar to St. Paul), where they say rent stabilization hasn't worked because the regulations are not strict enough, ignoring the warning signs that history has given us in other cities/states.

For me personally, I'm not too concerned about it because I think like any business you just need to grow and adapt, changing strategies if need be. One effect it would have is that the subset of value-add deals due to rents being well below market value would be tougher to pull off, especially if they don't include vacancy decontrol. With that being said, I prefer to buy vacant units so I don't have to terminate leases or drastically hike up rents upon purchasing a place, not to cast judgement on those who do so (a lease is a contract, once that's fulfilled you don't owe the tenants below market rent, nor should they expect that), but that is my personal preference.