The effectiveness of rent stabilization laws varies. How rent caps are determined and their relationship to market variables, such as rate of inflation, complicates results and can either help or hurt the gap in who can and cannot afford to remain housed. Both Minneapolis and St. Paul are majority-renter cities. Similarly, for both cities, 70% of renter households are already considered cost-burdened –those who spend more than 30 percent of their income on housing. Often there are exceptions to the cap and rules allowing pass through costs. It comes as no surprise, the details of rent control and rent stabilization laws matter.
In Minneapolis, a question will be posed to voters: whether to change the City Charter to authorize the City Council to enact a rent stabilization ordinance. It also provides two separate pathways to achieve this – by City Council adoption or by ballot in the next General Election. This measured approach signifies there will be robust process and ample opportunity for council members on both sides of the issue to make amendments and vote accordingly at each step of the process. The ordinance will likely be very comprehensive and heavily regulated.
In St. Paul, an actual rent control ordinance proposal will be on the ballot. The proposal takes a stronger approach to control rent increases by limiting any increase to 3%, despite the rise of inflation. While newly constructed buildings will not be exempt, there will be exceptions and permissions available for a variety of reasons, including “the right to a reasonable rate of return.” Landlords could appeal, for example, due to dramatic property tax increases or if costly improvements are required to bring the unit into compliance with city code.
What has worked to keep families housed?
The good news is both cities have had success in stabilizing homes for marginalized families who are vulnerable to homelessness. In Minneapolis, the Stable Homes Stable Schools program is a partnership between the City of Minneapolis, the Minneapolis Public Housing Authority, Minneapolis Public Schools and Hennepin County. With an initial pilot investment of $3.3 million from the City, the program has successfully helped provide housing stability to more than 900 Minneapolis Public Schools families. Similarly, St. Paul is the second city in the nation, after Stockton, California, to implement a guaranteed income program where up to 150 randomly selected families who participate in the City’s CollegeBound Savings program receive an unconditional $500 per month. In both cases, the focus is on families with children. In the case of St. Paul, program focus begins at newborn-age. In both cases, direct subsidies help some of the poorest families of color afford costs associated with rent, utilities, food, car repairs and other essential costs that would otherwise become barriers to stable housing.
Rent control remains a strategy that, with thoughtful and intentional design, can help ward off dramatic rises in rent cost, especially for the lowest income households. Meanwhile it is clear there are additional, effective ways cities can help stabilize housing for families which are both impactful and far less onerous.
J. Deebaa Sirdar
Guest Editor, Black Votes Matter MN