St. Paul Apartment Construction Slows; Rent Control Under Scrutiny

[Updated June 14, 2023 to accurately reflect the state of Minneapolis’ rent control ordinance.] Apartment construction is quickly declining in St. Paul, bucking national trends and raising questions about the effects of the aggressive rent control policies adopted by voters in 2021.

Frederick Melo reports on new data from the U.S. Department of Housing and Urban Development that show a 48 percent decline in apartment permits in just a year.

“The numbers of permitted units ended the year roughly on par with the city’s 10-year average, which was weighed down coming out of the Great Recession a decade ago. That’s fair, bad or really bad, depending upon how you slice it,” writes Melo.

For local perspective on the decline in construction, Melo notes that neighboring Minneapolis, which advanced its own rent control ordinance in 2021, increased multi-family residential permitting by 16 percent in the same time period. Minneapolis city staff is still drafting that ordinance. Crystal King, a spokesperson for St. Paul’s Department of Planning and Economic Development, is quoted in the article saying that it’s too soon to say why the city’s multi-family development markets are headed in such different directions. As noted by Melo, St. Paul historically has lagged behind Minneapolis’ multi-family construction rates.

And there are significant differences between the rent stabilization ordinances approved in either city. “Opponents of rent control have been quick to point out a key policy difference between the two cities. St. Paul voters approved the city’s first-ever rent-control policy at the ballot box in November 2021, a strict 3% rent cap that was later loosened by the city council last September, with the mayor’s blessing, to exempt new development for 20 years,” writes Melo.

Melo reports more on the fallout from the permitting data, including responses from rent control advocates, in the source article below.