Further evidence against rent control

Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.

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A recently released Minneapolis city staff report rightly opposes the 3% annual cap on rent increases that was recommended late last year by a working group of landlords and tenants, concluding that such a policy would not effectively address the cost burden for renters and would increase city costs.

Those sensible findings were presented Tuesday to the City Council's Business, Inspections, Housing and Zoning Committee. The committee received details about the 67-page study but did not take action.

The report found that rent stabilization would run counter to many city policies designed to promote increases in the amount of affordable housing. (Rent control is called rent stabilization by advocates and others who wish to distinguish new proposals from the strict, and ultimately unpopular, regulations of the past.) The analysis considered both the 3% cap proposed by the work group — similar to one approved in 2021 by voters in St. Paul — and a framework under which limits on rent increases are allowed to vary by inflation.

In addition, it found, a cap could encourage landlords to raise rents by the maximum amount allowed each year and discourage them from maintaining or improving their properties. And it could result in increased building and property taxes and significant spending on enforcement.

"Now is a particularly risky time to adopt a policy that staff anticipate would impede the development of new rental housing units," according to the report. "The city and surrounding market are still recovering from the economic impacts of the COVID-19 pandemic, and there are existing reasons to be concerned about the pace of needed development."

The release of that study on Tuesday is "a happy coincidence," Frey told an editorial writer. "Based on that research, it is indisputable that our goal and execution of creating more housing citywide has helped reduce rent increases.'' He added that, as the city staff report notes, rent control would produce immediate relief for some renters, but that benefit would be temporary and would lead to higher costs in the longer term.

This Star Tribune Editorial Board has consistently opposed city-imposed rent restrictions for some of the same reasons outlined in the staff study. We've argued that rent control discourages new housing development and, over time, does little to assist renters.

Other local research has concluded that some Twin Cities renters who experience higher rent hikes could see short-term relief if caps are imposed. Still, as the Minneapolis staff study found, there are more effective and sustainable ways to help renters through direct subsidies and other programs.

Minneapolis officials need only to look at St. Paul to see the negative impact of rent control. Development has slowed, and some building projects have been halted, because of uncertainty caused by the 2021 vote.

In addition, a pair of landlords have filed a lawsuit claiming St. Paul's policy is unconstitutional. At the very least, Minneapolis should wait for a ruling in that case before proceeding with a new city policy that would need to be approved by Aug. 25 to appear on the November ballot.