Minneapolis voters will decide the fate of one rent control proposal at the ballot box this fall, but in a rare move Mayor Jacob Frey vetoed a second one, setting up a potential showdown with the City Council.

Frey vetoed one resident-led ordinance proposal that aimed to cap rent increases in the city but let stand a separate one that asks voters to give the City Council the power to control rents or draw up a more detailed question to ask voters again in a later election.

The 13-member council, which meets next week, would need nine votes to override Frey's veto.

In an interview Friday, Frey said he has long opposed legislation by referendum and that the resident-led initiative would outsource the city leaders' core responsibilities to an interest group.

"We want a process that is open to everyone and that is accountable to everyone, not just one interest group," Frey said. "We want a policy that is backed by the expert residents that we have in City Hall that is supported by the data. And we want a process where we can engage a broad set of stakeholders throughout the city, not just one interest group."

Frey's veto came hours after the council on Friday gave its final approval to both hotly contested measures.

The council voted 9-3 on a charter amendment, the one Frey vetoed, that would give citizens the right to petition the council to create rent stabilization policies. Council Members Kevin Reich, Lisa Goodman and Linea Palmisano dissented. Council Member Andrew Johnson was absent due to a family emergency. Palmisano cast the lone opposing vote on the second one that would give the council the power to adopt a rent control policy by an ordinance.

The two rent control proposals crafted by Council President Lisa Bender and Council Members Cam Gordon and Jeremiah Ellison are meant to help protect vulnerable renters, particularly people of color, from housing costs that they say have risen faster than income. Council Member Jamal Osman was added as one of the co-authors of the initiatives Friday at his request.

More than half of the population in Minneapolis rents, according to the city. And more than half of those renters earn less than 60% of the area median income.

"We're often told by the City Attorney's Office that we can't do something. They told us we couldn't raise the minimum wage. We were told we couldn't require affordable housing and new apartments. They told us we couldn't pass the renter protection policies, and we've been able to eventually get all those things done," Bender said. "I really think this is the missing piece to help keep people safely and stably housed."

Housing advocates have said capping rents would help avoid displacement and keep housing affordable. Opponents argue that more regulation would mean less investment in affordable housing in the city and property taxes shifting onto homeowners.

About 200 cities across the country have some form of a rent regulation program, though the details vary, according to a report by the University of Minnesota's Center for Urban and Regional Affairs. Some cities proactively monitor rent increases, while others rely on complaints to take action. Some cap rent based on inflation, while others create a matrix to govern price increases. Many offer exemptions, the terms of which vary from city to city.

When the city accepted public comments on the proposals, landlords gave varying opinions.

An executive at Hornig Cos. encouraged the city to reject rent control proposals and instead work with state officials to expand rental assistance and create higher-paying jobs.

"Rent stabilization is a crude and incredibly expensive insurance against a limited subset of rent increases for a lucky few renters," the letter stated. "These amendments are political gamesmanship and a false promise to renters — not to mention a path to financial ruin for the city."

The city also heard from individuals who said they rent out properties they own. Some wanted rent control, saying they know people who have been priced out of the city's rental market, while others said they're not making a profit and have been raising rents to keep up with property tax increases and repairs.

Palmisano, who voted against both measures Friday, said she would have supported the council-led effort for rent control had they made changes suggested by the Charter Commission. The commission raised concerns that it believed the proposals conflicted with state law, but the council proceeded with its original versions.

Palmisano said she's worried about wealthy special interest groups gaining a stronger foothold on dictating city policy.

"I am so disappointed that some of my colleagues would rather play to a court of public opinion, or be their own armchair lawyer, than listen to the advice that we're getting and represent the best interest of the city," she said in an interview. "There was clear guidance from a detailed review against them because [the proposals] weaken our council's legislative capabilities."

Gordon said he's disappointed by the mayor's veto but glad the second measure is proceeding: "I was hoping that he would let both of those pathways move forward so we would have the option for voters to decide."

He said he hopes the council will override the veto next week.

Rent control question heading to the ballot

Authorizing City Council To Enact Rent Control Ordinance

Shall the Minneapolis City Charter be amended to authorize the City Council to regulate rents on private residential property in the City of Minneapolis, with the general nature of the amendments being indicated in the explanatory note below, which is made a part of this ballot?

Explanatory note

This amendment would:

1. Authorize the City Council to regulate rents on private residential property in the City of Minneapolis by ordinance.

2. Provide that an ordinance regulating rents on private residential property could be enacted in two different and independent ways:

a. The City Council may enact the ordinance.

b. The City Council may refer the ordinance as a ballot question to be decided by the voters for approval at an election. If more than half of the votes cast on the ballot question are in favor of its adoption, the ordinance would take effect 30 days after the election, or at such other time as provided in the ordinance."

Staff writer Liz Navratil contributed to this report.

Faiza Mahamud • 612-673-4203