Nearly three years after St. Paul’s rent stabilization ordinance went into effect, more than 40 people lined up inside the city council chambers to weigh in on a proposed change. The council is considering modifying the exemption for new construction.

“The good intentions of rent control in St. Paul have gone the opposite way,” said Joe Nathan, the director of Center for School Change, who spoke in support of the amendment.

St. Paul voters approved a 3% cap on annual rent increases in 2021. A Rent Stabilization Stakeholder Group was convened to research how to implement it and present recommendations to the city council. It included a 15-year exemption for new construction.

The city council ultimately passed an ordinance that gave landlords the ability to request exceptions for certain reasons and exempted new construction for 20 years, which also applied retroactively.

“We’ve given rent stabilization three years, and we’ve tried different amendments and taking an objective honest look at the data, I think it’s clear it’s time for a change,” said Council President Rebecca Noecker. “It’s becoming increasingly clear that housing is chilled in our city, that we need development, we need that tax base growth.”

The proposed ordinance would remove the 20-year exemption and replace it with language that would apply to newly constructed rental properties that were issued their first building certificate of occupancy after Dec. 31, 2044.

There were 799 new rental housing units identified by certificate of occupancy in 2022, according to a presentation from the Department of Planning and Economic Development. It rose to 988 in 2023 before falling to 293 new units in 2024. There have been 77 new rental units identified by certificate of occupancy so far this year.

While Noecker recognizes that rent stabilization is only one factor affecting housing growth in the city, she said the amendment will also send a clear signal that St. Paul is open for development.

“We need something that is really strong and really consistent,” she said.

More than a dozen people spoke out in support of the change, including Khalique Rogers, who is the executive director of Catalyst for Systems Change.

He said the current rent stabilization ordinance “prevents the ability to produce more affordable housing.”

Several other people who spoke during the hearing argued there should be a cap, even if it’s increased to 25 or 30 years.

“I’m very concerned that will incentivize tearing down existing rent-controlled apartments,” said Jean Giebenhain with the Metropolitan Interfaith Council on Affordable Housing, who stressed the importance of rent stabilization. “St. Paul voters voted overwhelmingly for this and now it’s being dismantled.”