On November 2, voters in St. Paul approved a referendum to enact the nation’s most stringent rent control law. The city government was unprepared, and in the ensuing weeks dissension has been fomenting in the city as developers announce that projects are being put on hold.
On one side are tenants and their advocates. They believe that might makes right, that the will of the majority is supreme. On the other side are city officials. They believe that the measure adopted by voters is too restrictive and seek a compromise between tenants and developers.
The president of the Housing Justice Center said that developer concerns about the ordinance are speculative. “Is there a real issue that is based on facts, data and information?” she asked.
I can’t speak for the developers, but the approval of price controls on landlords is a “real issue that is based on facts.” The referendum makes no exceptions for new development, which means that developers face great uncertainty regarding the ability to recover their investment. Developers already face significant risks. When voters can arbitrarily and unilaterally dictate how they can operate their business, developers have every reason to be cautious.
City officials are still trying to figure out what the rent control ordinance means and how to enforce it. Though they have expressed concerns about the ordinance’s impact on new development, they hope to find a compromise between freedom and slavery. The city’s planning director said,
We’ll be inviting stakeholders, stakeholder groups, starting with city council, to earnestly participate in the conversation that doesn’t pit renters against landlords, doesn’t pit growth against equity and affordability.
City officials think that there is some middle ground between housing producers and those who want to shackle and control them. But there is no such middle ground. If developers accept any form of rent control, they will be accepting shackles and controls. They might gain some temporary reprieve, but they will have lost the war. Compromise might reduce the extent of the controls for the time being. But compromise will empower advocates to lobby for more draconian measures in the future.
For example, if developers accept rent control, but ask that new construction be exempted for a period of time (15 years is common), they will have no valid argument to argue against further restrictions in the future. The time frame for the exemption could be shortened or completely eliminated if voters choose to do so in the future.
Neither voters nor city council has a moral right to impose rent control on landlords. If property owners want the freedom to produce housing, they must reject rent control in any form. They must proudly stand firm and refuse to compromise.