As previously noted on this blog, construction of new housing in St. Paul has been greatly reduced compared to the years before voters passed a rent control law last November. Many developers argue that they are having difficulty attracting capital because of the law. Despite a recent amendment to the law that exempts new construction for twenty years, investors are leery of a law that arbitrarily restricts their profits. And understandably so.
Minneapolis is considering a rent control ordinance, despite what has been happening just across the river. Not surprisingly, an attorney for a nonprofit tenant advocacy organization, criticized one of the developers—Ryan Companies—position on rent control.
Ryan Companies appears to be using their loud exit from St. Paul as leverage in the Minneapolis rent stabilization process. Their continued posturing despite major concessions to their position gives the whole game away.
I think Ryan Companies is moving the goal posts. They”ll say, “we really need a 20-year exemption.” And when they get a 20-year exemption, they say “we really need 30.” Their goal is zero rent control. They want to kill it.
Defenders of rent control claim that developers aren’t acting in good faith. They evade the fact that it is impossible to act in good faith when one side holds a gun. Rent control is backed by the government’s gun. Violators of rent control risk losing their property risk fines, jail, or both.
Developers warned voters what would happen in the rent control ordinance passed. Rent control advocates dismissed those claims as idle threats. But those claims weren’t idle threats; they were a recognition of economic reality. They were a recognition that investors are leery of St. Paul.
The developers who are pushing back against rent control have the moral high ground. Rent control is an attack on their freedom to produce and trade. They have every right to defend that freedom.