Concerned by a dramatic slowdown in housing construction, St. Paul Mayor Melvin Carter has called on the city council to adjust the city’s rent control ordinance to fully exempt residential buildings constructed after 2004.

Council President Rebecca Noecker and Council Members Anika Bowie and Saura Jost have signed on as sponsors of an amendment that will do that. Another vote from at least one more council member looms likely, giving the seven-member council the majority it needs to make fundamental changes Wednesday to the 3% cap on annual rent increases approved by city voters in 2021.

That hasn’t stopped two council members who favor rent caps from proposing last-minute amendments of their own, with the goal of salvaging what they can of one of the nation’s strictest municipal rent control policies. They’ve noted that housing construction has also slowed in many cities that did not institute rent control, including Minneapolis and Denver.

“I won’t be supporting either of them, and at the moment it doesn’t seem like they have majority support, but you never know until the vote,” said Noecker on Tuesday.

Council Member Nelsie Yang has proposed an amendment to drop the permanent exemption from rent control for buildings built after 2004 and replace it instead with a 30-year exemption, effectively mirroring the timeframe of a construction mortgage. In other words, 30 years after being issued its certificate of occupancy, a new building becomes subject to the city’s rent control mandate.

That exemption lengthens an existing 20-year exemption for new construction, which was approved by the council with the mayor’s encouragement in 2022. Her proposal’s chances of passing are unclear.

Prevailing wage amendment

Council Vice President HwaJeong Kim plans to introduce another amendment Wednesday requiring developers to pay prevailing wages on construction of multi-family buildings that benefit from the new rent control exemption. The prevailing wage mandate would apply to properties with at least 12 residential units that are newly constructed or had a change in occupancy classification from commercial to residential.

Landlords would have to verify that all construction workers on a project had been paid the prevailing wage, as defined by the city’s administrative code. The Minnesota Department of Labor and Industry lists hourly prevailing wages, before fringe benefits, around $30 for landscapers, $43.40 for general laborers, $46.50 for boom truck operators and $47.50 for pipe-layers.

The prevailing wage amendment has been a long-standing goal of the Laborers International Union of North America, or LIUNA, which represents general laborers on construction projects. It’s unclear if it has the votes to pass, but LIUNA spokesman Kris Fredson said they’ve repeatedly approached the council and mayor’s office and received “hard commitments” from individual council members since August 2022.

The goal, in part, is to have subcontractors certify their payroll, classifying each worker by their job role in a manner that a prime contractor or employee union later verifies. That would cut down on misclassification fraud, cash payments and other forms of wage theft, Fredson said, without necessarily increasing the overall cost of development, as the contractor or developer in those instances tends to pocket the savings anyway.

“It shouldn’t be controversial to have prevailing wage attached to a rent control exemption,” said Joe Fowler, business manager for Local 563, the state’s largest general laborers union for workers on private projects. Major developers like “the Ryan Cos., the Franas, etc., already pay prevailing wages. That is not what is holding up development. I’d push back against anyone saying it could be an impediment to development.”

Raising wages for laborers “typically translates to them spending the money here, increasing the tax base and paying payroll taxes,” Fowler added.

Noecker said she did not think the amendment will be approved.

“For me, it’s not about the timing,” Noecker said. “It’s more about the content of the amendments themselves. We’re in a situation where we need to send a strong, clear message to the market that St. Paul is open to development, and both of the amendments would muddy that message and set us back in what we’re trying to do, which is to build more housing in St. Paul.”

New tenant protections

In addition to changes to rent control, the city council is expected Wednesday to approve sweeping new protections for residential tenants. All seven council members have signed on as sponsors, reviving an effort that was approved but later rescinded by the previous council in June 2021 in light of legal pushback. Council members are hopeful that the new package of retooled protections will pass muster with the courts if landlords press their case again.

Among the proposed new tenant protections:

• Security deposits will be limited to the equivalent of a single month’s rent, unless the tenant’s application might otherwise be denied because of criminal history, credit history or rental history.

• A landlord must make their screening criteria “readily available” to any prospective tenant. A prospective tenant could not be rejected because of a conviction for a crime that is no longer illegal in Minnesota, a petty misdemeanor, a gross misdemeanor older than three years, and most felony convictions.

• For certain crimes, such as first-degree assault, arson or murder, a landlord can look back 10 years.

• Landlords cannot reject tenants based solely on their credit score, insufficient credit history or insufficient rental history.

• Landlords will not be allowed to consider pending evictions, evictions more than three years old and evictions that have not resulted in an order to vacate.

• Evictions for nonpayment of rent will require advance written notice to the tenant specifying the total amount due, as well as their right to seek legal help and a phone number and web address for legal and financial assistance.

• If affordable housing is sold, the new landlord may not terminate or fail to renew a tenant’s rental agreement without just cause, raise rent or rescreen existing tenants during a three-month period of time known as the “tenant protection period” without providing relocation assistance.

• Within 30 days of the transfer of ownership, a new landlord must give written notice to tenants in an affordable unit that the property is under new ownership and explain whether the new landlord will require them to be re-screened, whether they will be terminated without cause and whether there is an increase in rent.

If approved by the council, the new tenant protections still require the mayor’s signature, and take effect a year later.

Two public hearings held April 9 drew sizable numbers of advocates for and against the changes to both rent control and tenant protections.