Mpls. council panel favors study of rent-controlled housing in the city

Minneapolis city officials are considering capping the amount of money landlords can charge their tenants. Rent control ordinances have long been on the books in places such as New York and San Francisco. The idea is gaining traction in smaller cities as high demand for rental housing squeezes the supply, but supporters of rent control face some big obstacles.

Average monthly rent on a one-bedroom apartment in Minneapolis will set you back more than $1,200. With a vacancy rate of just 4 percent, the market remains tight.

If you’re looking for subsidized housing set aside for low-income renters, your search may take even longer — just 3 percent of that stock is available.

In recent years, the Minneapolis City Council has taken potshots at the problem. One ordinance prohibits landlords from discriminating against people who have federal Section 8 vouchers. Another, passed last month, imposes new limits on tenant background checks.

Council President Lisa Bender says the city remains increasingly unaffordable.

“We still have a problem that all of these strategies put together are still not hitting the reality that so many people are losing their homes,” Bender said.

Though she has expressed skepticism about rent control, Bender said it’s something the city should consider.

“The policy question is: Do we think landlords who own those older buildings that have no debt should be able to raise rent uncapped with no limit? Or should we consider a policy that would put a limit on the amount of rent that older buildings could charge each year?” Bender said.

Rent control is not on the immediate horizon. Council members have yet to draft an ordinance. But Wednesday, a council committee directed city staff to hire consultants to “evaluate rent stabilization as a component of housing policy in Minneapolis.”

Council member Lisa Goodman voted against a rent control study. She said there’s a simpler way to help tenants: reduce the tax and regulatory burden on landlords.

“If we were doing everything in our power to not have rents go up, we wouldn’t be raising property taxes 6.75 percent. So, let’s start with that,” Goodman said. “The biggest issue is that property taxes are going up as a result of unlimited spending.”

Mayor Jacob Frey has spoken out against rent control as well. And there’s another hitch: Minnesota state law prohibits it, except by citywide vote in a general election.

The Minnesota Multi Housing Association says in a statement to MPR News that city staff should consider the negative impact rent control has had elsewhere. The group says rent control may be politically popular, but it’s likely to deter much needed investment in new rental housing.

University of Minnesota economist Art Rolnick agrees that rent controls will dampen supply and that if they’re imposed in Minneapolis, they’ll lead to a bifurcated market split between properties that are controlled and those that aren’t.

“If you look at cities that have tried this, it doesn’t work very well. What happens is those properties deteriorate because there’s no incentive to invest in them, and it really does a neighborhood in over the long run, and often it doesn’t accomplish what it’s trying to do,” Rolnick said.

Rolnick said a more equitable and effective way of helping people of modest means is to expand government subsidies such as the Section 8 program.

The council wants city staff to have a rent control consultant hired by March 15.