St. Paul's mayor is proposing to loosen the city's rent control ordinance

St. Paul Mayor Melvin Carter wants to exempt all new housing from the city's rent control ordinance in an effort to jumpstart construction.

Why it matters: Carter argues the change would incentivize lenders to finance new projects in the city — which have slowed to a crawl this year.

The big picture: The move would be a setback for the advocacy groups that rallied St. Paul voters to enact the ordinance in a 2021 referendum , arguing limits on rent increases keep vulnerable residents in their homes.

How it would work: Carter proposes to permanently exempt rental properties built in 2005 or later from the city's current 3% cap on annual rent increases.

• That's a change. Right now, any new housing units in St. Paul become rent-controlled after 20 years.

Reality check: Council president Mitra Jalali told Axios that new housing construction is slowing down for a wide range of reasons, including high interest rates : "I'm sensitive to a conversation that blames the rent stabilization ordinance."

• Federal data show Minneapolis — which doesn't have rent control — saw its housing production numbers drop by half between 2022 and 2023.
• Building in other Midwest cities has slowed, too.

Zoom out: The amendment would pair with a new tenant rights ordinance the city council has been pursuing, as well as other city expenditures on housing.

• Carter rolled the plan out Tuesday in next year's $858 million budget proposal, which also contains $7.3 million for an "all-in" housing spending blitz to fund, among other things, new down payment and rental assistance.
• The mayor pitched a 7.9% levy increase to pay for these and other investments, which translates into a $133-per-year property tax jump for the median homeowner in 2025.

What they're saying: "Every key to the future for St. Paul depends on our ability to facilitate and accelerate our housing construction goals," Carter said in a speech on Tuesday.

What we're watching: Several new city council members favor moves in the opposite direction — to make the rent control ordinance more tenant-friendly .

• Council member HwaJeong Kim told Axios she wasn't open to weakening rent control: "The voters were very clear."

Yes, but: Others, including council member Rebecca Noecker, told Axios they're open to Carter's idea, noting the construction slowdown.

• Jalali is skeptical of weakening the ordinance but acknowledged that packaging it with other housing investments could address renters' concerns.

The intrigue: The mayor also proposed $1 million to waive city fees for developers looking to convert two commercial high-rises into residential units.

• Though Axios recently reported that commercial property vacancies in downtown St. Paul may be higher than previously thought, Carter says residential demand is high — and conversions could meet it.