Bad policy versus worse

Minneapolis should take heed of other cities’ mistakes when implementing new rent control policies.

Rent control policies nowadays follow a certain formula. To control for some of the negative effects on housing supply, lawmakers usually exempt new construction, allow vacancy decontrol — whereby landlords can reset rents to market levels once a tenant moves out — and index rent hike caps to inflation.

But all is not well with moderate rent control policies. Even places that have implemented these provisions have faced similar detrimental effects. From San Francisco and Cambridge to Ontario and Berlin, as well as numerous other cities, moderate rent control — aka rent stabilization — has only worked to reduce the quantity and quality of housing.

As far as rent stabilization goes, policies range from bad to worse. And this proposal by some Minneapolis City Council members to follow in St. Paul’s footsteps — with a policy that caps rent control hikes at no more than 3 percent per year, does not allow vacancy decontrol, and does not exempt new buildings — is one of the worst ones.

St. Paul has already seen building projects come to a standstill, and Mayor Melvin Carter has asked the city council to make amendments exempting new construction. This should be caution enough for Minneapolis. But numerous other cities have had rent control policies much less stringent than St. Paul’s, and even those laws were abandoned due to the negative outcomes. The idea that somehow Minneapolis will come out unscathed and will only enjoy all the benefits that rent control has to offer, namely stability and affordability, without the negative consequences experienced by these other cities, is illogical and destructive.

Unless landlords rent buildings out of the goodness of their hearts and won’t mind making losses, there is no way to reconcile the idea that “greedy” landlords will somehow accept less profit without changing their behavior once rent control is enacted.

The fact of the matter is that there are no good or bad rent control policies, only varying degrees of bad. Regardless of what type of policy the city council pursues, there are bound to be some negative consequences. There is no way to have a robust rent control policy without hurting the housing supply. Just like there is no way to have a weak rent control policy without hurting housing supply — albeit to a slightly smaller extent.

But unlike the St. Paul ballot, the Minneapolis ballot only empowers the city council to adopt some form of rent control, meaning that there is a lot of leeway for the Minneapolis City Council to come up with a more thoughtful policy.

If Minneapolis City Council members insist on adopting a rent control policy, the least they could do is resist the temptation to make what is already considered a bad policy even worse.

A version of this op-ed appeared in the Star Tribune.