St. Paul will spend over half a million dollars enforcing rent control this year
As reported by the Star Tribune,
St. Paul city officials on Wednesday unveiled a proposal that would provide five full-time employees and funding to administer the rent-control ordinance passed by voters in November.
But as the policy’s May 1 effective date looms, many uncertainties remain for St. Paul tenants, landlords, developers and others who say a lack of clarity has prompted a string of reactions, including pre-emptive rent hikes and the pausing of new housing projects.
The City Council voted 4-1 to spend $635,527 to hire five employees — two administrators for the city’s Department of Safety and Inspections, a deputy hearing officer and administrator for the council, and a city attorney — to handle requests for exceptions, appeals, complaints and other work related to the ordinance. Council Member Jane Prince voted against the resolution, saying she has not yet heard a plan that justifies the expenditure, and Council Members Rebecca Noecker and Dai Thao were absent.
That money — which is projected excess tax revenue in the city’s general fund, according to St. Paul Finance Director John McCarthy — will cover salaries and overhead through the end of the year. The council will have further conversations later this year about how to budget for the policy in 2023 and beyond.
As I noted previously, the St. Paul City Council already agreed on a budget for 2022. So, this $635,000 is well above that budget. The availability of that money will depend on actual tax collections, which should not not be a big issue, since property tax collections are more stable than most other sources of tax revenues — like sales and income taxes.
The issue is that going forward, rent control administration will have to take a recurring fixture of the city’s budget. This means money that could be going to other public services will be used to enforce rent control. Not to mention that with all the amendments being proposed, the enforcement process will likely get more complex and thereby require more funding from the budget.
Moreover, as an American Experiment report explained, cities that have enacted rent control often see their property values go down. This means that these cities lose property tax revenues, while they see enforcement costs go up — a double whammy.
Rent control is already proving costly for St. Paul’s housing market. Unfortunately, more is yet to come. This $635,000 is only just the beginning of damage that rent control is likely to bring to the city’s budget.