St. Paul’s Rent Stabilization Ordinance has been in place for less than three month, but both landlords and tenant groups say that there are still many kinks to be worked out.
The appeals process, where landlords can request an exemption from the 3% rent rise cap, is one area that needs to be clarified. In June, the first hearings for such appeals started. The full schedule of hearings is available at the St. Paul legislative hearings office.
This is how the appeal process works, and what landlords or tenant groups have to share about it:
A landlord cannot increase rent by more than 3 percent annually under the rent control ordinance. There are exceptions. A landlord can request rent increases above the 3% threshold if their circumstances are acceptable.
The ordinance , which was created by Housing Equity Now St. Paul(HENS), a coalition affordable housing advocates allows landlords to make exceptions to the cap if they anticipate that they won’t get a reasonable return for their housing investment.
This ordinance addresses seven situations that could limit a landlord’s rights to a reasonable return.
Increases and decreases in property taxes.
span style=”font weight: 400 Unavoidable” rises in maintenance and operating costs, such as if water prices tripled. Officials from the city said that there is no evidence yet to support a decrease in operating and maintenance expenses.
Capital improvements are required to ensure compliance with safety and health codes.
Changes in the number or use of a building’s furnishings or housing services by tenants.
“Substantial degradation” of the unit beyond normal wear.
The landlord is not providing adequate housing services, or is not in compliance with local and state housing regulations. The city officials also noted that they don’t know when this would apply and that it needs to be “road-tested.” This is when a tenant petitions the district court to make a landlord increase or decrease rent or refinance to repair the unit that has caused the tenant to have to move.
Trend of rent increases and decreases in recent years.
Property tax increases or increased maintenance costs are obvious: Rent could go up if that cost goes higher, explained Marcia Moermond, St. Paul’s legislative auditor. Other situations are not yet discussed.
A landlord can apply to the city for an exemption from the rent cap rules if they feel they fall within one of these categories.
Moermond says that a landlord can apply for a rent increase of 3% to 8.8%. This is self-certified and almost entirely automated. Moermond stated that a landlord can request a rent increase if they are approved by the city.
However, requests to increase rent by more than 8% require the city to review each landlord’s financial records. A landlord may appeal to the City Council if denied.
Tenants are not notified by landlords that they have applied for an exception from the cap on rent increases. There is no mechanism to do this. Both the tenant and landlord have the right of appeal to City Council decisions on exceptions.
A tenant may notice that their landlord is trying to appeal the rent control ordinance. They can appeal to the city disputing the landlord’s claim that they are entitled for an exception. At which point, a hearing will take place and the landlord’s application will be re-examined.
Tenant groups are aware it is early, but have suggestions
Margaret Kaplan, president of the St. Paul non-profit Housing Justice Center is one of the organizations that helped HENS push for the passage of the rent control ordinance.
She stressed that the city officials are responsive and send information when requested about the landlord appeal process or tenant complaint process.
“The ordinance just got off the ground.” “The ordinance just got off to the ground .”
However, Kaplan stated that her organization had observed “obstacles”.
One is the cost. Any appeal filed with St. Paul codes carries a $25 charge. Tenants must pay the fee if they want to contest a landlord’s request for an exception.
Kaplan stated that it is not easy for everyone to do this.
Kaplan stated that another problem in the appeal process for rent control is the failure to notify tenants. This is especially true when the landlord self-certifies documents for an increase of 3% to 8.8%. She said that tenants are not sure when to file a complaint.
Eric Hauge, executive Director of HOME Line (an organization that provides legal advocacy and resources to tenants), said that he has received calls from tenants who don’t know that their landlords can self-certify an increase of up to 8% percent.
Hauge said that St. Paul staffers are “very open” about the appeals process. He is also for adding a method to notify tenants that their landlord is appealing the rent stabilization ordinance. Hauge said that the city could also take steps in order to ensure tenants are informed about every aspect of the ordinance as well as their rights.
Kaplan notes that the city is taking their suggestions “very, very seriously.” On St. Paul’s rules and process
Some landlords find it too complicated and unfair.
On July 13, the group told the St. Paul City Council about how rules and processes should be clarified.
Cecil Smith is the president and CEO at the Minnesota Multi Housing Association, which is one the largest non-profit organizations representing property owners in the state.
Smith stated that the font-weight of 400 ;”>” is too heavy for owners and renters. Smith said that the city had created rules that were “opaque” because “nobody understands span>
MHA members say that it costs them more to understand the rules, let alone to appeal. This adds to the cost of housing in St. Paul.
span style=”font weight: 400 It’s not free asking regional managers and accountants to spend time on this. Smith stated that this takes resources.
Smith stated that some MHA landlords looked at the appeals process and found it too complicated. They decided not to appeal. MHA accountants often find the appeals process too complex.
Smith stated that the appeals process is not consistent with general accounting practice. This can lead to problems if a landlord appeals and receives a review by the city. The records of landlords’ financial books become public after city staff have looked into them. Anyone can look at the financial records of a landlord and see that they are not following general accounting practices. Smith stated that this exposes landlords and could impact future sales prices as well as tax increases by assessors.
Some landlords don’t like the idea of having their records made publicly.
Smith stated that the struggle to understand and attempt to appeal to a client is unfair because it will most adversely affect owners who are smaller than those of color.
Smith suggests simplifying appeals — something he points out may not be possible due to the complexity of a rental control ordinance.