Rent Control in Minnesota (Minneapolis and Saint Paul)

Voters have given Minneapolis officials the green light to regulate rents, and Saint Paul voters have approved a rent control ordinance for the city.

By , Attorney

During the November 2021 general election, Minneapolis and Saint Paul voters each approved ballot propositions regarding limits on how much landlords can charge tenants for rent ("rent control"). In Minneapolis, voters gave the city council the authority to regulate rents on private property, meaning that for rent control to become law in Minneapolis, the council must draft and pass an ordinancemost likely by placing it on a future ballot for voter approval. If and until that time, Minneapolis has no rent control.

The new Saint Paul ordinance ((Saint Paul City Code of Ordinances (SPCCO) §§ 193A.01 - 193A.09) is likely the strictest rent control in the nation, if not the world. Effective 5/1/22, rent increases on every rental unit and all renters are capped at 3% per 12-month period. The 3% limit also applies to a vacant unit after a tenant moves out, which means that a landlord cannot charge a new tenant more than 3% over what the prior tenant was paying. In other words, the amount of rent a landlord can charge applies to the unit, rather than individual leases. And unlike most rent control ordinances, the St. Paul law does not make an exception for newly constructed unitsit applies to every unit, no matter its age.

Landlords can request an exemption from the 3% limit via a "reasonable (fair) return on investment" review process. A "fair return" is presumed equal to the property's Base Year (typically 2019) net operating income plus 100% of the increase of the local Consumer Price Index (CPI) since the Base Year. Exemptions hinge on one or more of the seven factors (increased property taxes or health and safety improvements,for example) specified in the ordinance. (SPCCO § 193A.01.) Landlords requesting an annual increase between 4% and 8% can "self-certify" by submitting a web-based form subject to audit. Requests above 8% require a staff determination, appealable to a hearing officer followed in turn by the City Council.

Landlords who request exemptions receive resident notification forms, which can be forwarded to tenants.