Minneapolis rent stabilization working group

[Wendy Man]

"Minneapolis group recommends strict rent-control plan to City Council"

The group split with 14/25 voting to recommend a strict rent-control plan like the one that St. Paul passed last year, and 11/25 to recommend a plan that was more lenient.  What do you think?

https://www.bizjournals.com/tw...

https://lims.minneapolismn.gov...

[Chris John]

@Wendy Man

I think I won't be investing in Minneapolis real estate anytime soon.  I also think that the only successful investors there will most likely be taking part in good ole fashioned crony capitalism.

[Evan Kraljic]

Frey isn't going to go for it, and the city council is more moderate that some might think and probably won't go for it either. I'm against rent control is essentially all forms, but it's quite absurd to propose that strict of an amendment when it's literally already been dubbed a failure in St. Paul in less than a year. They have since loosened restrictions on it which is good. 

No one wanted to build in St. Paul anymore, and the same stuff will happen in Mpls if it gets approved with similar conditions. The twin cities have actually done a pretty good job of delivering new apartments and rents have stayed relatively affordable here. Rent control will absolutely stymie that progress. 

[James Hamling]

"Work Group, made up of a mix of tenants, landlords, developers and others.", gee, I wonder who voted which way....

This is politics, plain and simple, the very formation of the group is not to actually do anything, it was political posturing, the compilation shows that clearly. To put tenants into a "think tank" on what, if anything, should be done on rents, lol. That's like saying "Hey, let's sort what to do with a Nuclear Power Plant, I know, let's put some average ever-day elec. users in this group to decide how to run it". 

As it all said, from day 1 the St Paul measure has been a complete train wreck AND they know it, everyone knows it. Since inception the only thing they have been doing to make it work is slowly dismembering it into oblivion. 

So what do I think of political posturing and rhetoric for rhetoric's sake, nothing. This is the rental real estate version of the wealthy white politician putting a BLM sign in his front yard then shouting and posting to everyone "look at me, LOOK AT ME, see, SEE what I did". It's nothing, just perception. 

This is just "Talkie-talk" to please the Plebeians, to continue the "ballet-train" because without that in Msp, MN goes full red and all seats flip to correspond. Msp needs something to keep peoples focus on and away from the facts, facts like rampant crime, mass loss of officers, business's saying "f-that" and relocating into suburbs, just a complete decline of MSP in general all thanks to moronic management. 

[James Hamling]

[Jeff Schemmel]

Well.  I got back to the September meeting results, and I have to say these notes are a horrible read and it's really hard to follow; I do get the concept of "frameworks" but it feels so scattered when I read it back.  There's quite a bit of fear-mongering in the comments and little to no actual data represented as a backbone to some of these comments from the board members.  I hope we get something a little more concise.  For example, the 3% cap without CPI consideration is noted to be "the most important thing", but I wish there was some basis for understanding why that comment is there.  I'm going to keep reading for now.

[Wendy Man]

@Jeff Schemmel

I skimmed the minutes, and it looks like somehow 20 frameworks were developed, then reduced to 8 through some means.  And, in the last meeting (10th meeting) this week the members (23 of 25 were able to make it) were asked to choose by themselves one of two frameworks (5 or 7), then discuss its pros and cons and such.  (Part of me does wonder about the 'echo chamber' effect in this type of structure of "select the one you want then talk to others who want the same about it."  For both frameworks 5 AND 7)

Framework 5 is the one that received 14 votes (12 at the meeting and 2 from the people who were not able to attend), and is the strict St. Paul like one.  Framework 7 is the more lenient one that received 11 votes.  As @James Hamling guessed, the votes fell the way you would expect.  The facilitators and the city staff says they will include both Frameworks 5 and 7 in the report.  The framework 5 voters are insisting the working group voted for framework 5 and that should be the only one in the report.  I feel like framework 5 by itself doesn't represent the thoughts of the entire group, and just the make-up of the people who were selected for the Work Group.

I hope we don't end up in the same boat as St. Paul last year (or even this year).  That was NOT good for any group involved - renters, property owners, developers, financiers, city government.  The only ones who benefited seems to be those already renting.  And it seemed those renting in the NICER areas were those who benefited the most.  So not the intended effect by any means.

[Rodney Sums]

Quote from @Wendy Man:

"Minneapolis group recommends strict rent-control plan to City Council"

The group split with 14/25 voting to recommend a strict rent-control plan like the one that St. Paul passed last year, and 11/25 to recommend a plan that was more lenient.  What do you think?

https://www.bizjournals.com/tw...

https://lims.minneapolismn.gov...

 How would those same people feel if someone came along and proposed a law limiting increases in earnings to 3%, no exceptions?  

Your job wants to give you a raise or promotion?  3% max.  Got a new job?  Can't accept more than 3% more than what you earned last year.

Are they suggesting a cap on how much insurance can raise their rates to insure a property?  How about a cap on property taxes?  A cap on all the vendors the landlord has to contract when the tenant wants something fixed or updated?  A cap on utilities the landlord pays?  How about a cap on how much Walmart can sell a TV for?  Or Chevron for a gallon of gas?  

They just got through telling landlords they couldn't evict people for not paying rent, now they don't want them to earn more either but still pay all the bills and fix things.

I'm not insensitive to the fact there's people in communities with lower incomes and challenging situations.  Rather than attack the landlord, more focus should be geared toward other ideas such as higher education, helping people develop skills to increase their income,  pathways to home ownership,  and affordable housing programs/vouchers.  

[James Hamling]

Quote from @Wendy Man:

@Jeff Schemmel

I skimmed the minutes, and it looks like somehow 20 frameworks were developed, then reduced to 8 through some means.  And, in the last meeting (10th meeting) this week the members (23 of 25 were able to make it) were asked to choose by themselves one of two frameworks (5 or 7), then discuss its pros and cons and such.  (Part of me does wonder about the 'echo chamber' effect in this type of structure of "select the one you want then talk to others who want the same about it."  For both frameworks 5 AND 7)

Framework 5 is the one that received 14 votes (12 at the meeting and 2 from the people who were not able to attend), and is the strict St. Paul like one.  Framework 7 is the more lenient one that received 11 votes.  As @James Hamling guessed, the votes fell the way you would expect.  The facilitators and the city staff says they will include both Frameworks 5 and 7 in the report.  The framework 5 voters are insisting the working group voted for framework 5 and that should be the only one in the report.  I feel like framework 5 by itself doesn't represent the thoughts of the entire group, and just the make-up of the people who were selected for the Work Group.

I hope we don't end up in the same boat as St. Paul last year (or even this year).  That was NOT good for any group involved - renters, property owners, developers, financiers, city government.  The only ones who benefited seems to be those already renting.  And it seemed those renting in the NICER areas were those who benefited the most.  So not the intended effect by any means.

 If they truly cared about results, they would task a "work group" of Historians, not tenants, not politicians, HISTORIANS. 

There is a considerable depth of data on all sorts of actions in housing and rent stabilization. They need only to look back at what worked, what didn't, when, how and why. Integrate what's proven, keep out what's proven in the negative, and give that a whirl. 

But, that would just make too much sense now wouldn't it. We tell our children how many times "well, did you learn your lesson?", why is it we don't expect the same level of competence in our political leadership as we do from a 9 year old? 

[James Hamling]

Quote from @Rodney Sums:

Quote from @Wendy Man:

"Minneapolis group recommends strict rent-control plan to City Council"

The group split with 14/25 voting to recommend a strict rent-control plan like the one that St. Paul passed last year, and 11/25 to recommend a plan that was more lenient.  What do you think?

https://www.bizjournals.com/tw...

https://lims.minneapolismn.gov...

 How would those same people feel if someone came along and proposed a law limiting increases in earnings to 3%, no exceptions?  

Your job wants to give you a raise or promotion?  3% max.  Got a new job?  Can't accept more than 3% more than what you earned last year.

Are they suggesting a cap on how much insurance can raise their rates to insure a property?  How about a cap on property taxes?  A cap on all the vendors the landlord has to contract when the tenant wants something fixed or updated?  A cap on utilities the landlord pays?  How about a cap on how much Walmart can sell a TV for?  Or Chevron for a gallon of gas?  

They just got through telling landlords they couldn't evict people for not paying rent, now they don't want them to earn more either but still pay all the bills and fix things.

I'm not insensitive to the fact there's people in communities with lower incomes and challenging situations.  Rather than attack the landlord, more focus should be geared toward other ideas such as higher education, helping people develop skills to increase their income,  pathways to home ownership,  and affordable housing programs/vouchers.  

 Now that's an idea! 

Go ahead, cap rental rate increase BUT, it's a UNIVERSAL economic cap! 

3% cap on rent increase, ok BUT EVERYTHING is capped at maximum increase of 3%! Wage increases, gas sale price, groceries, PROPERTY TAX INCREASES, everything! 

There is a cancer in the U.S. that's being allowed to run wild, and that's the "I am OWED" sickness. And the entitlement has been fostered to drag down any other perceived as "more", to 'elevate" the have/do-not's. That's COMMUNISM! It's not even just socialism, it's COMMUNISM. And it failed, miserably, in every instance it's been attempted. Unless mass poverty was the goal, Communism is excellent at that. 

[Amber Gonion]

@Chris John while I don’t agree with the proposal. The effects so far have not been too bad. We manage properties in both Mpls and St. Paul. and have done remodeling and raised rents, and obviously have raised rents in St Paul to the max every year and will continue. After a dozen years remodeling and appeal for a rent increase and start raising again.

Neither Mpls or St Paul are on our preferred list for areas to invest in they are just like everything else it depends on the location and deal for our investors.

We have always said for the last few years that it is not what those city councils have done, it is what they might do that scares us from recommending investment in those cities.

[Chris John]

@Amber Gonion

I'm sincerely glad that you're having success so far.  A few thoughts to what you've written:

-  It's not the going over the cliff that's the problem so much as it is the landing.

- Are other landlords being precluded from or choosing not to enter those markets based on these laws?  If so, it's already beginning to consolidate and restrict the market.

- I'm not sure I fully understand this statement "After a dozen years remodeling and appeal for a rent increase and start raising again.", but it sounds like you're having to ask for permission to raise rents?  At that point, I don't even really care so much about returns as much as I do about enacting a plan to get my money somewhere where it's safe.

-  This statement nails it for me "We have always said for the last few years that it is not what those city councils have done, it is what they might do that scares us from recommending investment in those cities."

In the end, there's too many other places to deploy money.  I'm happy for anyone that makes it work in these places, but it's just not for me with so many options across the country.  I'm still working on trying to get my money out of California, personally.

Best wishes!

[Tim Swierczek]

@Wendy Man I know a landlord on the working group, and the groups were stacked with advocates for rent control.  This was not an even or fair vote. Luckily the city council and the mayor are not likely to follow the recommendation.

[Tim Bee]

I would assume that property values have gone down to compensate for the decrease in profit from rent control?  Any realtors in those markets affected by this care to comment?