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Property owners file federal lawsuit over St. Paul rent control

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Two building owners based in Bloomington and Minnetonka have filed a federal proceeding against the city of St. Paul, the city council, the mayor’s office, and the director of the St. Paul’s Safety Bureau, calling St. Paul’s new rent management obligation unconstitutional. .. And inspection.

Six jury trials, including allegations that the city’s annual rent increase of 3% violates the U.S. Constitution because the civil lawsuit and the Mandala Warrant do not allow automatic adjustment of inflation. Seeking a trial. In addition, the proceedings allege that the city has not hired enough staff to consider tax exemption requests and hear “useless” appeals if tax exemptions are not granted. According to the proceedings, it constitutes both a lack of constitutional due process and an illegal acquisition of private property.

The proceedings are on behalf of two plaintiffs, Woodstone Limited Partnership of Bloomington and Loft, from Minneapolis-based Farmers Market LLC, by law firms in Minneapolis-based Anthony, Ostrund, Ruwazy, Dressen, and Boylan on Thursday. Was filed in the US District Court. Woodstone is interested in the Woodstone Apartment Building on 2335 Stewart Avenue, just off Shepherd Road, and the Farmers Market loft is on 260 Fifth Street between downtown Mears Park and CHS Field.

The proceedings spanned 59 pages and had 61 pages of additional exhibits, stating that both properties have already lost substantial potential market and resale value as a direct result of rental management, even when housing demand is high. Insist.

Supported by a coalition of housing advocates, the city’s “Rent Stabilization” Ordinance was issued to voters last November over opposition from a majority of the St. Paul City Council. Ordinance that came into effect on May 1 The housing rent limit is 3%, and the city’s enforcement regulations allow landlords to self-certify an increase of less than 8% above the voter-approved limit...

Rent management challenges the founder

Since the return of the first soldiers from World War I, property owners have challenged the legality of rent management obligations with limited success. The US Supreme Court upheld the country’s first rent management law and the New York City Emergency Housing Act a century ago in Washington, DC. Despite major changes over the years, it has withstood a century of legal attacks.

According to Farmers Market lawyers Woodstone and Loft, the difference between St. Paul is that the capital’s mission is the strictest in the country, with relatively limited staff to exempt new construction, adjust inflation, and consider possibilities. Is not providing funding for. For exemption or appeal.

In other rent-managed cities, apartments can be returned to market rents or near market prices after they are vacant.

Neither of these is true in St. Paul, they said, and as a result, construction of new rental housing has almost stopped, defeating the purpose of the law.

“Preliminary economic analysis shows that St. Paul’s real estate value has already fallen by 6-7% in all real estate and 12% in rental properties, with a net loss of over $ 1.6 billion in the first quarter alone. Shows. In 2022 alone “reads the proceedings. “The sudden fall in real estate prices, coupled with the withdrawal from many critical development markets, including affordable housing, does not alleviate the affordable housing crisis that plagues St. Paul, but significantly. Is expected to worsen. “

“In short, the net effect of the ordinance is already the opposite of what its supporters wanted to achieve.”

Proponents of rent management obligations predict that the market will revive over time. The Mayor of Saint Paul’s Melvin Carter office has proposed a 15-year tax exemption for new construction, and the Rent Management Task Force recently submitted additional recommendations on improving and changing the implementation of city ordinances.

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