Introduction

In January 2026, Kaohly Vang Her was sworn in as mayor of St. Paul — the city’s first woman and first Hmong American mayor. She had entered the race the previous August with no institutional backing, against an incumbent endorsed by both of Minnesota’s U.S. senators and the governor. She won by fewer than 1,900 votes in the final ranked-choice round.

Among the things she ran against was the rent stabilization ordinance her predecessor had endorsed in 2021 and then spent three years dismantling. She has said she is open to weakening it further.

That is an unusual outcome for a policy 53 percent of the city’s voters approved four years earlier. Understanding it requires looking past the rent cap itself and at what happened to the thing St. Paul stopped building.

In simple terms: the argument in St. Paul is no longer mainly about rent. It is about who pays the city’s property tax bill after the apartment sector stops growing.

Background: What St. Paul Enacted

On November 2, 2021, St. Paul voters approved a Residential Rent Stabilization Ordinance by ballot measure. Minneapolis voters, the same night, approved a charter amendment merely authorizing their City Council to regulate rents — an ordinance that has never been enacted.

Minnesota is one of the few Midwestern states without a statewide ban on local rent control. Under Minn. Stat. § 471.9996, local governments may adopt it, but only with voter approval at a general election. That statute is why St. Paul went to the ballot, and why Minneapolis would have to go back a second time.

St. Paul’s ordinance took effect May 1, 2022. As written, it capped rent increases at 3 percent in any 12-month period and applied to every unit in the city, including new construction, with no vacancy decontrol. Among American rent regulations, the absence of a new-construction exemption made it close to unique — and, by most accounts, the strictest in the country at the time of passage.

Policy Explanation: Four Years of Narrowing

The ordinance in force today is a substantially different law from the one voters passed.

September 2022 (effective January 1, 2023): the City Council added a 20-year exemption for new construction, a permanent exemption for affordable housing developments, vacancy decontrol permitting above-cap increases after a just-cause vacancy, and a self-certification path for increases between 3 and 8 percent. The city approved the large majority of landlord requests for above-cap increases.

May 7, 2025 (effective June 13, 2025): by a 4–3 vote, the council replaced the rolling 20-year window with a permanent exemption for any unit whose first certificate of occupancy was issued after December 31, 2004. Then-Mayor Melvin Carter had requested it, saying the city’s housing equity goals could not be met without building more homes. Council Members Nelsie Yang and Hwa Jeong Kim, whose amendments to extend the window to 30 years failed, warned that a permanent carve-out would gradually shrink the regulated stock until working-class tenants were concentrated in the city’s oldest buildings.

In simple terms: the cap that once covered every apartment in St. Paul now covers only buildings that opened before 2005.

The Permit Collapse

Multifamily permits in St. Paul, in units, per Federal Reserve Bank of Minneapolis data:

Year	Units permitted
2020–21	2,000+ (most since 1970)
2022	1,169
2023	1,204
2024	404
2025	357

The immediate reaction was sharper than the annual totals suggest. HUD data reported by the Wall Street Journal showed apartment permits down roughly 79 percent in early 2022 against the prior year. Axios, using the same dataset, put the January-to-April 2022 decline at 86 percent while Minneapolis held steady. By 2023, apartment permitting in St. Paul had fallen 48 percent over twelve months against a national trend running the other way.

The mechanism developers described is not ideological, and everything downstream follows from it. A new apartment building is underwritten on projected rent growth through lease-up and stabilization — the two to four years in which a building fills and rents move toward market. Cap that growth at 3 percent nominal from the certificate of occupancy forward, in a period when construction costs were rising roughly 7 percent a year, and the pro forma does not clear a lender’s return threshold.

The project does not get built. Critically, it does not fail to get built in the region — it gets built in Bloomington, or Roseville, or across the river.

That distinction shapes everything below.

Impact I — Jobs: The Work Didn’t Disappear. It Moved.

This is where commentary on St. Paul most often overreaches, and precision matters.

Regional construction employment did not collapse. Building construction employment in the Twin Cities metro averaged 20,900 workers per month in 2025, a 1 percent increase over 2024. Statewide, construction employment rose 2.7 percent year-over-year as of mid-2025, outpacing national growth of 1.4 percent. Minnesota’s construction sector employed nearly 148,000 people in 2025 — about one job in 20 statewide — at an average annual wage of roughly $91,200, some $15,000 above the all-industry average.

There is no evidence that St. Paul’s ordinance cost the Twin Cities construction trades a single net job. In a shared metropolitan labor market, capital and crews relocate. A carpenter who would have framed an apartment building in Frogtown framed one in Woodbury instead.

What St. Paul lost is narrower and specific to the city.

Permit and fee revenue. Impact fees, hookup charges and plan review fees are collected by the jurisdiction where the shovel goes in the ground. The National Association of Home Builders local impact model assumes roughly $13,672 per multifamily unit in permit, hookup, impact and other fees paid to local governments in a typical local area. That is a national average from an industry association, not a St. Paul figure — but against a gap of roughly 600 to 700 units a year between the 2020–21 run rate and the 2024–25 totals, it describes a real hole in a department budget.

Construction-period local spending. NAHB estimates that building 1,000 average rental apartments supports between 1,133 and 1,250 full-time-equivalent jobs across construction, materials, transport and professional services. These are trade-association models built on national averages, and they should be read as such: they are advocacy-adjacent, and they do not net out the jobs created wherever the displaced project was ultimately built. The local capture — subcontractors headquartered in the city, equipment rental yards, the lunch counters near the site — accrues to the host jurisdiction.

Permanent on-site employment. The National Multifamily Housing Council estimates ongoing property operations support roughly four permanent jobs per 100 apartments — leasing agents, maintenance technicians, property managers — plus the resident spending that follows occupancy. Those jobs do not relocate. They simply never exist.

One caveat governs all 2026 labor data. Operation Metro Surge, the federal immigration enforcement action in the Twin Cities, severely disrupted construction labor in the region in early 2026; one Minneapolis-area builder described crews walking off sites and a roofing contract going from 80 workers to six. Minneapolis recorded nine new residential construction permits in January and February 2026, 40 percent below its three-year average for the period. Any 2026 construction figure read as a rent control signal is being misread.

Impact II — Tax Revenue: The Shift, Not the Shortfall

This is the most quantified part of the story, and the part most frequently reported wrong.

Under Minnesota law, a city certifies a levy — a dollar amount — and the tax rate is derived by dividing that levy across total net tax capacity. Falling apartment values do not reduce what St. Paul collects. They redistribute who pays it. The city gets its money. The question is from whom.

Federal Reserve Bank of Minneapolis analysis published in June 2026, alongside a new Saint Paul Housing Dashboard, quantifies the redistribution:

• Median apartment market value, per the Ramsey County Assessor, fell 12.9 percent between 2020 and 2025, from $121,547 to $105,875 — a decline that persisted despite the higher assessed values of what new construction did occur.
• Adjusted for inflation, owners of multifamily buildings in aggregate paid 27 percent less in property taxes in 2025 than in the 2022 peak year: $103 million, down from $141 million.
• Median annual property tax per rental unit fell from an inflation-adjusted peak of $2,825 in 2020 to $1,958 in 2025.
• Over the same period, annual property tax on the median-priced St. Paul single-family home rose from $3,442 to $4,264.

Roughly $38 million a year moved off apartment owners. It did not evaporate. It landed on homeowners and other property classes.

Rent stabilization is not the only force pushing in that direction, and it is not the largest one. Downtown St. Paul’s commercial net tax capacity fell about 11 percent between 2024 and 2025 on an office market that never recovered from the pandemic. The commercial and industrial share of the city’s total net tax capacity has fallen from nearly 30 percent in 2016 to roughly 23 percent in 2026. Estimated market value of commercial and industrial property has declined three consecutive years, from $23.1 billion in 2024 to a preliminary $22.1 billion in 2026 — and in inflation-adjusted terms from a 2023 peak near $24.9 billion to an estimated $21.5 billion, erasing nearly all of the real gains since 2021.

Ramsey County Auditor Tracy West has told the county board that declining commercial and apartment values together are shifting the burden onto residential taxpayers. Apartments are one leg of that. Downtown offices are the other, and the bigger one.

The compounding effect has been politically decisive. Owners of median-value St. Paul homes faced 2026 property tax increases ranging from 7.5 to 16.3 percent once voters approved a $37.2 million annual school excess levy on November 4, 2025 — the same night they replaced the mayor. The city’s 2026 levy rose 5.3 percent. Mayor Her has proposed a 6.8 percent levy increase for FY2027.

The genuine revenue loss is the base that was never built. Property tax redistribution is zero-sum within a fixed levy. But units never permitted never enter the tax base at all. The sales tax exposure is instructive by proxy: Minneapolis staff, modeling a framework comparable to St. Paul’s original ordinance, projected a $34 million to $47 million sales tax loss under the strictest scenario — conservatively assuming an impact on only one of five local option sales taxes. St. Paul raised its own local sales tax by a full percentage point in 2023, to 9.875 percent, the highest in the state.

Impact III — Inventory: The Shortage Is Deferred, Not Avoided

Here the evidence cuts in more than one direction, and honest reporting has to say so.

The predicted rent spike has not happened. Despite the construction slowdown, rents in St. Paul have been flat to falling. Libby Starling, a senior community development advisor at the Minneapolis Fed, has said the finding surprised researchers. HousingLink’s March 2026 St. Paul brief puts median one-bedroom rent at $1,095, up 1 percent year over year; median two-bedroom rent at $1,425, down 1 percent; three-bedroom at $1,925, up 4 percent.

Affordability of available units improved at some income bands. Of St. Paul rental vacancies in March 2026, 56 percent were affordable to households at 50 percent of area median income, up from 43 percent a year earlier; 87 percent were affordable at 60 percent AMI, up from 77 percent. At 30 percent AMI the figure was zero in both years — the deepest need remains entirely unmet, which no rent cap and no construction boom has ever addressed without subsidy.

The risk sits on the far side of the pipeline. Multifamily development runs on a three-to-five-year lag between financing and delivery. Units not permitted in 2024 and 2025 are units that will not deliver from 2027 through 2029. Marcus & Millichap’s second-quarter 2026 Twin Cities multifamily report frames scant construction as supporting a favorable outlook — favorable, that is, for owners of existing buildings, which is another way of describing a supply constraint. The Metropolitan Council projects St. Paul will add 29,100 residents and 12,700 households by 2040. Those households arrive into whatever was built for them.

Existing stock is the quieter problem. The classic failure mode of rent regulation is not a rent spike; it is deferred maintenance. Capped revenue against uncapped operating costs eventually comes out of the building. The Fed’s interviews with St. Paul owners describe that squeeze directly — operating costs rising while rent revenue stays flat, with several downtown owners reporting that full-time security has become a line item their original underwriting never contemplated. Owners are actively appealing assessments on the basis of falling sales prices. Buildings that trade below replacement cost do not get recapitalized.

And tenants absorbed the rollback anyway. Under the amended ordinance, renters in older St. Paul buildings are seeing increases of 8 percent. The people the 2021 measure was written for are largely the people the amendments moved.

Analysis: What the Record Does Not Establish

The causal claim is weaker than advocates on either side suggest, and the limits are specific.

• The decline began before the ordinance. St. Paul’s multifamily permitting fell earlier and faster than its neighbors’, starting just before rent stabilization passed. That is consistent with an anticipation effect. It is also consistent with St. Paul-specific factors that predate the ballot measure.
• The whole country slowed. Multifamily construction contracted nationally from 2022 on interest rates and construction costs. Minneapolis permitting slowed too, beginning in 2023.
• St. Paul is not a zoning laggard. It adopted its own missing-middle reform allowing four to five units on formerly single-family lots, and has been permitting small apartment buildings faster than Minneapolis over the last five years.
• Downtown offices, not apartments, drive the commercial tax base problem. Attributing the homeowner tax shift primarily to rent control does not survive contact with the office vacancy data.
• The design was extreme, and design may be the variable. The 2021 CURA study commissioned by Minneapolis modeled caps at CPI and at 75 percent of CPI and found returns comparable to what Twin Cities apartment owners actually achieved through the middle of the market since 2009. What St. Paul enacted — a hard 3 percent nominal cap, no new-construction exemption, no vacancy decontrol, adopted at the onset of the sharpest inflation in four decades — was among the strictest regimes in the United States. Its failure is not automatically a verdict on rent stabilization designed differently.
• No study has cleanly isolated the effect, and analysts who conclude rent stabilization meaningfully contributed to the decline have said so in those terms.

Conclusion

St. Paul now has an ordinance most of its housing stock is exempt from, a mayor elected in part on dissatisfaction with it, a commercial tax base in its fourth consecutive year of decline, and a development pipeline that will deliver into the back half of the decade at a fraction of its 2021 rate.

The city did not settle the rent control argument. It demonstrated something narrower: that a single city inside a shared metropolitan labor and capital market cannot cap returns on new construction without exporting the construction — and that the cost of doing so shows up first not in rents, but on the tax bills of people who own their homes.

Key Takeaways

• St. Paul multifamily permits fell from more than 2,000 units a year in 2020–21 to 404 in 2024 and 357 in 2025.
• The ordinance voters approved in 2021 covered every unit in the city. Since June 2025 it permanently exempts anything with a first certificate of occupancy after December 31, 2004.
• Regional construction employment did not fall. Twin Cities building construction employment rose about 1 percent in 2025. The work relocated within the metro; St. Paul lost the permit fees, local spending capture and permanent on-site jobs.
• Inflation-adjusted property taxes paid by St. Paul multifamily owners fell 27 percent from the 2022 peak — $141 million to $103 million — while tax on the median single-family home rose from $3,442 to $4,264.
• Property tax is levy-based: falling apartment values shift the burden rather than cutting city revenue. The real revenue loss is the tax base never built.
• Rents have been flat to falling, and affordability of available units improved at 50 and 60 percent AMI. The supply risk is deferred to 2027–2029 deliveries.
• Downtown office decline, not rent control, is the larger driver of the commercial tax base contraction.

Frequently Asked Questions

Does St. Paul still have rent control?

Yes, but it now applies only to buildings whose first certificate of occupancy was issued on or before December 31, 2004. Everything newer is permanently exempt under the amendment the City Council adopted May 7, 2025, effective June 13, 2025.

Does Minneapolis have rent control?

No. Minneapolis voters approved a charter amendment in November 2021 authorizing the City Council to regulate rents, but no ordinance has ever been enacted. Any ordinance would also have to return to voters for approval.

Did rent control cause St. Paul’s construction decline?

No study has cleanly isolated the effect. Multifamily construction slowed nationally over the same period on interest rates and costs, and St. Paul’s decline began shortly before the ordinance passed. Developers and lenders have consistently identified the 3 percent cap on new construction as a material factor, and the city amended the ordinance four times in response.

Did St. Paul lose construction jobs?

Not regionally. Twin Cities building construction employment averaged 20,900 workers a month in 2025, up about 1 percent from 2024. Projects relocated within the metropolitan labor market. St. Paul lost permit and fee revenue, local spending capture during construction, and the permanent on-site jobs that come with occupied buildings.

Did the city lose property tax revenue?

Not directly. Minnesota cities certify a levy in dollars, so the total collected is set by the council, not by property values. Falling apartment values shifted roughly $38 million a year of that burden onto homeowners and other property classes. The genuine loss is the tax base from units that were never built.

Have rents gone up as a result?

Not so far. Median one-bedroom rent in St. Paul was $1,095 in March 2026, up 1 percent year over year, and median two-bedroom rent fell 1 percent. Analysts at the Minneapolis Fed have described the flat-to-falling trend as surprising given the construction slowdown.

Sources

• Federal Reserve Bank of Minneapolis, “Housing policies in Saint Paul yield mixed results, data and developers say” (June 2026), and the Saint Paul Housing Dashboard
• Federal Reserve Bank of Minneapolis, “Unpacking supply and demand in rent trends since the Minneapolis 2040 Plan” (August 2025)
• City of Saint Paul, Rent Stabilization Ordinance, rules and amendment record
• Ramsey County Assessor; Ramsey County Auditor Tracy West, testimony to the County Board
• MyVillager, “St. Paul’s shrinking commercial tax base: A fiscal warning sign” (April 2026); property tax coverage (October 2025)
• City of Saint Paul, “Taxes Payable 2026” council presentation
• HousingLink, St. Paul Rental Housing Brief, March 2026
• Minneapolis Rent Stabilization Staff Analysis Report (April 2023)
• CURA, University of Minnesota, Minneapolis Rent Stabilization Study (2021)
• Minnesota DEED Labor Market Information; CareerForce Minnesota construction profile (2025); Mortenson Construction Cost Index, Minneapolis
• NAHB, “The Local Economic Impact of Home Building” (industry association estimates)
• NMHC, “The Impact of Apartment Communities and Their Residents on Local Economies” (industry association estimates)
• Marcus & Millichap, Minneapolis–St. Paul Multifamily Market Report, 2Q 2026
• Metropolitan Council household and affordable housing need forecasts
• MPR News, KSTP, FOX 9, Star Tribune, Minnesota Reformer, MinnPost, Governing — St. Paul council votes and the 2025 mayoral election
• CNN Business; Sahan Journal — construction labor disruption from federal immigration enforcement (February–March 2026)
• Wall Street Journal; Axios; Planetizen — 2022–2023 HUD permit data
• Minn. Stat. § 471.9996