A State of Denial
In November 2021, voters in St. Paul approved one of the nation’s most stringent rent control laws. The law was later amended to loosen the controls slightly. However, that did little to motivate the construction of new housing. The U.S. Department of Housing and Urban Development (HUD) reports that building permits in St. Paul fell by 48 percent in 2022. City officials are disputing the numbers and are clearly in a state of denial.
A spokesperson for the city’s Department of Planning and Economic Development (PED) said,
We are not prepared to make generalizations about the housing market with an appropriate degree of confidence based on a relatively small number of datapoints that have been generated since the two different versions of rent stabilization have been adopted or gone into effect.
The disagreement stems from the way HUD and PED count permits. HUD uses occupancy permits, while PED uses building permits. Consequently, HUD’s numbers lag PED’s. But this is a minor issue. Rent control stifles new housing development, and there is an abundance of datapoints illustrating this fact.
One need only look at any city that has implemented rent control to find datapoints. One of the most recent is Boston. Though rent control hasn’t taken effect in the city, the threat of future controls resulted in a decline in building permits of 94 percent in 2022.
Though such declines are easy to predict, city officials in both St. Paul and Boston are in a state of denial. They don’t want to acknowledge what critics of rent control claimed before passage of such laws. They believe that somehow they will do rent control better than other cities, and thereby avoid the decline in the quality and quantity of rental housing that invariably occurs.
To these city officials, datapoints from other cities are irrelevant. “Our city is different,” they implicitly proclaim. And so, they dismiss any claims of impending problems. This is what happens when principles are abandoned during the consideration of public policy.