By Erin Hassanzadeh

ST. PAUL, Minn. (WCCO) – In November, St. Paul voters said “yes” to a rent stabilization ordinance, which will cap rent increases to no more than 3% a year.

It’s the strictest measure of its kind in the nation, but there are still exceptions to the policy.

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Even if there’s a new tenant, landlords cannot raise rent more than 3% a year without filing for an exception.

“It means that our kids don’t have to switch schools mid-year, it means we can keep our jobs and have long term stable employment. It means that we can start saving up for that small business we always dreamt about,” said Tram Hoang, Director of Policy and Research at the Housing Justice Center. “Or saving up for a down payment for that forever home.”

“It certainly is a challenge because it is the only one like it in the nation,” said Angie Wiese with the city of St. Paul.

Landlords can submit an application to raise rents between 3% and 8%. Anything above 8% needs a staff determination, and the city council is working out other details.

“It’s easier to decide to go elsewhere right now, said Chris Osmundson, director of development with Alatus.

“A new construction exception can happen in the future if amended by ordinance but not within the first year of its implementation,” said Wiese.

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It’s all giving some developers pause.

“I really think you see people putting their pencils down, so to speak,” said Osmundson.

Osmundson says rent stabilization isn’t the only hurdle for new projects but it’s pushing some over the edge.

“I would say there’s projects that have been put on hold directly from rent control,” he said.  “I think right now we would be hesitant to look at another project in St. Paul.”

Ryan Companies is transforming the old Ford plant into Highland Bridge, a corridor with thousands of market rate and affordable units.

The company tells WCCO-TV they’re pausing the project until there’s more clarification on exemptions for new housing construction.

Starting Sunday, landlords can formally submit exception requests. Tenants can also report concerns to the city.

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The Minnesota Multi Family Housing Association says at a time when St. Paul needs more investment in housing, this policy is having the opposite effect.

Erin Hassanzadeh