St. Paul’s rent control ordinance capped annual rent increases at 3 percent for most units, regardless of turnover or inflation. Developers responded by walking away. According to federal housing data, apartment permits in St. Paul dropped 79 percent in the year after the law took effect. Investment stalled and lenders pulled out. Property values declined, reducing the tax base and squeezing public budgets.
One of the biggest projects affected was Highland Bridge, a 122-acre redevelopment where market-rate units were shelved while subsidized and senior housing continued. St. Paul has since amended the law to exempt new construction, but even with changes, developers expect to build 700 fewer units than planned and are years behind schedule.
Landlords, too, are adjusting in ways that undercut the ordinance’s intent. Some who previously kept rent increases modest now raise them by the 3 percent cap each year. Others are selling. A 2022 National Bureau of Economic Research study found St. Paul property values fell at least 6 percent due to the ordinance. Fewer upgrades, fewer transactions, and less tax revenue have followed.
Meanwhile, Minneapolis avoided rent control and pursued supply-side reforms. A 2020 land-use overhaul ended single-family zoning and cleared the way for more apartments. Permits to build housing rose nearly fourfold in early 2022 compared with the year prior. New apartments clustered around the city’s downtown core, attracting renters and private investment. Rents grew more slowly than in either St. Paul or the national average.
Still, the new supply favored higher-income tenants. Eviction filings rose in both cities—more than 60 percent above pre-pandemic averages—raising questions about how much even strong supply growth can do for lower-income households. Minneapolis has tried to address this through expanded housing subsidies rather than price controls.
This distinction is key. Minneapolis Mayor Jacob Frey, who defeated a challenger promising rent freezes, emphasized his administration’s commitment to maintaining a regulatory environment where development remains viable. He’s even written personal assurances to developers that rent control is not coming.
Cities looking to ease housing pressure can draw several conclusions from the Twin Cities’ experiment. First, supply restrictions reduce supply. This sounds obvious but often goes unheeded. Second, zoning reform is a proven way to enable more housing construction without direct subsidies. Third, even in supply-friendly cities, targeted aid for lower-income renters may still be needed—but it works best as a complement, not a substitute, for broad housing availability.
None of this is to say Minneapolis has solved the affordability challenge. But it has avoided the supply collapse seen across the river in St. Paul. Cities interested in expanding housing access should study both sides carefully. Regulation without feasibility slows growth. Reforms that unlock production offer a better path.
