Sherman Associates is redeveloping a downtown office tower into market-rate apartments. By Katie Galioto. A developer who is converting a downtown St. Paul office building into apartments made a deal with the city: If the project is subject to rent control, the city will give millions more in subsidies.
The first-of-its-kind agreement between the city and Sherman Associates was approved late last year by the City Council. But the deal with Sherman Associates is an acknowledgement by city leaders that some developers will walk away from projects if they lose the power to raise rents. Peter St. If the new council, a progressive majority that has indicated support for rent control, were to repeal the exemption, the tax subsidy for the Landmark project goes up substantially.
After voters passed rent control in the fall of , developers halted their projects in St. Paul, saying the policy caused costs to rise and investors and lenders to back out. Carter convened a task force to recommend changes to the law.
The council then voted in fall to exempt new construction and income-restricted units from rent control. Jalali and Yang voted against the changes, siding with rent control advocates who accused developers of using scare tactics.
Conversations about rent control cooled down until last fall, when all seven St. Paul council seats were on the ballot. As candidates fielded questions about the policy, some developers grew concerned that the new leaders would revert to the original, more restrictive version approved by voters. Carter said in an interview that he does not expect any imminent, significant changes to rent control. The city has not received similar risk-mitigation requests, and Carter said any that arise would have to be considered on a case-by-case basis.
