Mayor Melvin Carter is alarmed by the decline in housing construction in St. Paul and will ask the City Council to drastically change rent controls, making them permanent for housing built before 2005, but permanently and completely removing rent caps for housing started after that time.

“The fundamental economics of maintaining a 50-year-old building are fundamentally different from those of maintaining a new building,” Carter said in his budget address on Tuesday.

The mayor said a number of factors, including high interest rates, have worked against the development of new multifamily housing in St. Paul. “I don’t think you have to assign blame to take responsibility,” Carter said in a recent interview, noting that the real estate development community has made it clear that obtaining financing to build new housing has proven difficult.

Reactions from city council members varied on Tuesday, from Councilmember HwaJeong Kim, who spoke out clearly against the mayor’s proposal, to Councilmember Rebecca Noecker, who called for more data linking the decline in the housing market to rent control.

Carter hopes the City Council will vote by year’s end on a key amendment to the voter-approved rent control ordinance, laying the groundwork for a series of housing initiatives and downtown investments he hopes to pass in 2025. Among other things, the mayor wants to advance new renter protections, allocate $1 million to waive certain fees for developers converting downtown office buildings to housing, and expand a Rondo-based homebuyer program called the Inheritance Fund to the city’s West Side.

The mayor made his announcements Tuesday during his annual budget speech at the Ordway Center for the Performing Arts downtown, where he proposed a city property tax increase of $208.5 million — or 7.9%. Given the fluctuating values ​​of taxable properties, the $225 million levy would result in an estimated property tax increase of $132 next year on a median-value home that will be worth around $290,000 next year.

Proposed city budget 2025

Overall, the city’s proposed 2025 budget would rise to $854.9 million, a $25 million increase over the current year, if the council adopts Carter’s budget proposal without major changes. The proposal calls for 28 new full-time employees – including six new firefighters – bringing the city’s total workforce across all departments to 3,509 employees.

As spending deadlines for critical COVID relief funds from the federal American Rescue Plan and other one-time funding fast approach, the city relied on a handful of new or additional funding sources, including a one percent “common cent” sales tax approved by city voters in November to support parks and streets.

The Common Cent sales tax will fund 100 projects “in every corner” of the city, the mayor said, including a major road construction project that will begin next month on Grand Avenue.

“It was challenging to put this budget together for a number of reasons,” Carter said. “We had one-time funding that helped us weather the storms of the last few years.”

In an interview last week that set the stage for his budget speech, Carter said more needs to be done to promote downtown St. Paul as a “preferred destination” because falling property values ​​downtown could soon have an impact on the entire city. But property owners have yet to feel the full impact of a potential budget cliff.

His budget calls for more cameras, cleaning crews and police patrols downtown, an expanded Downtown Improvement District and a downtown project manager in the St. Paul Department of Planning and Economic Development.

Looking at the entire city, Carter said public safety, housing, downtown investment and climate change are at the top of his agenda.

Investments in public safety in line with the Community First strategy: $4.5 million

Carter said his budget aims to achieve “safer outcomes in every neighborhood,” with $1.4 million in investments ranging from continuing free youth sports for children ages 10 and up to a gun disposal program run by the city’s district attorney’s office.

The St. Paul Fire Department’s staffing level would be increased by four firefighters in this budget. About $520,000 approved last year will hire two more firefighters and fund eight promotions. Other initiatives include staffing a victim/witness program, re-staffing a forensic police unit and public safety initiatives in the downtown area.

The International Association of Fire Fighters Local 21 has requested 12 more firefighters, union president Mike Smith said.

“This is progress,” Smith said after Carter’s budget speech. “… It’s a step in the right direction. Our calls cannot continue to increase without hiring additional staff.”

Another $3.1 million will support two police academies in St. Paul next year, as well as youth intervention and staffing through St. Paul Parks and Recreation and “community-first infrastructure” in libraries, including improvements at Rondo Library, which sometimes draws large groups of young people.

All-In Housing Framework: $7.4 million

The mayor proposed $5.3 million in assistance for homeowners and renters, including expanded assistance for downtown homebuyers, new investments in a home improvement loan program, and a $500,000 investment in a low-income homeowner assistance program. Other initiatives include a weatherization and electrical upgrade program, $1 million in rental subsidies, a new tenant protection officer, and support for tenant services through Home Line.

Another $1.4 million would be allocated to a fee waiver program for converting downtown offices to apartments and to speed up the approval process for new housing. Another $1 million would be allocated to homeless initiatives, including $500,000 for a new “Familiar Families” family housing program to be launched by Heading Home Ramsey County. Another $500,000 would help Catholic Charities, which operates the downtown emergency shelter campus known as Higher Ground/Dorothy Day, weather budget pressures amid rising demand for homeless services.

Carter said specific policy proposals in the housing sector will include changes to rent control, revising a number of proposed tenant protections that had been delayed by court orders, a proposed charter amendment to allow the City Council to enact new administrative penalties, and expanding the inheritance fund to include descendants of residents evicted from the West Side Flats decades ago.

The mayor’s housing initiatives would be supported by an expected $5 million from a citywide sales tax approved by the state legislature last year to fund public transit and housing in the Twin Cities.

Downtown Vitality: $1.7 million

Downtown initiatives include increased sidewalk maintenance, event promotions, public art and banners, $275,000 for increased downtown patrols, $200,000 for a camera system and related support, $78,000 for increased downtown cleaning, a downtown project manager in Planning and Economic Development, a citywide grant program to support events and festivals, the expanded Downtown Improvement District and an office-to-residential conversion study.

Two business coalitions – the St. Paul Downtown Alliance and the St. Paul Area Chamber of Commerce – issued statements Tuesday generally supporting the mayor’s efforts, but the Chamber of Commerce urged Carter to try to keep property taxes low as small businesses are still recovering from the pandemic.

Climate change: $1.4 million

The mayor said the city will extend Xcel Energy’s existing franchise fee, which currently runs from May through October, for two months — April and November — raising $1.4 million to combat the impacts of climate change. Initiatives include changes to snow removal operations, a Right Track youth work program focused on planting and maintaining trees in parks and rights-of-way, a climate change coordinator, a project management technician and staff in the Department of Safety and Inspections to manage the changes related to the state’s updated energy code.

Mara H. Gottfried contributed to this report.