Katherine Banbury’s rent went up $90 a month even before she signed her first lease. In 2018, Banbury was living in Wisconsin and hoping to move into Dominium’s new Cambric Apartments, which had been marketed as attractive HUD-backed affordable housing on St. Paul’s East Seventh Street. It would take about three weeks for Dominium to complete the means test to determine that she was eligible based on the income limits.
When he walked in to sign his lease, he discovered that the price had gone up. But Banbury, a yoga instructor and health food chef, had already made plans to move to St. Paul. She felt locked up.
“I’ve lived here for over four years, and it’s a revolving door,” said Banbury, who has seen many neighbors move in who are fed up with “Section 42,” rents regulated by the federal government. “It’s like taking candy from a baby. You have to have a means test to get in here, and they’ve raised the rent almost 30 percent since I’ve been here. They say it’s affordable.”
Some of those rent increases occurred at the start of the pandemic or within their two-year lease, drawing the ire of St. Paul-based legal advocates. The attorneys at the Housing Justice Center successfully fought increases that took place within the term of your lease, but another rent increase is coming.
This would increase your rent by 8 percent, more than double what is allowed by St. Paul’s new rent control ordinance, unless the property owner can prove the need for an exception. Banbury, represented by the Center for Housing Justice, is scheduled to present her case at a public appeal hearing on Tuesday, July 19, at St. Paul City Hall on behalf of all tenants of Cambric and Union Flats, a high-rise building. domain apartments. on Hampden Avenue in St. Paul.
Under the new voter-approved city ordinance, rent increases must be capped at 3 percent, unless a property owner can justify higher increases through documentation, such as evidence of increased operating costs or a recent remodel. And there is no evidence that Cambric has been remodeled. “In the eight Dominium buildings in St. Paul, they’re asking for an 8 percent raise, and that’s crazy,” Banbury said. “They haven’t done anything to this building, nothing. We’ve had our exercise machines broken since December.”
PROPERTY BLAMES INFLATION
Khayree Duckett, a spokesperson for Dominium, confirmed that the company is seeking increases of 8% across the board in St. Paul and 12.5% elsewhere in the East and West metro area, but noted that the company is operating within the maximum increases. permitted by HUD and the city itself. St. Paul allows homeowners to “self-certify” necessary increases between 3 and 8 percent without a formal review hearing.
He said Dominium’s biggest expenses, in the entire metro area, have been property taxes, insurance, utilities and “bad debts” or uncollected rent.
“The city provided a process on how to calculate an allowable rent increase,” Duckett said. “Our calculations showed that we are entitled to a higher than 8 percent rent increase, but in the best business sense, for city staff and our staff time, we believe it made more sense to present the 8 percent in the when we make those requests. ”
Dominium, a Plymouth-based for-profit housing provider, describes itself as the fourth largest provider of affordable housing in the nation, and has been widely praised by elected officials for adding attractive housing for seniors low-income, artist housing, and mixed-income apartments. buildings in cities across the country. He is also known for his historic restorations of properties such as the A-Mill Artist Lofts in Minneapolis and the former Schmidt Brewery in St. Paul.
At Fort Snelling’s Upper Post, the company received support from Hennepin County to renovate more than 20 historic buildings into affordable housing for veterans. It operates eight sites and 1,400 housing units in St. Paul alone.
In recent months, the cheers have died down, and some state legislators have openly described Dominium’s practices as unaffordable for the vulnerable population it serves.
St. Paul City Councilwoman Jane Prince said she once raised the issue of mid-lease rent increases with the city’s Housing and Redevelopment Authority and encouraged the city not to back Dominium in future projects if the practice continued. “It’s very difficult to work with them,” Prince said. “The rents go up to the maximum.”
Banbury said her rent went up $117 a month in the early days of the pandemic, when she and many of the other tenants around her were recently unemployed. A property manager at the time, she said, told her they had to raise rents in accordance with federal HUD requirements. “It’s up to them,” Banbury said. “It doesn’t depend on HUD. They don’t have to raise rents as much. They don’t have to raise rents at all.”
Beyond the documented costs, Dominium officials have said there’s another reason they’re not bound by St. Paul’s new rent control cap: They have a replacement agreement with the city, known as a “settlement agreement.” of land use restriction”, related to its federal low-cost law. income housing tax credits. Under that agreement, they maintain they can raise rents as much as HUD allows.
‘PRACTICALLY REQUIRES AN AUDIT’
More broadly, company officials have also noted that Dominium aims to serve residents who earn between 50 and 60 percent of the area median income, a sum that tends to rise over time. Some renters who have not seen their income increase at the same time, or who have not had a cost-of-living adjustment proportional to their Social Security benefits, end up falling below the threshold over time, although most renters still are within that income band.
“The rent increases we’ve had in each of our communities are due to operating costs that have been affected by inflation,” Duckett said. “Insurance costs are rising rapidly, property taxes, building maintenance, the cost of construction, they are all rising.”
Jack Cann, an attorney with the Center for Housing Justice, recently shared a general written response with Prince, the city councilman.
“Cambric’s proposed new rent represents a 23.5 percent increase over the 2019 rent,” Cann wrote. “Operational expenses would have had to increase at an even faster rate than rent, probably at least twice the increase (in the consumer price index). This is so unlikely that it practically requires an audit.”
William Kreye, a four-year resident of The Legends of Cottage Grove senior living, isn’t convinced either. Given low interest rates during the pandemic, debt payments on some refinanced properties may even have decreased. Duckett confirmed that at least one St. Paul property, 808 Berry, had been refinanced in 2021 prior to property improvements.
“A big expense for Dominium is paying off debt, and on properties built in previous years, this cost shouldn’t go up,” said Kreye, who is facing a 12.5 percent rent increase this year. “Reps from Dominium came to Cottage Grove a few weeks ago and basically said HUD’s calculation allowed for the increase and even though they didn’t have to, they took the maximum.”
Elsewhere in the East and West metro area, Dominium is raising rents on its senior housing buildings by 12.5 percent this year, prompting open pushback from tenants. Banbury joined several residents of the Cambric Apartments on July 6 who picketed outside the River North Senior Apartments in Coon Rapids ahead of a three-hour meeting with legislators from the West Metro area, a council member from the city and attorneys from the Housing Justice Center.
Several tenants of both senior housing and Section 42 apartments have said that in a tight housing market, there are few places they can afford to move to. Simply packing up and moving is not an option. “Some of these people are in their 90s,” Banbury said.
Like Banbury, Barbara Marine faced a rent increase even before signing her lease with Dominium a few years ago. “The day I came to sign my lease, my rent had gone up,” said Marine, a resident of 808 Berry Place in St. Paul. “What are you going to do? I mean, you’ve vacated your previous house.