Published July 14 2012
Ask Your Government: Why doesn’t North Dakota institute some form of rent control?
I have heard that the city of New York, and I am assuming other areas as well, have pricing regulations on real estate property, such as rent or housing. Am I correct in this? If so, what is preventing some pricing controls from taking effect in the Oil Patch counties? Thank you. Sincerely,
Thanks for writing! I could have asked a variety of people to respond to this. I settled on four state senators with an interest in this topic and the North Dakota Housing Finance Agency.
I’ll start with Sen. Tim Mathern, D-Fargo, and his response:
“The short answer is that rent controls are illegal in North Dakota as per state law.
“However, citizens asked me to sponsor legislation establishing rent controls similar to controls in place in other parts of the country. Unfortunately, these same citizens were reluctant to be public about their request, fearing retribution from their landlords and elected officials who saw rent controls as limiting immediate high profits available because of the oil boom.
“Simplistic statewide rent control in the form of a law that makes rent increase illegal does not make sense. But giving authority to cities to limit the amount of increase to the rate of inflation makes sense. It gives the control to local authorities with a practical economic parameter.
“The main point, though, is that energy development in North Dakota has an upside and downside. Where there is a downside, like escalating rents that put people into the street and price gouging, government needs to act.
“This includes developing more housing projects, placing expectations on the energy industry to share the wealth and giving cities the tools to manage housing policy for their citizens. Rent control can be one of those tools for some cities in crisis.”
Senate Majority Leader Rich Wardner, R-Dickinson, gave this response:
“It does disappoint me when landlords double rents on persons who have rented from them for many years. However, I believe in property rights of the owner. The renting of any property is a private contract between two parties.
“Any time government steps in and sets limits and sets up price control, it ends up being counterproductive. Developers who build apartments and rental property tend not to invest in building when price controls are in place.
“We need to let the free enterprise system work and let the developers build housing to meet the needs of the community. When the rental market reaches a point where there are more apartments than persons that want to rent them, then the price to rent decreases.
“The income tax credit for low-income housing is a program that is available to communities to build low-income housing. It is not the complete answer, but can help meet some of the needs.”
Senate Minority Leader Ryan Taylor, D-Towner, who is running for governor, said:
“Unfortunately, over a decade ago, the North Dakota Legislature passed a law that deemed rent control illegal, but that doesn’t mean that we can’t begin to talk about other ways the state can help reduce the rent burden of the people living in oil-impacted communities.
“As a state, we need to look at all the options that are on the table to address this issue. Whether it is providing state tax incentives for developers to build affordable housing in the western part of the state, establishing state-run programs that incorporate affordable housing within new and existing units or providing terms from our state-owned Bank of North Dakota to property owners that keep rents at a reasonable rate.
“With our state’s substantial surplus comes a responsibility, and the fiscal ability, to take care of our own. Addressing the rent crisis in western North Dakota is a good place to start.”
I also talked to Sen. Stan Lyson, R-Williston. He said he knows the increasing cost of rent is a problem, but he has concerns about regulating free enterprise.
“Because where do you stop? Do we start to regulate the price they put on gasoline or the price they put on milk or bread or any type of groceries?” he said.
Residential construction continues in Williston and is starting to catch up, he said.
“I honestly believe, as we catch up … rent is going to start coming down,” Lyson said.
Here’s what North Dakota Housing Finance Agency Executive Director Mike Anderson said:
“Section §47-16-02.1 of the North Dakota Century Code prohibits a political subdivision from enacting, maintaining or enforcing an ordinance or resolution that restricts the amount of rent charged for leasing private residential or commercial property.
“The prohibition does not extend to a political subdivision (a city, county or local housing authority, for example) from restricting rents on property it owns.
“The North Dakota Housing Finance Agency administers programs that have been active in creating apartments in North Dakota set aside for households of modest means. The common characteristic of these rental programs is that rents are restricted to be affordable for lower-income individuals and families.
“In response to North Dakota’s growing need for affordable housing, the state legislative assembly, during the 2011 session, approved the Housing Incentive Fund program to help address the need for affordable multifamily rental housing development.
“The fund is capitalized by contributions from state income taxpayers. In return for supporting the fund, taxpayers earn a dollar-for-dollar state tax credit.
“The money contributed to the fund provides flexible financing to developers who agree to rent to low- and moderate-income households. The program subsidizes a developer’s construction costs, which, in turn, allows the apartments to be rented at lower than market rates.
“To ensure that the housing created through the Housing Incentive Fund remains affordable, the North Dakota Housing Finance Agency requires the property owner to sign a contract agreeing to income and rent restrictions. If the developer breaks the contract, the agency recaptures the state dollars invested into the project. The length of the term of such an agreement runs from 15 to 30 years.
“Ninety percent of the
$15 million Housing Incentive Fund tax credit authority is designated for use in disaster and energy-impacted communities. The housing finance agency anticipates the program will support the development of approximately 800 rental units.
“Prior to the fund, the federal Low Income Housing Tax Credit program was the largest resource for affordable rental housing development in North Dakota. The program produces approximately 200 to 300 rental units per year.”
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Teri Finneman is a multimedia reporter for Forum Communications Co.