PROVIDENCE — The long-anticipated rent control plan from the Providence City Council was released Tuesday, proposing a 4 percent limit on annual rent increases, though a large portion of apartments in the city would be excluded from the new limits.
“Far too often, a rent increase is an eviction notice by another name,” City Council President Rachel Miller said at a news conference announcing the plan. “It has to stop.”
The introduction of the 17-page ordinance, officially called “rent stabilization,” will launch a fierce battle in the coming months between members of the all-Democratic City Council and the Democratic mayor, who opposes rent limits. It’s also expected to be a top issue in the campaign for mayor, where state Representative David Morales is challenging Mayor Brett Smiley in the Democratic primary.
Business leaders began lining up against the proposal before it was even released, citing unintended consequences such as poorly maintained units and possible rent increases for the thousands of apartments that won’t be controlled. But progressive groups and tenant advocates are thrilled at the prospect of limits on what they say are out-of-control rent increases in Providence, rising at higher rates than salaries.
“I think that without some guardrails on the market, like rent stabilization, it is swiftly becoming a city that is not for us to live in,” Miller said in an interview. “It’s for people who are vastly more wealthy, and I think we kind of owe it to residents to create some stability.”
Hundreds of municipalities have rent control in the United States, though they are concentrated in relatively few states; 30 states, including Massachusetts, ban the practice. Advocates in Massachusetts are seeking to put a question on November’s ballot to overturn the ban, which Governor Maura Healey opposes.
Rhode Island neither bans rent control nor has rent restrictions in place, outside of specific low- or middle-income housing programs.
Smiley immediately said he would veto the ordinance if it reached his desk as written. The council would need 10 out of 15 members to override a veto.
Eight councilors have so far told the Globe they support the ordinance.
Most agree that Providence has a rent problem. Rates skyrocketed in the years after the pandemic, and Providence often lands on lists of most unaffordable cities, when comparing rents to median salaries. The average apartment currently costs about $2,100, according to Zillow, a $50 decrease from last year.
A University of Rhode Island poll last year found 72 percent of state residents surveyed supported capping annual rent hikes.
“This will lower no one’s rent,” Smiley told reporters Tuesday. “All this does is cap future increases a couple of years from now, and along with that will come almost-certain mandatory rent increases every year, because landlords will be afraid that they won’t be able to recoup their costs down the road.”
He said “aggressively” building more housing at all price points was the better solution. He pointed to the drop in construction in St. Paul, after that city implemented rent control. Leaders there rolled back the policy after not initially excluding new construction.
Rent stabilization won’t lower the rents, but would provide security for renters that the price of their housing won’t increase dramatically each year, supporters argue.
Miller said council leaders opted for a flat 4 percent limit on rent hikes rather than tying it to inflation — like some other communities, including Portland, Maine, do — in order to have a simple and predictable system.
The proposal includes substantial carveouts. Apartments would not be subject to rent control until 15 years after they are built, so that developers don’t flee. And so-called “mom and pop” landlords who live in their properties of three units or less would also be exempt from the limits, plus they would be able to exempt a second property they own.
The owner-occupied exemption alone would exclude more than 16,000 units from rent control limits, according to city data, not counting landlords’ second buildings that could be exempt. It’s not yet clear how many new construction units would be exempt.
There would also be exemptions for buildings where some units are otherwise regulated, such as low- and middle-income housing. Institutional housing, such as college dorms and homes considered “lodging” that pay the hotel tax like an Airbnb, would also be exempt.
In a city of triple-deckers that has also seen a lot of construction and building conversions in recent years, it means a significant number of renters would not have rent-stabilized apartments.
“We are targeting the large-scale corporate entities that treat our blocks like stock portfolios,” Councilman Juan Pichardo said. “Not the grandmother ... who rents out the second floor of a triple-decker.”
“That kind of investment, commitment to the city and neighborhood, comes along with a set of behaviors that include wanting to create a stable environment for really good tenants,” Miller said.
Miller acknowledged that the evidence that small landlords don’t hike rents is anecdotal.
Providence “used to be a relatively affordable city,” said Daniel Denvir, the cochair of the tenant rights group Reclaim Rhode Island, which is pushing for the policy. The current housing crisis “destroys the dreams of the city’s working and middle-class families, artists, service workers, and increasingly pushes them out of our city entirely,” he said.
A report released last week by the R.I. Public Expenditure Council, which was commissioned by the Providence Foundation, found rent control could chill housing production, increase condo conversions, or increase rent on the unregulated units.
Rent control is “not the solution to the problem we’re having right now,” said Shannon Weinstein, a partner at RentProv Realty and director of the landlord-led R.I. Coalition of Housing Providers.
She said rents are starting to level off in Providence, but are unlikely to drop further if landlords know future increases are capped. Most landlords will use the full 4 percent every year, she said.
“We have rising expenses that include taxes, insurance, labor costs, utilities,” Weinstein said. “Any of those expenses that are on the landlord, they’re going to be worried that they’re not going to be able to adjust.
“Rent control deters investment and new building, and also deters maintenance in existing housing stock,” Weinstein added.
The proposal does not include a rent registry, so it’s not clear when there will be a clear accounting of how many units will be rent-controlled, or whether landlords are complying.
Enforcement would be reactive, not proactive. Tenants would need to know if their unit is rent-stabilized and make a complaint if their landlords violate the rules. Without a rent registry, it could be difficult to determine the past rent on a unit.
Landlords would not be able to increase rent on a unit beyond 4 percent between tenants, and would not be able to bank the annual increase if they don’t use it. The “base rent” for a unit would be considered whatever the rent was 180 days before the ordinance takes effect.
A new five-member rent board would hear complaints and issue fines, while also hearing requests from landlords to raise rent above the cap because of improvements to the unit, or because they otherwise would not get a “fair return” on their property.
Landlords would be allowed to raise rent above the cap in the case of a tax increase of more than 5 percent without needing to ask the rent board.
If landlords raise rent beyond the legal limits, it could mean fines of $250 per day, plus rolling back the rents.
The proposal will be introduced at Thursday’s City Council meeting and referred to the Committee on Health, Opportunity, Prosperity, and Education.
A vote is likely months away. There will be public hearings for residents to weigh in, Miller said, and the proposal could be amended before passage.
In addition to Miller and Pichardo, Councilors Miguel Sanchez, Justin Roias, Sue AnderBois, Jill Davidson, Mary Kay Harris, and Althea Graves said they support the proposal. Councilors James Taylor and Pedro Espinal said they oppose it, and Councilors John Goncalves, Ana Vargas, and Shelley Peterson said they were undecided. Councilors Oscar Vargas and Jo-Ann Ryan did not immediately respond.
Christopher Gavin of the Globe staff contributed to this report.
Steph Machado can be reached at steph.machado@globe.com. Follow her @StephMachado.