Legislate in haste, repent at leisure. St. Paul voters cheered the passage of a new law in last week’s election that imposes rent control, with rent increases capped at 3% each year. The new law includes new development as well as existing rentals, an incentive that has had an entirely predictable impact. In record time, no less:

Less than 24 hours after St. Paul voters approved one of the country’s most stringent rent control policies, Nicolle Goodman’s phone started to ring. Developers were calling to tell the city’s director of planning and economic development they were placing projects on hold, putting hundreds of new housing units at risk. …

Voters’ decision Tuesday to cap annual rent increases at 3% sent developers into a frenzy, prompting some with stakes in Minnesota’s capital city to pause projects or reconsider sites for future housing.

Unlike most cities with rent control, St. Paul will not exempt new construction, which opponents argue will force lenders and developers to look outside the city for spots where they feel more confident that they will recoup investments and earn profits.

“We, like everybody else, are re-evaluating what — if any — future business activity we’ll be doing in St. Paul,” said Jim Stolpestad, who has worked on developments in St. Paul for 30 years as founder of Exeter, the company behind major projects like Grand Avenue’s revamped retail corridor and new luxury apartments in the Cathedral Hill neighborhood.

If anything, this was an impressively stupid time to pass such a law, especially while applying it to new development. Annualized inflation is running over 5%, labor is in short supply, and materials in even shorter supply. A 3% cap on increases falls far short of keeping up with the status quo even outside of new development. The need for repairs on existing units will either require a higher level of spending or force landlords to postpone the repairs in order to absorb the costs without losing their shirts.

On top of this, St. Paul has only itself to blame for its rent pressures. The city has spent the last several years manipulating zoning codes to get bigger-ticket development in traditionally smaller-scale neighborhoods. The raft of six-story businesses and lofts on Snelling Avenue alone has changed the face of what had been a sleepy and stable residential district. (For reference, it’s where Charles Schulz grew up and where he got the inspiration for Peanuts.) That in itself has put significant upward pressure on rents, and it drove locally owned businesses in the previous units out in favor of chain outlets that could afford the higher leases in the new buildings. If there was a rent-price issue in St. Paul, the city helped create it in the first place.

The city of St. Paul wanted to eat its development cake and have it, too. Now that developers are looking outside the city for investment instead, the city seems to have belatedly come to a realization about economic incentives:

“We don’t want our equity goals to be at odds with our growth goals,” Goodman said in a presentation to the City Council Wednesday. “The ordinance as written may actually put those goals at odds.”

You don’t say. If the city wanted to prioritize “equity,” it wouldn’t have cut concessions for all of the developments on Snelling and other areas that made a joke out of “equity.” They certainly would have thought twice about biting the hand that fed them tax revenues in that process with price-control laws that all but guarantees that investors won’t get their best return in St. Paul. And just wait until apartment buildings start going condo, and see what “equity” begins to resemble in the state’s capital.

Keep an eye on this story, though, because there’s more than one way to skin a cat. Don’t bet against the city council cutting developers all sorts of tax breaks and other variances to keep these projects from escaping to the less-regulated suburbs. Those will also be an offense to “equity,” but it will help the city council in its efforts to keep getting re-elected while leaving city taxpayers, small businesses, and renters holding the bag.