BY D. ADAM ANDERSONThis article originally appeared in the March 7, 2017, edition of the Business Tribune.
In one of the first significant policy actions of Ted Wheeler’s new mayorship, residential landlords must now generally pay the moving costs of involuntarily displaced Portland tenants. A new Portland City Ordinance (the “Ordinance”)–the brainchild of first-term city commissioner and tenant rights advocate Chloe Eudaly–passed unanimously on February 2 and provides for assistance payments to tenants facing both no-cause evictions as well as constructive, “economic evictions” due to rent increases. The Ordinance augments previous protections passed in the wake of the citywide housing emergency declared by the city council in October of 2015.
The crux of the ordinance requires affected landlords to pay relocation assistance determined under a formula to tenants who are either actually evicted without cause or constructively evicted because of a rent increase of greater than 10 percent over a 12-month period. While there is nothing on the face of the new law itself that would prevent up to a 9.9 percent increase as an obvious workaround, the law does appear to prevent the situation whereby a landlord chooses not to renew an expiring lease, but then immediately rents the unit to another tenant at a 10 percent (or greater) increase.
Mandatory assistance amounts under the Ordinance range from $2,900.00 to $4,500.00 depending on the number of bedrooms in the dwelling unit that is the subject of the eviction. Findings of the city council recite that such assistance is meant to alleviate not just the expense of physically moving, but of a variety of collateral expenses such as application fees, security deposits, double rent, storage fee, and lost wages. Exempt from the Ordinance are landlords who temporarily rent out their own principal residence, occupy the same dwelling unit as the tenant, or rent a unit on a week-to-week basis. Further, in a last-minute addition to the law, landlords who rent only a single dwelling unit are exempt, ensuring that the Ordinance affects primarily commercial landlords.
Since a housing emergency was declared in 2015, Portland has required a 90-day notice for any no-cause eviction (the default minimum under Oregon law is only 30-60 days based on length of tenancy), or for any rent increase greater than 5 percent over a 12-month period. These extended notice periods remain unchanged by the Ordinance. The Ordinance was effective immediately upon passage and applies retroactively to unexpired 90-day notices already delivered before the Ordinance was passed. The Ordinance is currently set to sunset, along with the declaration of the housing emergency itself, on October 6, 2017, unless the council acts to extend it.
The Ordinance has drawn both praise and criticism from predictable quarters. Local housing advocates such as the Portland Tenants Union see this as a necessary stop-gap while advocating at the state level for more permanent rent-stabilization methods, or an end altogether to no-cause evictions. Meanwhile, a legal challenge to the Ordinance, funded by Multifamily Northwest, has already been filed in Multnomah County Court on the basis that it violates the state’s statutory prohibitions on rent control, as well as various Federal constitutional protections. The case was initially removed to U.S. District Court, where the City successfully opposed a temporary restraining order against enforcement of the Ordinance. The Ordinance thus continues in effect, for now. The opponent’s federal claims have subsequently been dropped, and the case has been moved back to Multnomah County for hearing of the state law claims on April 6.
According to the findings of the city council that were relied upon for the Ordinance’s passage, 45 percent of Portland’s population are tenants, and 52 percent of those are “cost burdened” (i.e., paying greater than 30 percent of gross monthly income on rent). The council asserts that involuntary housing displacements create an untenable economic burden on Portland’s renters and contribute to the City’s homelessness. Whatever the ultimate fate of the Ordinance, legal efforts to stem rent increases will likely be a long-term feature of Portland’s residential rental market.