Thursday, May 30, 2019

Portland Unreinforced Masonry Owners Prevail in Fight for Preliminary Injunction Against City of Portland

Unreinforced masonry owners have been granted a preliminary injunction against the City of Portland's placard ordinance pending trial. 


Beginning on page 49, Judge Acosta makes his final closing argument of his opinion as follows:
In this case, Plaintiffs readily satisfy the elements for a preliminary injunction. Plaintiffs have demonstrated a likelihood of success on the merits of their First Amendment claim on the placard and tenant notification provisions of the Ordinance. The court finds that Plaintiffs have demonstrated they likely will suffer ineparable harm if the Ordinance takes effect. Plaintiffs have demonstrated they will be injured beginning June 1, 2019, when they are required to provide a potentially factually inaccurate and misleading statement to prospective tenants in their lease applications. Harris, 772 F.3d at 583 ("[A] colorable First Amendment claim is ineparable injury sufficient to merit the grant of [preliminary injunctive] relief.") Mr. McMonies and Mr. Beardsley testified that if the Ordinance goes into effect, they will be forced to provide false, or at least inaccurate and misleading, information to prospective tenants that their buildings are umeinforced when their buildings have undertaken seismic upgrades. See Oregon v. Azar, Case No. 6:19-cv-00317-MC, 2019 WL 1897475, at 15-16 (D. Or. Apr. 29, 2019) (discussing that plaintiffs demonstrated ineparable injury because of massive cuts to Title X funding if the final rule went into effect). Defendants' contention that the effort for Plaintiffs to provide the URM disclosure in the lease applications is relatively modest in light of other disclosures already required by law, misses the point. The question for the court is not the severity of the harm, but whether the harm is ineparable. Here, Plaintiffs will be required to speak a government-drafted message that is misleading at best. Washington Post v. McManus, 355 F. Supp. 3d 272, 305-06 (D. Md. Jan. 13, 49 -2019) (granting preliminary injunction on First Amendment grounds). Clearly, this factor weighs in Plaintiffs' favor.
Furthermore, the Ordinance CatTies the risk of substantial fines for failing to comply, raising the risk for extraordinary harm. See Harris, 772 F.3d at 583 (finding the risk of criminal penalties for failing to comply with rep01iing requirement weighed in favor of granting preliminary injunction). Thus, the court finds that Plaintiffs are likely to suffer in-eparable harm without injunctive relief because if the Ordinance is permitted to take effect, it will violate Plaintiffs' First Amendment rights.
The balance of equities and the public interest also weigh in favor of granting the injunction, Insisting that URM building owners post a placard and inform tenants has not been shown to demonstrably increase awareness of seismic risk or inform the public about how to "drop, cover, and hold on." Requiring URM building owners to display and distribute a factually inaccurate message would permit Defendants to infringe on the speech rights of a handful of P01ilanders while failing to take steps to actually increase seismic awareness for all Portlanders. Thus, the significant public interest in upholding First Amendment principles is acutely on display in this case, and weighs in favor of an injunction. The Ninth Circuit "consistently recognize[s] the significant public interest in upholding free speech principles." Klein v. City of San Clemente, 584 F.3d 1196, 1208 (9th Cir. 2009) (finding "balance of equities and the public interest thus tip sharply in favor of enjoining" where plaintiff likely to succeed on merits of First Amendment claim); Innovation Law Lab v. Nielson, 342 F. Supp. 3d 1067, 1082 (D. Or. 2018) ("[I]t is always in the public interest to prevent the violation of a patiy's constitutional rights.") In summary, Plaintiffs have satisfied each of the requirements for a preliminary injunction.
Because the court concludes that Plaintiffs have demonstrated colorable First Amendment violations pertaining to the placarding and tenant notification provisions and that a preliminary injunction should issue on that basis, the comi consequently enjoins enforcement of the acknowledgment provision of the Ordinance. The acknowledgment provision requires URM building owners to document their compliance with the placarding and tenant notification provisions on a BDS form. P.C.C. 24.85.65(E). The court is enjoining enforcement of the placard and tenant notification provisions, therefore practically speaking, there is no compliance to acknowledge.
Similarly, because Plaintiffs have demonstrated colorable First Amendment violations, the court declines to address Plaintiffs' argument that the Ordinance also violates the Due Process Clause under the Fourteenth Amendment.

City Council Hears From Landlords, Tenants, in Extended Public Hearing

The City of Portland’s public hearing on Chloe Eudaly’s proposed tenant screening and renter deposit ordinance was held last Wednesday. The council heard nearly three and a half hours of testimony from both renters and landlords. Written comments are being accepted through June 12th, when last week's proposed amendments will be voted on. Both ordinances may be headed for a second reading and a vote the week of June 17th. Only three votes are needed for approval, and it appears the council has the votes to pass both measures at this time.



Sold! 56 Units Near Portland State University

The Westfal's downtown Portland location adjacent to MAX light rail and its proximit to PSU made it an attractive acquisition. Some units had minor updates but the building required significant upgrades, which were factored into the purchase price.

HFO focused its marketing efforts on locating a buyer familiar with bricker buildings seeking to acquire a critical mass of units in downtown Portland. The building was sold to a value-add syndicate based in Colorado.

Although built in 1910, The Westfal is not unreinforced masonry construction

Tuesday, May 28, 2019

Vox: One Expert's Seven Principles for Solving America's Housing Crisis

In a recent The Weeds podcast by Vox, senior correspondent Matthew Yglesias sat down with Jenny Schuetz, a housing economist and David Rubenstein fellow at the Brookings Institution, to explore an issue that’s resurfaced on the national agenda for the first time in a couple of generations.

Yglesias summarized Schuetz' key ideas as follows:

  1. There are two only partially overlapping housing affordability crises in America, one that affects low-income households in all parts of the country and another that affects a larger share of households in a minority of markets (mostly in coastal metro areas) that suffer from an acute shortage of housing.
  2. To help low-income families, we should make housing assistance an entitlement — like SNAP or Medicaid — that’s available to every family that meets the income eligibility standards.
  3. We probably shouldn’t tie housing assistance to local housing costs, because high local housing costs reflect housing scarcity, which means extra subsidy will be captured by landlords. Instead, we should tackle the shortage.
  4. In California, the Northeast Corridor, Greater Seattle, Greater Portland, and, to a lesser extent, Greater Denver and many college towns, there is simply not enough housing being built to meet the demand to live in these areas, creating problems that no amount of subsidy or rent control can really solve.
  5. Many of these supply-constrained metro areas do in fact feature building booms in select areas — downtown or in gentrifying neighborhoods — but the vast majority of urban and suburban land is generally set aside for single-family homes and has almost no construction happening in it.
  6. The most socially and economically valuable place to build new housing would be in the most expensive, most affluent neighborhoods and suburban towns — but to make that happen, state governments will have to override local zoning regulations.
  7. Federal policymakers hoping to incentive more house-building need to look beyond funds from the Department of Housing and Urban Development, which are not a very strong carrot, and consider using transportation money as a lever to influence state and local policy.

Opinion: City puts responsibility for housing crisis on those providing the housing

Rental owner Sue Scott's letter to the editor was published in today's Oregonian. Read the article online to read and respond to reader's comments. 

Sue Scott is a semi-retired fitness consultant and the owner of 25 rental units in two properties in Portland. She lives in Happy Valley.

by Sue Scott

The city is using legislation and threats of huge penalties, fines, and fees to put the housing crisis on the backs of those who provide housing.

The proposed regulations for tenant screening and security deposits are 40-plus pages of verbiage and mandate huge fines only to rental providers. This will greatly increase risks for landlords. It's not fair.

Worse, the new proposals hit small investors hardest. That's all wrong too. It is the mom-and-pop landlords who are consistently most flexible with tenants. The big out-of-state providers are already here, and evictions are part of best practices for them in protecting their investors and bottom lines.

There are no risks here for the city. It makes the rules and dictates fines. It doesn’t offer to share the risk and gives us little or no respect Senate Bill 608, which imposed statewide rent control and prohibited landlords from ending most leases flew through all public hearings, and its legislative backers accepted no changes. While the proposed screening and security deposit regulations have had some small changes, it seems the policy as a whole is going down this same intractable path, which will only make the market worse for renters.

Portland City Commissioner Chloe Eudaly especially seems to enjoy pitting renters against the "evil" landlords that maintain the homes and safe places renters live in. We are apparently the biggest easy target. As landlords, we do not have enough political power or numbers. The us against them attitude needs to stop. A workable and sustainable solution needs to be a shared solution.

Writers of these regulations should include all sides. Tenants, housing providers (large and small), financial institutions, and non-profits. The changes must result in sustainable housing for our great city.

And what about property rights? The city now says we must accept applicants who may not be able to afford the rent or are felons in our properties.

Felons are not a protected class, like race, gender, religion, families with kids, sexual preferences, service dogs, disabilities, etc. etc. And tenants who are financially vulnerable are a great risk for any landlord.

As property owners, responsible for the debts and expenses related to those properties, we should have protected rights to assess the financial risk we are willing to take. We pay taxes, mortgages, repairs, legal and all other costs. It takes several years to break even on most properties. For most of us, the big financial rewards come only at the end of our careers and are part of our retirement.

There are more equitable, broader-based solutions that the city should consider.

Tacoma is Now the Nation's Hottest Housing Market

So far in May, the median home in Tacoma was on the market just eight days — the shortest period of any U.S. metro — while the supply of homes for sale is just 1.3 months, the lowest in the United States. Read more in the Seattle Times

Multifamily Marketwatch Podcast - May 27, 2019

Last week's planned public hearing on Portland's latest tenant screening ordinance draft was rescheduled to this Wednesday from 6-8 pm after council members publicly struggled over the city budget; four of Multnomah county's five commissioners come out in favor of the city's renter screening ordinance, and unreinforced masonry owners are hoping a federal judge rules in their favor this week by granting an extended injunction against the city of portland's placard requirement.



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Sold! 31 Units with Commercial Space in Downtown Portland, Oregon

This mixed-use asset in the heart of downtown offers 31 units and four commercial spaces. Apartments feature spacious floor plans and a unique solarium window system overlooking the South Park blocks. Many units had been upgraded.

The purchase price of $8.2 million reflected numerous capital improvement projects scheduled to take place post-closing. The property amenities include underground parking.

Thursday, May 23, 2019

Tenant Screening Ordinance Hearing Postponed to 5/29 at 6:00 pm. After Council Bickering Blows Up Budget Talks [video]

Tensions among Portland Mayor Ted Wheeler and other City Council members erupted on Wednesday at a public hearing on the City's proposed budget.

Unable to take a final vote on the budget, the council was forced to reschedule the public hearing for the draft tenant screening and security deposit ordinances. Those issues are rescheduled to Wednesday, May 29th at 6:00 pm.


See the video of yesterday's discussion by clicking here.

Read the latest screening ordinance here.

Read the latest security deposit draft here.

This post was updated 05/23/19 at 3:54 pm with the date and time of the rescheduled hearing.
This post was updated again 05/23/19 at 7:15 pm with yet another date and time of the rescheduled hearing.

Sold! 28 Units in Gresham

The seller of this gated community was participating in an exchange. The asset offered a balanced unit mix of one- and two-unit apartments.

The property's operations requried adjustments for costs associated with capital improvements and owner management. HFO worked with investors familiar with the outer east side neighborhoods of Portland and Gresham to complete a successful sale of this asset.

Wednesday, May 22, 2019

Multnomah County Commissioners Support Eudaly's Tenant Screening & Security Deposit Ordinances

Four of Multnomah County's five commissioners sent a letter of support for Commissioner Eudaly's tenant screening and security deposit ordinances to the Portland City Council. The commissioners who signed the letter include County Chair Deborah Kafoury, as well as Commissioners Sharon Meieran, Susheela Jayapal, and Jessica Vega Pederson. In the letter they state, "This ordinance uses research-based criteria to identify low-risk characteristics that would help former offenders obtain housing and not be perpetually punished for long-past offenses." According to the Willamette Week, the letter was spearheaded by Commissioner Vega Pederson. Read more.

Federal Judge Unimpressed With City of Portland's Argument Justifying Unreinforced Masonry Placards

Closing arguments on the City of Portland's ordinance requiring placards on unreinforced masonry building took place yesterday, and the judge appeared skeptical of the City's reasoning.

Judge Acosta spent much of the City Attorney's time asking questions, offering his counter-argument, and expressing concern over the City's ever-changing ordinance.

A ruling is expected in the case by the end of next week.

In a two-day trial last week, unreinforced masonry building owners learned in testimony by Mike Haggerty how buildings were placed on the City's "official" URM list.

  • From 1990 to 1993 the City of Portland had a total of 3 Portland State University students conduct the survey over the course of three summers 
  • The students were not the same students each summer and conducted their official survey on foot 
  • The areas only included downtown and the exact perimeter is unknown
  • The city did not survey buildings on the east side, Multnomah Village, St. Johns or other areas
  • The students eyeballed a building and checked a box 
  • They did not know that the list would be used 27 years later as the City of Portland's official list, and they did not know that by accidentally checking the wrong box they could impact real people 
  • They had no significant training for the job and there was no field manual 
  • Their work was "spot checked" by an actual engineer
  • The project had no budget
Shelly Duquette, a Structural Engineer at the City of Portland Bureau of Development Services was integral in the update and maintenance of the old URM database according to the city's website, She previously provided the public with this information about the city's unreinforced masonry list.
"The URM database was established in the mid-1990s.Trained City staff, in collaboration with Portland State University (PSU), surveyed all commercial buildings in the City of Portland using procedures developed by American Technology Council (ATC) to identify different building types. This survey was based on site visits and visual inspections of building exterior combined with research of existing building records and permit history. Based on this survey of buildings, buildings that were identified as URMs were listed in a URM database." ~ Shelly Duquette
In addition, during trial testimony, the City revealed it is developing a new version of retrofit standards for 2021-2023. 




Tuesday, May 21, 2019

City's Proposed Screening Ordinance Remains Substantively Unchanged From Prior Iteration

A close analysis of the February and May draft renter screening ordinances by HFO researchers revealed a fairly large surprise: despite Mayor Ted Wheeler's claim to "push for significant changes" and the City Attorney's office's concerns about possible legal issues with the screening requirements, the final draft remains virtually unchanged in its latest iteration.

And as commissioners and staffers are patting themselves on the back for collaborative work and building a good product, an individual working closely with the rental services commission bluntly confirmed: "It's not that different at all." 

The only change we noted aside from clearer wording was this single item cited in Willamette Week: 

Instead of requiring landlords to set the minimum income required for an apartment at two times the rent, the new policy will benchmark the requirement to apartments affordable to 80 percent of area median income: above that, landlords will be required to accept income that's twice the rent; below that the requirement will be 2.5 times the rent.
A hearing on the draft tenant screening ordinance is Thursday, May 23rd at 3 pm at Portland City Hall.

Note: this article updated May 22nd at 2:54 pm with a draft screening criteria that was updated on the City of Portland's auditor website after 7:34 am on Monday, May 20th. 

Sold! 8 Units in Gresham

This 8-plex required adjustment for costs associated with capital improvements and owner management. With high demand for smaller plex properties, HFO worked with investors familiar with the outer eastside neighborhoods of Portland and Gresham to complete a successful sale.

Monday, May 20, 2019

Multifamily Marketwatch - May 20, 2019

Smart Growth advocacy group up for growth released a report criticizing Portland's inclusionary zoning policy, and the Mayor is requesting $150,000 for an independent review of the program; a US magistrate judge heard from building owners and city officials as the lawsuit against placarding signs for unreinforced masonry buildings moved forward; and Vancouver, BC continues to face a tight housing market despite efforts to upzone and new taxes on foreign buyers.



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City Council to Hold Hearing on Revised Tenant Screening & Security Deposit Ordinances Thursday, May 23rd

The Portland City Council plans to hold a hearing on Commissioner Eudaly's newly revised tenant screening and security deposit ordinances at 3 PM on Thursday, May 23rd. Mayor Wheeler has been working with Eudaly's office to bring the ordinances in line with legal standards laid out in a memo from the City Attorney's office. According to the Portland Tribune, the ordinances have been simplified but still place significant restrictions on landlords. Read more.

Revised Tenant Screening Ordinance

Revised Security Deposit Ordinance

Note: this article updated May 22nd at 2:54 pm with a draft screening criteria that was updated on the City of Portland's auditor website after 7:34 am on Monday, May 20th. 

Friday, May 17, 2019

Portland City Attorney Warns City Council about Legal Issues in Tenant Screening & Security Deposit Ordinances

According to the Portland Tribune, the Portland City Attorney's Office sent a legal memo to City Council outlining potential legal pitfalls for Commissioner Eudaly's proposed tenant screening and security deposit ordinances. While City Attorney Tracy Reeve declined to release the memo to the public, Mayor Wheeler indicated that the memo ranked legal challenges from "low" to "high." The Mayor said that Eudaly's office is working to overcome these legal problems prior to the next hearing. Read more.

Thursday, May 16, 2019

Washington State Enacts Graduated Real Estate Excise Tax

The Washington State legislature voted to enact a change in the real estate excise tax law on April 25th. As of May 16th, the bill is awaiting the governor’s signature but is expected to be signed shortly.

A legal summary of that change is on the following page. It indicates that the law enacts a new graduated rate scale for real estate. The flat tax of 1.28% will be replaced January 1, 2020, by the following rates:
  • 1.1% – Portion of selling price less than or equal to $500,000
  • 1.28% – Portion of selling price greater than $500,000 and equal to or less than $1.5 million
  • 2.75% – Portion of selling price greater than $1.5 million and equal to or less than $3 million
  • 3.0% – Portion of selling price greater than $3 million

Sold! 48 Units in NE Portland

This 48 unit property built in 2005 consists of units with private decks or patios overlooking green spaces between each building. The apartments include a full-size washer/dryer and gas fireplace with vaulted ceilings in the upper units. Siding and all decks were replaced prior to sale.

Historical operations were impacted by a broken water main. HFo worked to help investors understand the challenging historical operations and appreciate the asset's upside opportunity.

Tuesday, May 14, 2019

Sold! 13 Units in NE Portland

This garden-court property consists of two-bedroom, one-story duplex units with private entrances. The apartments feature in-unit washer/dryer and off-street parking.

Prior to sale, the property had new windows, roofs and siding. HFO worked with investors familiar with outer east side neighborhoods of Portland and Gresham to orchestrate a successful sale.

Update: Landlords, Tenants, and Marijuana Law in Oregon and Washington

Attorney Charles Kovas provides a 2019 update on marijuana laws as they relate to multifamily owners and renters in Oregon and Washington.


Monday, May 13, 2019

Hearings Begin Tomorrow in Federal Court as URM Owners Seek Preliminary Injunction Against the City of Portland, OR

Two days of hearings on a preliminary injunction against the placarding of unreinforced masonry buildings in Portland begin in Federal Court tomorrow.

In early April the City of Portland was found in violation of a temporary restraining order by attempting to enforce its placard ordinance. A few weeks later, the court found the City in violation of the restraining order a second time.

Attorneys representing owners of unreinforced masonry buildings had to send a letter demanding remedies for the second round of violations of the court's temporary restraining order, specifically for these violations:

  • The City illegally recorded contracts on titles.
  • The City illegally accepted contracts after the temporary restraining order date.
  • The City failed to remove enforcement language on websites.

The judge ordered the City of Portland to:

  • Remove the encumbrances off titles and deeds.
  • Return the contracts to building owners.
  • Refund the costs related to contract recording.
  • Update placard websites with a restraining order notice.
  • Follow a phone and email script approved by Judge Acosta.

Judge Acosta begins two full days of hearings Tuesday, May 14th and Wednesday, May 15th at 8:30 am in courtroom 11B at the Federal Courthouse located at 1000 SW 3rd, Portland, Oregon.

Unreinforced Masonry Owners are hoping to win this first round of hearings in order to move forward with a motion for a permanent injunction on the placard requirement.


Multifamily Marketwatch - May 13, 2019

A Portland economist reports on the two major factors contributing to rampant homelessness in our region; Prosper Portland announces its design choice for the 14-acre US Post office site downtown, and the Washington legislature budgets nearly 10 billion dollars for transportation spending in that state.


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Jennifer Shuch on Greater Portland's Multifamily Housing Pipeline [video]

Jennifer Shuch, HFO's Research Analyst and host of the HFO weekly Multifamily Marketwatch podcast, discusses the methodology behind estimating the pipeline of multifamily units being delivered in the Portland/Vancouver metro area. She also provides an analysis of the lackluster results of Portland's Inclusionary Housing ordinance.


Friday, May 10, 2019

Meet J.R. Johnson's Co-President Clint Arp

HFO partner Greg Frick interviewed J.R. Johnson Co-President Clint Arp recently to learn more about the company and its work repairing and restoring multifamily buildings throughout the West. J.R. Johnson is a co-sponsor of HFO's investor events, newsletters, and the Multifamily Marketwatch podcast.


Thursday, May 9, 2019

Understanding Oregon's Rent Control Bill and Portland's Latest Landlord/Tenant Law Changes

Ball Janik Partners Adele Ridenour and Ciaran Connelly presented information on Oregon Senate Bill 608 (Rent Control) and updates on many new Portland ordinances affecting tenants and landlords inside the city limits of Portland.


New National Website Aggregates Information on the U.S. Housing Crisis

With more than half of American renter households paying more than 30% of their income on housing, the National Multifamily Housing Council is urging Federal, state and local governments to work together to tackle the cost of housing in our country. To help and provide detailed data, the NMHC has created a new website that provides information on a state-by-state basis. The website can be found at growinghomestogether.org.

Sold! 45 Units in East Portland, Oregon

This 1973 community is located along the MAX light rail in East Portland. The seller had completed extensive updates to the property exterior including new roofs, siding, and landscaping. Most units also had some interior upgrades.

HFO targeted investors with properties on the east side of the metro area, helping the potential buyers factor in management upside opportunity.

Washington State Housing Law Update with Charles Kovas

Attorney Charles Kovas provides an update on landlord/tenant legislation in Washington State.


Wednesday, May 8, 2019

2019 Mid Year Portland Economic Update from Oregon Workforce Economist Christian Kaylor [video]

State of Oregon economist Christian Kaylor studies on the Portland metro area extensively. In our annual mid-year interview, he covers trends in the local and national workforce. He also takes a look at national job growth, and the hottest cities for employment, and the fastest-growing industries for work in today's economy.

Tuesday, May 7, 2019

Sold! 12 Units in Outer SE Portland

Fernhill is a 12-unit townhome community midway between Portland and Gresham, Oregon located near major manufacturing and technology employers. The seller approached HFO to list the property and it sold quickly with immediately nonrefundable earnest money in escrow.

Monday, May 6, 2019

Multifamily Marketwatch - May 6, 2019

This week: Developers are warning that Portland's inclusionary housing requirement is causing a construction slowdown that could exacerbate the city's shortage of housing; Portland commissioner Chloe Eudaly is exploring avenues for increasing city revenue, including a personal income tax on top earners and a vacancy tax on apartment buildings; and cities and states across the U.S. are looking to Minneapolis for creative ways to solve the housing crisis.


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Friday, May 3, 2019

Sold! 110 Units in Vancouver, Washington

Built in 1971, Hampton Hills' exterior envelope had been replaced, and several units had been updated. Property amenities include a clubhouse, fitness center, and an outdoor seasonal pool. Nearly all apartments are one-bedroom flats.

Given the unique unit mix and property vintage, HFO worked to demonstrate possible upside through ongoing interior updates. Hampton HIlls was sold to a buyer participating in a 1031 tax-free exchange. 

Wednesday, May 1, 2019

Report: City of Portland "On the Right Track" on homelessness

The Oregonian/Oregonlive reports that "Portland Mayor Ted Wheeler on Monday cast himself and city partners as effectively tackling the city’s homelessness crisis and policing controversies." Read the story.

Report: Economic Growth Slowing in Multnomah County as Payroll Surges by 6.8%

The State of Oregon is reporting employment growth in Multnomah County slowed from 3.3% in 2015 to 1.8% in 2018, suggesting slowing economic growth. This change occurred even as payroll for Multnomah County surged by 6.8%. One possible explanation, according to State of Oregon workforce analyst Christian Kaylor, is that employers are raising wages to keep workers from leaving for better-paying jobs elsewhere.