Wednesday, July 15, 2020

Oregon Lawmakers Divvy Up More than $200 Million in COVID Relief

Oregon is providing more than $200 million in financial relief to Oregonians and small businesses. Read more. 

National Multi Housing Council Finds 12.4% of Renters Fail to Make Full or Partial Rent Payments by July 13



The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 87.6 percent of apartment households made a full or partial rent payment by July 13 in its survey of 11.4 million units of professionally managed apartment units across the country. Read more.

Landlords Plan to Appeal Decision on Portland Rental Relocation Fee Ordinance

After losing their court of appeals case arguing that the City of Portland's relocation fee ordinance is unlawful rent control, landlords announce they will pursue their case in the Oregon Supreme Court. Read more.

Monday, July 13, 2020

HFO Multifamily Marketwatch - July 13, 2020

This week: The Oregon Court of Appeals ruled that Portland’s relocation ordinance does not conflict with the state ban on local rent controls; A new report finds that if Washington State enacts rent control, the result would be less housing, investment, and less tax income. Meanwhile, in Washington DC, a proposed law would ban evictions nationwide through March 2021.



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Friday, July 10, 2020

Portland City Council to Vote July 22nd on Extending Development Deadlines

A building under construction with the foundation in place, and a view of Portland in the background.
The Daily Journal of Commerce reports that the Portland City Council is considering amendments to the city's zoning code in order to extend expiration dates for land use approvals for applications submitted between July 2017 and December 2020. The new expiration date would be January 1, 2024. While many of these projects may still end up being shelved, the extension could help developers whose timelines have been delayed due to COVID-19. Council is expected to vote on the code amendments July 22, 2020. Read more.

Thursday, July 9, 2020

Oregon Appeals Court Upholds Ruling in Support of Portland's Relocation Ordinance

A brown and gold judge's gavel on a wood table, in front of a gold plated sign reading "tenancy law" in capital letters.
The Oregon Court of Appeals upheld a 2017 decision that allows the city of Portland to charge relocation fees when landlords raise rent by 10% or more. The Court ruled that the relocation ordinance does not run afoul of the state’s ban on local rent control policies, and referred the case back to the lower court. Attorney John DiLorenzo, who represents the two landlords who initially brought the suit, plans to file a petition with the state Supreme Court before the case is brought back to Multnomah County. Appeals Judge Darleen Ortega does not believe the state law prohibits any regulation that could impact rents. Rather, she argues that the state constitution bans rules that directly regulate how much a landlord can charge. Once a petition is filed with the Supreme Court, the lower court cannot begin proceedings until the Supreme Court decides whether to hear the case. Read more.

Tuesday, July 7, 2020

Congress May Extend Eviction Moratorium Nationwide to March 27, 2021

On June 29th, Senator Elizabeth Warren and Representatives Chuy, Garcia, and Lee introduced legislation to extend the nationwide moratorium on evictions. The bill has 15 senate co-sponsors including Oregon's Merkley and Wyden. There are 25 House of Representative co-sponsors.

In May, the House of Representatives passed the HEROES Act, which included housing relief measures of $100 billion for emergency rental assistance.

According to Forbes Magazine, the HEROES act "currently sits in the Republican-controlled Senate where it was initially labeled 'dead on arrival'. But one of the provisions of the Act is to extend the $600 federal unemployment payments through January 31, 2021. That would provide a full six months for the economy to recover from the economic fallout of COVID-19."

Another proposal – and one more likely to gather bipartisan support – is the Worker Relief and Security Act. Proposed by Don Beyer (D-Virginia), it’s a more complex proposal, offering tiered benefit provisions.

Monday, July 6, 2020

Washington Attorney General Creates Unpaid Rent Repayment Plan Worksheet

The State of Washington's Attorney General's office has created a rent repayment plan worksheet for renters and landlords. You can view and download the document here. 

ECONorthwest Study: Rent Control in Washington State Would Be Counterproductive

ECONorthwest recently conducted a study for the Partnership for Affordable Housing.

Released in June, the study found rent control could reduce more than a year's worth of housing construction activity. The study is based in part on the findings of a 2019 Stanford study on rent control in San Francisco, which found the policy resulted in a 15 percent reduction of rental housing supply.

The study found that rent control could reduce housing built over the next decade by 15,000 units, with more than 75 percent of that loss in the central Puget Sound region. Read the study here.

HFO Multifamily Marketwatch Podcast - Special Edition

Podcast host Jennifer Shuch interviews Derek Merrill, Co-Founder & CEO of LeaseLock, a lease insurance company that allows rental housing providers to accept renters without requiring a security deposit. LeaseLock currently insures more than $300 million in leases.



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Tuesday, June 30, 2020

Report: Portland Rents Estimated to Decline 1.60% by Year's End

Multi-Housing News indicates that the Coronavirus is causing price decreases in stabilized Class A properties. Yardi Matrix expects these decreases to cascade, extending into B and C properties as well.

Some markets will see growth this year, including Indianapolis which is forecast to see rents rise 3.20%. Tampa, Florida is also expected to see rents rise 2.80%.

Seattle had been expected to see rents increase by 3.80% this year but that forecast is now +0.90%. Las Vegas' predicted 2.40% increase now appears more likely to decline by 5.40%.

Portland, Oregon had been forecast to see a slight rent increase by year's end, and that has now changed to a decrease of 1.60%.  Read more. 

Monday, June 29, 2020

What Oregon House Bill 4213 Means for Landlords


As noted in our post on Friday, the Oregon legislature has extended an eviction moratorium through September 30, 2020.

Multifamily NW is providing additional analysis of what that means.

NOTE: This is not intended as legal advice. Please obtain the advice of an attorney for any policy change or decisions regarding your individual residential and commercial Landlord-Tenant matters, as well as laws that impact your local jurisdictions. 

On June 26, 2020, the State of Oregon passed HB 4213 which added new restrictions limiting Landlords’ ability to enforce the right to rent payments, among other things. The new laws became effective upon passage. Consequently, you need to familiarize yourself with them immediately and adjust any policies or procedures accordingly. This legal update addresses these changes as they relate to residential tenancies only.

I. General

a. Governed period of time 

The law creates protections based upon three different time periods that are interrelated:

April 1, 2020 through September 30, 2020 (the “Emergency Period”);
October 1, 2020 through March 31, 2021 (the “Grace Period”); and
April 1, 2020 through March 31, 2021 (the “Regulated Year”).

b.  Defined terms 

‘Nonpayment’ is defined as “the nonpayment of a payment that becomes due during the emergency period to a Landlord, including payment of rent, late charges, utility or service charges or any other charge or fee as described in the rental agreement or ORS 90.140, 90.302, 90.315, 90.392, 90.394, 90.560 to 90.584 or 90.630.” It seems to include any debt incurred during the emergency period (4/1 – 9/30).

‘Nonpayment Balance’ is defined to “include all or a part of the net total amount of all items of nonpayment by a Tenant.”

‘Termination Notice Without Cause’ is defined as “a notice delivered by a Landlord under ORS 90.427 (3)(b), (4)(b) or (c), (5)(a) to (c), or (8)(a)(B) or (b)(B).” This includes:
  • Terminations without stated cause for month-to-month tenancies in the first year of occupancy.
  • Non-renewals without stated cause of fixed-term tenancies in the first year of occupancy.
  • Terminations without cause by live-in Landlords at a property with two dwellings or less (e.g. duplexes or homes with ADUs).
  • ”Qualifying Landlord Reason” (QLR) termination notices. These include:
  • Termination for plans for demolition or conversion
  • Termination for plans to repair or renovate
  • Termination because Landlord or Landlord’s family intends to move in
Note: Termination notice without cause does not include the QLR termination notice allowing Landlords to terminate a tenancy when they have accepted an offer from a buyer who intends to occupy the dwelling as their primary residence.

Note: Termination notice without cause does not apply to “3-strike” non-renewals so long as the underlying notices of violation are not based upon “nonpayment.” as described above.

II. Restrictions

a. Prohibited Conduct. The Regulated Year Restrictions (April 1, 2020, to March 31, 2021)

During the Regulated Year (April 1, 2020, to March 31, 2021), Landlords may not do or threaten (orally or in writing) to do any the following:
  1. Deliver a termination notice for Nonpayment Balance (4/1/2020 – 9/30/2020 debts);
  2. Initiate or continue an eviction action based upon notice of termination for nonpayment delivered after April 1, 2020;
  3. Take any action that would interfere with a Tenant’s possession or use of a dwelling unit based on a Tenant’s nonpayment balance;
  4. Assess a late fee or any other penalty on a Tenant’s nonpayment (4/1 – 9/30 debts); or
  5. Report a Tenant’s nonpayment balance as delinquent to any consumer credit reporting agency.
Practice Tip 1: Clients should inspect their forms to ensure language that threatens such action is removed during the applicable period.

Practice Tip 2: Ensure that your procedures or automated actions do not violate these restrictions. For example, if your software automatically sends cases to collections you should ensure that any agent, including a collection agency, is not reporting “nonpayment balances” to credit reporting bureaus.

b. Application of payments during Regulated Year (4/1/2020-3/31/2021)

Landlords shall apply payments in the following order, to:
  1. Rent for the current rental period
  2. Utility or service charges;
  3. Late rent payment charges; and lastly to
  4. Fees or charges owed by the Tenant under ORS 90.302 or other fees or charges related to damage claims or other claims against the Tenant.
c. Notices regarding balances during the Emergency Period (4/1/2020 – 9/30/2020)
  
During the Emergency Period, Landlord may give Tenants written notice stating that Tenants continue to owe any outstanding rent. However, if a Landlord elects to send such notice, it must include a statement that eviction for non-payment is not allowed before September 30, 2020.

d. Prohibition on delivery Termination Notice Without Cause during the during the Emergency Period (4/1/2020 – 9/30/2020)

During the Emergency Period, Landlords may not issue a Termination Notice Without Stated Cause or file an eviction action based upon one. For any tenancy in which the first year of occupancy has or will end during the Emergency Period, the law extends the first-year occupancy for a period of 30 days after the Emergency Period (i.e. until October 30, 2020).
         
e. Prohibited Conduct during the Grace Period (October 1, 2020, to March 31, 2021)

Tenants have until March 31, 2021 to pay Landlord any outstanding Nonpayment Balance.

On or after October 1, 2020, Landlords may give written notice to Tenants that substantially states:

The date the Emergency Period ended (Sept 30, 2020);
  1. That if rents and other payments that come due after the emergency period are not timely paid, the Landlord may terminate the tenancy;
  2. That the nonpayment balance that accrued during the emergency period is still due and must be paid;
  3. That the Tenant will not owe a late charge for the nonpayment balance; 
  4. That the Tenant is entitled to a six-month grace period to repay the nonpayment balance ending on March 31, 2021;
  5. That within a specified date stated in the notice given under this subsection that is no earlier than 14 days following the delivery of the notice, the Tenant must pay the nonpayment balance or notify the Landlord that the Tenant intends to pay the nonpayment balance by the end of the six-month grace period described in HB 4213 Section 3, subsection (6);
  6. That failure of a Tenant to give notice to the Landlord of utilization of the grace period described in HB 4213 Section 3, subsection (6) may result in a penalty described in subsection HB 4213 Section 3, subsection (10); and
  7. That rents and other charges or fees that come due after the emergency period must be paid as usual or the Landlord may terminate the tenancy under ORS 90.392, 90.394 or 90.630.
Landlord’s letter may also offer an alternate voluntary payment plan for the Nonpayment Balance. If the Landlord chooses to do so, the notice must state that the alternate payment plan is voluntary.
If Landlord delivers the notice described above, the Tenant must notify the Landlord by actual notice of their intent to use the Grace Period to pay the Nonpayment Balance by the deadline in the notice. “Actual notice” means communicating the request verbally, by leaving a voicemail, by written notice given personally, left at the rental office, by fax, posted to the Landlord’s residence, or by fist class mail, by electronic means, or any other method permitted in the lease.
Tenant’s failure to timely give the required noticed entitles Landlord to receive 50% of one month’s rent following the Grace Period (i.e. on April 1, 2021).

f. Landlord penalties

If Landlord violates any of the provisions of the law, including those summarized herein, Tenants may obtain injunctive relief to recover possession or address any other violation. In addition, Tenants may cover up to three month’s periodic rent plus any actual damages.

g. Waiver not applicable to acceptance of partial payments

The new law limits the application of waiver by acceptance of partial payments. Specifically, “ORS 90.412 does not apply to a Landlord that accepts a partial rent payment.”

III. Sunset Clause

The laws described above are automatically repealed on March 31, 2021.

IV. Tolling of Statute of Limitations

The new law tolls Landlords’ claims for Nonpayment or Nonpayment Balance until March 31, 2021. Normally, residential Landlords only have 1 year to commence an action from the date of lease violation. Exactly how much time a Landlord has after March 31, 2021 to file a claim will depend on the underlying facts of the claim and the interpretation of when HB 4312’s tolling date commences.

Landlords: Please support Multifamily NW through a paid membership at www.multifamilynw.org

NOTE: The above is not intended as legal advice. Please obtain the advice of an attorney for any policy change or decisions regarding your individual residential and commercial Landlord-Tenant matters, as well as laws that impact your local jurisdictions. 




HFO Multifamily Marketwatch - June 29, 2020

This week: residential sales rebound, and roughly one-third 30 percent of office and industrial sales are moving forward despite the economic slowdown; and a warning of a second great depression without significant policy intervention.


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The Portland Business Journal reports that approximately one-third of worldwide office and industrial sales moved forward on schedule in May, while around 28% were put on hold, and 17.6% were canceled. Portland-based commercial real estate broker Mark McFarland says that while he has seen Portland-area transactions slow down, they have not come to a halt. He cautions that employers in the tech sector, which has been booming in Portland, may begin rethinking how their companies utilize office space. Typically, tech companies lease space in downtown areas where the price per square foot is high. But if the pandemic causes a shift toward remote work, these companies may re-evaluate whether the cost of renting prime office space makes sense.
Meanwhile, in Portland-area residential real estate, home sale activity started bouncing back in May. While there were fewer pending sales last month compared with May 2019, they were up 52.5% since April. In the Portland Metro Area, prices are up 1.2% year over year, and inventory is around 2.3 months.



Washington Governor Jay Inslee announced last week that masks or facial coverings will be required statewide.
The Governor’s order mandates that anyone over the age of 5 must wear face coverings when utilizing indoor or outdoor public spaces. In Yakima County, which has 6,435 reported cases of COVID-19, businesses will not be allowed to operate unless all customers wear face coverings. Companies that do not comply could lose their licenses. Washington residents who are at home with their family members, outside in places where they can maintain at least 6 feet of distance, or alone in their vehicles do not have to wear face coverings. People who are communicating with someone who is deaf or hard of hearing are also exempt from the mask requirement. Unlike the mandate in 7 Oregon counties, Washington’s mask mandate will be enforceable by police. Violations are classified as a misdemeanor, though Governor Inslee emphasizes that he would prefer not to enforce it.



The Oregon Legislature convened a special session last week to address the state’s pandemic response as well as issues with police brutality.
While the session will not address budget issues, the Governor has indicated that she may call for an additional session once a clearer picture of federal aid emerges. The majority of the pandemic response measures are currently housed in an omnibus package, though an extension of Governor Brown’s eviction moratorium was broken out into a separate bill, HB 4213. Governor Brown’s initial order barring evictions during the pandemic is slated to end June 30th, but HB 4213 would extend the moratorium until 90 days after the Governor ends the state of emergency. A proposed amendment to the bill would set September 30th as the end of the moratorium, and March 31st, 2021 as the date at which missed rents would come due. As in the Governor’s original moratorium order, landlords will be prohibited from charging late fees. The police accountability bills include provisions that would prevent arbitrators from overturning discipline against a police officer. The laws would also ban chokeholds, establish a database of officers who have been disciplined, and empower the Oregon DOJ to investigate police use of force cases. Further, officers would be required to intervene when they witness a colleague engaging in illegal misconduct. Finally, they would restrict the use of tear gas and other “less lethal” crowd control methods.
   
Portland Tribune – Legislative Session Focuses on Police Conduct, Pandemic After-Effects


Activists in Seattle’s Central District are calling on the City to keep its promises to the Black community and to work more proactively to increase rates of Black land ownership in the City.
In a speech earlier this month, K. Wyking Garrett, president and CEO of the Africatown Community Land Trust argued that the City has a responsibility to fulfill its promise to turn Fire Station 6 into the William Grose Center for Enterprise and Cultural Innovation. Although the City committed to this plan in 2016, since then, the station has sat vacant – it is primarily used as a place to park law enforcement vehicles. Spurred by sustained activism in the aftermath of the murder of George Floyd in Minneapolis, the City of Seattle announced on June 12th that it would transfer the fire station to the Africatown Community Land Trust. Garrett and a group of like-minded activists from the community have also established a campaign called “King County Equity Now.” They are calling for the county to hand over several vacant lots as well as a nursing home to the Black community. They are also advocating for a $500 million anti-gentrification land acquisition fund to increase wealth and opportunity for Seattle’s Black residents. Since it was established in 2016, the Africatown Land Trust has found that to fund projects, it has had to partner with white-led nonprofits and development companies. The Trust hopes to move away from these partnerships to better promote Black land ownership in the City.

CityLab – In Seattle, Protests over Racial Equity Turn to Land Ownership


Earlier this month, Oregon Governor Kate Brown announced that Multnomah, Clackamas, and Washington Counties would be considered a single region by the state as it determines when they can move into the next phases of reopening.
This would delay the move to Phase 2 for both Clackamas and Washington Counties, which moved into Phase 1 before Multnomah County. These counties are now pushing back against the Governor’s announcement, arguing that they should not have to wait for Multnomah County to move into the next phases of reopening. Clackamas County is now eligible to move into Phase 2, having entered Phase 1 over 3 weeks ago. After the Governor’s announcement, the Clackamas County Commission voted 3-to-2 to submit the county’s Phase 2 application. Board Chair Jim Bernard was one of the two “no” votes. He points to the recent spike in cases in Union County as an example of why they need to slow down reopening plans. Washington County has also voted to move forward with the reopening, and 13 business organizations located in the two counties have sent a letter to the Governor opposing her plan to treat the Metro area as a single entity.

Portland Tribune – Brown’s COVID-19 Region Opposed in Clackamas and Washington Counties

King County Assessor John Wilson announced that his office will be re-evaluating how private golf courses are taxed to raise the tax base and take some of the burdens off of homeowners and commercial landlords. They have effectively been subsidizing golf courses. According to the Seattle Times, land in the most affordable Seattle neighborhoods is taxed at a rate approximately 71 times the rate of these private golf courses. Also, tax rates are determined by dividing local government budgets by total appraised property values. Because private golf courses are assessed at such low amounts, in many cases, they are being paid for by people who aren’t able to utilize the courses. There are 28 private golf courses in King County, and appraised land value per square foot for these courses ranges from 13 cents to $2.50. In all cases, these rates are significantly below the estimated land value of single-family homes in the same zip codes. The Broadmoor Golf Course in Seattle has an appraised value of 76 cents per square foot. Single-family homes in the same zip code are appraised on average at over $141 per square foot. In Fall City, the Twin Rivers Golf Course is valued at 13 cents per square foot. It is in one of the most affordable areas of King County, where single-family homes are typically appraised at around $5.58 per square foot – nearly 43 times higher. Even public golf courses are assessed at a higher rate than private ones – Seattle’s four public golf courses are valued at between $12.50 and $62.50 per square foot. Local officials hope that increasing the taxes on privately run golf courses will generate more money for county programs and much-needed affordable housing.

The Seattle Times – Are Seattle’s Exclusive Private Golf Courses Getting a Huge Break on Property Taxes? Critics Say It’s Time to Recalculate


A new survey commissioned by the campaign of Mayoral Candidate Sarah Iannarone finds that while a large number of Portlanders have not yet made up their mind about the race, among those who have Iannarone and incumbent Ted Wheeler are running neck-in-neck.
35% of the 992 Portlanders who were surveyed between June 17th and 18th said they are not sure which candidate they will ultimately support in November. But of the 65% of voters who have made up their minds, 33% plan to vote for Wheeler while 32% back Iannarone. The survey showed that Iannarone’s biggest hurdle will be name recognition, while Wheeler’s most significant weakness may be likeability (or lack thereof). 41% of respondents disapprove of Wheeler’s job performance while only 30% approve. But while just 15% of those surveyed have an unfavorable opinion of Iannarone, 61% said they are not sure. In the same poll, Iannarone’s campaign asked potential voters about efforts to defund the Portland Police Bureau. 63% of respondents support reallocating funding from the police to communities of color. Just 22% are opposed.

Portland Tribune – Survey Shows Tight Race for Portland Mayor


Finally, The Atlantic reports that without policy intervention, the US may be heading toward a second Great Depression. Although there have been some signs that allowing businesses to reopen has boosted retail sales and let some people get back to work, these small rays of hope are unlikely to be enough to get the economy back on track in the near term. Atlantic Staff Writer Annie Lowrey predicts that the recovery will look more like the Nike “swoosh” logo than the V-shape some optimistic prognosticators were hoping for. The Congressional Budget Office has revised down expectations for economic output over the next decade by $8 trillion, indicating that a full recovery may be delayed until the 2030s. Economists are bracing for several consequences of the pandemic-related shutdowns, including a massive wave of business closures, state and local budget shortfalls, the ongoing health crisis, and a fiscal cliff that many households are already rapidly approaching. In March alone, nearly 40% of low-income workers lost their jobs. While the increased unemployment benefits and $1,200 stimulus checks provided a boost to a large number of families, they were not nearly sufficient for providing long-term stability in the face of a historic economic downturn. Between March and May, a total of 40 million people lost their jobs, while just 2.5 million jobs were added back last month. When increased unemployment benefits run out at the end of July, those most affected by it will be the households that can least afford it. Most high-income jobs can be performed remotely, and wealthier households have seen few layoffs. But poor and immigrant workers, who were shut out from federal stimulus, will be unable to feed their families or pay their rent without additional federal intervention. Also, this will occur at the same time that the number of COVID cases nationwide is surging, compounding the effects on businesses. Lowrey argues that the federal government must act now to prevent an economic catastrophe by extending unemployment insurance benefits, providing additional help to businesses, sending cash to low-income families, and providing financial support to state and local governments.

The Atlantic – The Second Great Depression

Oregon Legislature Votes to Extend Eviction Moratorium

A wood and metal plaque that says, "tenancy law" in capital letters in front of a judge's gavel. Both are on a wooden surface.
The Oregon Legislature passed HB 4213 on Friday, which extends Governor Brown's eviction moratorium to September 30th. Tenants will be responsible for paying any back rent owed by March 31, 2021. Tenants are required to inform their landlords within two weeks of the moratorium's end date if they plan to use the grace period to pay back the rent they owe. If a tenant fails to do so, the landlord can charge the tenant with a penalty equal to half of the monthly rent. Read more.

Friday, June 26, 2020

Thursday, June 25, 2020

About 15% of Oregon Renters Late with Monthly Payments in June, an Increase from May

The Oregonian reported data released by HFO in a story posted late Thursday. The data, obtained through a survey of more than 74,000 apartment units in the Portland metro area by Multifamly NW, indicates that nonpayment of rent climbed from 12% in May to 15.4% in June.

Statewide, the number of renters failing to make full rent payments increased from 11.8% to 15.1%. The July rent survey results are anticipated some time the week of July 6th.
Click to Enlarge


Multifamily NW collaborated with an array of housing providers (housing authorities, nonprofits, state agencies) to collect surveys of conventional and affordable rental housing to establish the ongoing impact on rent payment of the COVID -19 crisis. The June Rent Survey represented nearly 1/6th of the rental units in Oregon. We found that on average, 15.8% of Oregon households could not pay their rent due to loss of income. This is an increase of approximately 4% from May. Digging into data collected in June, we also found that the impacts of COVID-19 continue to be very clearly regressive.

Unfortunately, job losses combined with delays processing unemployment claims and slow implementation of statewide emergency rental assistance to worsen the situation for many renters.

Both surveys asked: How many households were unable to pay full rent by the 8th day of the month? The survey adjusted for vacancy in order to arrive at the true percentage of renters impacted. The broader impact on the market can, therefore, be extrapolated from these numbers.
  • Overall in the State of Oregon, 15.1% of renter households were unable to pay rent in June, compared to 11.8% in May.
  • Statewide, of renter households living in Affordable Tax Credit units, 15.4% were unable to pay rent, compared to 11.8% in May.
  • The impact is greatest for households living in non-assisted, conventional “Class-C” workforce multifamily housing, which experienced an 18.2% inability to pay rent, up slightly from 17.8% last month.
  • Overall, 1.7% of households were reported to be on a formal repayment plan.
  • 4.9% were two or more months in arrears on rent.
Optional Covid-19 -related expense questions were asked in the June survey, with varying responses:

Cleaning – This question received 121 responses. All responses suggested that cleaning costs were up dramatically, most in the 50-100% increase range.

Personal Protection (PPE) - Counting 106 responses, this category also dramatically increased by 25-50% for all respondents. Where in some cases this had not even been a budget line item, many reported between $150-500 or more in expense per property.

Security - 30 surveys responded to the security question, with 22 indicating there was no change in this expense for their properties. Seven indicated increases of 10-50%.  One survey indicated security had to be canceled. Although many reported many more incidents, this does not necessarily correlate with more expenses under existing security contracts.

Other - With only 16 responses to this question, the highlights include:  Increases to all utility expenses (water, sewer, electric, garbage) with everyone at home most of the time.  Several reported staffing hours increasing by up to 20%. 

Oregon Legislative Committee Weighing Eviction Moratorium Extension

The Oregon State Capitol Building in Salem, Oregon
A joint committee within the Oregon Legislature is considering a bill that would extend Governor Brown's eviction moratorium. The original order is set to expire June 30th, but House Bill 4213 would extend the moratorium until 90 days after the state of emergency is ended. An amendment to the bill sets September 30, 2020 as a hard date for the end of the moratorium. If that amendment passes, rent that went unpaid during the time the moratorium was in effect would then be due March 31, 2021. Washington has already extended its eviction moratorium to August 1st. Oregon legislators heard public testimony on HB 4213 on Wednesday, and could vote as early as today on the bill. Read more.

Monday, June 22, 2020

HFO Multifamily Marketwatch - June 22, 2020

This week: Oregon Governor Kate Brown allows Multnomah County to enter Phase 1 of reopening; Ithaca, NY becomes the first city to vote to cancel rent; the Urban Institute estimates that the US would need to spend $16 billion per month to ensure renters are not cost burdened or evicted during the pandemic.


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Governor Kate Brown announced last Wednesday that Multnomah County could enter Phase 1 of the state’s reopening plan on Friday, June 19th. Multnomah County is the last county to begin phased reopenings – county officials expected to reopen businesses on the 12th, but a spike in cases led the Governor to put a 7 day hold on pending applications. Starting on June 24th, residents of Multnomah, Clackamas, Marion, Polk, Hood River, and Lincoln counties will be required to wear face masks for all indoor activities, with the exception of bars and restaurants. But state officials have not issued guidelines for how this new face covering mandate will be enforced. Under Phase 1 rules, indoor gatherings of up to 25 people are allowed, provided social distancing is possible, and restaurants, bars, hair salons, and gyms are allowed to open. Multnomah County health officer Dr Jennifer Vines warns that cases are likely to go up, and residents should not view the reopening as a return to normal. Last Tuesday, 278 new cases were announced – a one-day record for the state. The day before there were 184. Around 43% of the cases reported on Tuesday were tied to an outbreak at the Lighthouse United Pentecostal Church in Union County. Oregon is one of 20 states where cases have been on the rise. According to state epidemiologist Dr Thomas Jeanne, the state hasn’t been able to identify the source of 35% of infections.


City planners in the Washington County cities of Beaverton, Tigard, and Tualatin are reporting a slowdown in new construction permit applications. Officials are unsure of whether the slowdown is related to the pandemic or whether it is due to the market cycle more generally. According to Beaverton Community Development Director Cheryl Twete, the city has seen a boom in construction over the past 5 years. And while there is a slowdown in building and site development permits, the number of land-use approval applications is on par with previous years. Twete believes some of the slowdown in building construction is tied to hesitation on the part of lenders. Many banks have been holding off on issuing new loans due to uncertainty in the market. Twete believes that is likely to change over the next few months. But the announcement by federal economists last week that the US is officially in a recession could mean that lenders will remain conservative until conditions begin to improve. Still, Tigard Community Development Director Aquilla Hurd-Ravich believes that the unusually wet late-Spring may be impacting construction timelines to a greater degree than COVID-19. 
The unemployment rate in Oregon fell slightly in May, but still remains near record levels. The rate dipped from 14.9% in April to 14.2% in May after 22,500 jobs were added statewide. Since the beginning of the pandemic, the state has lost a total of 243,500 jobs – in March, the unemployment rate was just 3.5%. Although the rate in May was a slight improvement over April, it remains significantly higher than the peak of the last recession, when unemployment was around 12% in 2009. Nationally, the unemployment rate was 13.3% in May, though this figure does not reflect the number of workers who have seen their hours cut or who are unable to look for work. Oregon’s leisure and hospitality sector, which cut 60% of its jobs in April, gained back around 16,000 jobs in May as counties began to reopen. Around 490,000 Oregonians have filed for unemployment assistance since March, and the state Employment Department has been steadily working through a significant backlog. But while just 2,010 regular claims are still waiting to be processed, last week the state reported a backlog of over 70,000 claims for self-employed and contract workers.
The city of Ithaca in Western New York became the first city in the nation last week to allow its Mayor to issue an executive order cancelling rent. The June 3rd order allows the Mayor to forgive three months of rent due through June 2020 for residential tenants and small businesses. In addition, the resolution freezes rents and requires that landlords provide tenants with lease extensions. Nearly 75% of households in Ithaca are renters, and a petition on Change.org demanding a rent freeze garnered 5,000 signatures earlier this year – nearly a sixth of the city’s population. New York’s Governor, Andrew Cuomo, issued an executive order requiring that local orders be approved by the state’s health department for the duration of the pandemic, and Ithaca’s order will not go into effect until it receives state approval. According to a spokesperson for the New York Department of Health, the agency has not yet been made aware of Ithaca’s order. Rebecca Garrard, Campaign Manager for Housing Justice at Citizen Action of New York, believes that the Governor will not be supportive of the measure, which could lead the Health Department to block it. But the Ithaca Tenants Union is more optimistic. If the order is not allowed to go into effect, the Mayor plans to form a task force charged with finding an effective way of cancelling rent while protecting small landlords. 
Oregon Governor Kate Brown is convening the state Legislature for a special session on June 24th. The session will be dedicated to addressing the COVID-19 pandemic and issues of police brutality and accountability. She does not intend to hold budget discussions during the special session, because she expects Congress to pass an additional relief package. The governor plans to wait and see what assistance the state will be getting from the federal government before committing to a formal budget process. Governor Brown has outlined 27 legislative measures she wants to discuss immediately – 6 of these are aimed at addressing police accountability. In addition, she plans to codify in law a number of her pandemic-related executive orders, including the temporary eviction moratorium. And while the budget will not be a focus of the session, the Governor expects the legislature to reduce general funds by around $150 million. State Republicans, who sabotaged the last legislative session by staging a walkout to prevent the passage of a cap and trade bill, are already taking exception to holding a legislative session that does not focus on balancing the state budget. In addition, Senate President Peter Courtney and Senate Republican Leader Fred Girod have both expressed concern over the safety of an in-person legislative session. 
The Associated Press reports that US retail sales were up slightly in May, as businesses nationwide began to reopen. Sales were up 17.7% in May, after declining by 14.7% in April and 8.3% in March. Despite the significant rebound last month, retail sales are still down 6.1% from May 2019. Clothing stores experienced the largest bump with a 188% increase in sales between April and May. But smaller clothing stores are not seeing sales rebound in the same way that national retailers seem to be. Women’s clothing store CPW in New York saw a decrease in sales of around 30%, while teen-focused clothing brand American Eagle has seen its sales dip by only 5%. Local retailers in Multnomah County are hopeful that entering into Phase 1 of the state’s reopening plan will help them regain some of the customers they have lost over the past three months, but the Oregonian reports that many county residents will likely continue to exercise caution despite the lifting of stay at home orders. OHSU School of Medicine Psychiatry Chair Dr George Keepers believes that generally people fall into two categories – one group that remains fearful of the virus and will continue limiting activities, and another that wants to prove they can do whatever they want. In Benton County, which entered Phase 1 in May, most businesses saw only limited foot traffic during the first week of reopenings, though barber shops saw a significant uptick in activity. Week by week, however, more residents have slowly started venturing out. With coronavirus cases rising statewide, it is unclear how long it will take for Multnomah County residents to feel safe leaving their homes.
Landon Crowell, a Black Portland-based multifamily housing developer, has filed a complaint with the federal Department of Housing and Urban Development alleging that Prosper Portland discriminated against him because of his race. For the last 5 years, Crowell has been in a battle with the city to develop an 18-unit multifamily building on a parcel located at Southeast 11th Avenue and Ankeny Street, which he has owned for 16 years. In 2017, after a fifth design review hearing was held for the project, the Design Commission rejected his application despite a staff report recommending approval. Crowell revised his design, eliminating two units, and the city overturned the Design Commission’s decision later that year. Crowell obtained primary financing for the project last Summer, which was conditioned on Prosper Portland providing an additional $2 million in secondary financing. But the city agency believed that the interest rate on the primary loan was too high, and that Crowell’s estimate for rental income was unrealistic. Crowell argues that as the city’s economic development agency, Prosper Portland’s job is to act as a financial stopgap for projects that struggle to qualify for private financing. He contends that while the agency has provided such financing to white developers and nonprofits, they have not done enough to provide economic mobility for people of color. His complaint is currently being investigated by the HUD.
Finally, the Urban Institute estimates that renters in the US need $15.5 billion in housing support each month to remain housed for the duration of the pandemic. This estimate is based on the number of renters who were cost burdened prior to the pandemic, as well as those who have lost their jobs or seen their hours cut as a result of business closures. Nearly 9 million renter households have experienced at least one resident losing a job between February and April. But many low-income renters who were cost burdened prior to the pandemic have not been able to take advantage of increased unemployment benefits. The Urban Institute estimates that 45% of federal and state assistance has gone to renter households making at least 100% AMI. Because of this, Urban Institute policy experts Kathryn Reynolds and Aaron Shroyer argue that the federal government should provide direct rental assistance, rather than relying on expanded unemployment benefits as a panacea. This would allow the most vulnerable renters to stay in their homes, and prevent those who are grappling with housing insecurity from becoming homeless in the midst of a global health crisis. $15.5 billion per month in federal rental assistance on top of expanded unemployment benefits would allow all renter households to maintain a 30% rent-to-income ratio.

Monday, June 15, 2020

HFO Multifamily Marketwatch - June 15, 2020

This week: new laws in Washington state impact tenant screening and rent payments; Oregon directs $55 million to landlords with low-income tenants; possible solutions to a looming eviction crisis.



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Thursday, June 11, 2020

Sold! 24 Units in Gresham

HFO Is pleased to announce our recent sale of Mountain Crest Apartments in Gresham. This property's convenient location combined with unit size/mix made it an excellent opportunity for an experienced investor looking to expand their portfolio. Both buyer and seller participated in exchanges.


HFO-TV: Oregon workforce analyst Christian Kaylor offers the latest Portland metro jobs update.

This mid-year workforce update includes the latest employment data available following the onset of the COVID-19 pandemic.


Wednesday, June 10, 2020

HFO-TV: Dr. Mike Wilkerson of ECONorthwest on COVID-19's impact on the economy & housing in Oregon.

In this video, Dr. Michael Wilkerson of ECONorthwest provides a detailed look at the current and future potential impacts of COVID-19 on rental housing in Oregon and on the economy as a whole.


Seattle Times: Some Rents in Seattle Decrease, Most Rents Flat

The Seattle Times reports that while most rents in Seattle remain flat, but "cheaper apartments" and those in West Seattle experience a decrease. Read more.

Monday, June 8, 2020

State of Oregon Allocates Additional $55 Million to Landlords for Renter Assistance

A bipartisan committee of legislators has agreed to dole out an additional $55 million to help with renter assistance. The funding is part of $247 million received from the federal government. It will be allocated through the housing agencies that were responsible for allocating $8.5 million in state renter assistance in April and May. 

HFO Multifamily Marketwatch - June 8, 2020

This week: Washington’s State’s Governor extends the existing ban on residential evictions until August 1st as landlords in New York and New Jersey file lawsuits against similar moratoriums, and phased reopening continues throughout Oregon and Washington.


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Washington Governor Jay Inslee announced that he is extending the state’s eviction moratorium to August 1st. Also, Inslee’s order includes a handful of new tenant protections aimed at keeping people in their homes during this unprecedented pandemic and economic downturn. Specifically, the law prohibits retaliation against tenants who claim protection under the eviction ban and provides a defense for tenants who face lawsuits over nonpayment of rent in situations where it can be proved that the landlord failed to offer an adequate payment plan. Landlords can still evict tenants for other reasons, such as damage to the unit or if they plan to sell or occupy the property. Washington’s House Minority Leader, JT Wilcox, acknowledged the importance of keeping people housed but pointed out that the eviction moratorium is placing a significant burden on landlords. He argued that extending the ban could exacerbate the state’s housing crisis.


Twenty-six Oregon counties have applied for Phase 2 of the state’s reopening plan, and an additional five are eligible. Governor Kate Brown has stated that unlike Phase 1, counties will likely remain in Phase 2 for a considerable amount of time. Her framework for moving into Phase 3 requires the availability of a reliable treatment or prevention method for COVID-19. Before moving to Phase 2, counties must be in Phase 1 for at least 14 days and show that they are adequately testing and tracking cases. Phase 2 allows for gatherings of up to 50 people indoors or 100 people outdoors, and restaurants and bars may remain open until midnight. Churches and movie theaters can also increase the number of people who can gather at one time. Under Phase 2 guidelines, the state still encourages those who can work from home do so, though a limited return to indoor workspaces is allowed. In contrast with previous statements from the Governor, state epidemiologist Dr. Dean Sidelinger says that counties that are approved to move into Phase 2 will not be required to pause or revert to Phase 1 if an outbreak occurs. The counties that make up the Portland Metro Area are not yet eligible to apply for Phase 2. Multnomah County is the only county in the state that has not entered Phase 1, though it expects to do so on June 12th.


King County has applied to enter a “modified” Phase 1 for reopening, as most counties in Washington have moved into Phase 2. Governor Inslee declined to extend the state’s stay at home order past the end of May, but as of that time, King County and the surrounding area remained in Phase 1, which bans all gatherings and requires non-essential businesses to stay closed. While the county is still not eligible to enter into Phase 2, it can apply to enter a modified Phase 1. This modification would allow some business activities to resume, including real estate, in-store retail, personal services, professional services, photography, pet grooming, and restaurants. For the real estate industry, indoor spaces would be capped at 25% occupancy, and indoor services would be limited to 30 minutes. Restaurants would only be able to operate at 50% capacity. Also, outdoor gatherings, recreation, and fitness would be allowed in groups of 5 or fewer people who do not live together. While the number of confirmed cases is highest in Seattle metro area counties like King, Pierce, and Snohomish, Yakima county has the second-highest number of cases in the state. In contrast, Benton, Franklin, and Clark counties still have hundreds of confirmed cases.


Harvard’s Joint Center for Housing Studies published an article by Senior Research Associate Daniel McCue arguing that the housing industry could help pull the US out of its current recession. While McCue acknowledges that this recession is unique in that it was caused by a pandemic, he points to the tightness in the housing market and evidence from previous downturns to make his case. After recessions in the 70s, 80s, 90s, and early 2000s, residential fixed income made up a significantly higher than average share of GDP growth. This share was particularly high after 1982 and 2001 when RFI accounted for roughly a quarter of GDP growth. Vacancy rates were extremely low for both owner- and renter-occupied homes as we entered the current recession. The vacancy rate for owner-occupied homes is 1.7 percentage points lower than it was in 2007, while the vacancy rate for renter-occupied homes is 3 percentage points lower. McCue also points out that unlike the last recession, there is not a substantial inventory of distressed and foreclosed properties that could have an impact on housing values. If states can lift bans on housing construction and tightness in the construction labor market softens, it could provide a boost for the economy.


As cities across the country begin to lift pandemic-related restrictions, customers and workers appear hesitant to go back to business as usual. In Oregon, the Governor lifted a ban on in-person retail sales last month. However, Portland shops are finding that even with extra precautions like curbside pickup, customers are still wary of venturing out. Pam Coven, the owner of Imelda’s and Louie’s Shoes, says revenue at her stores on SE Hawthorne and NE Alberta is down between 70% and 80%. She hopes that once bars and restaurants reopen and more foot traffic returns to the surrounding neighborhoods, her stores will get a boost. Sandra McDonough, CEO of Oregon Business and Industry, largely agrees with Coven. She has seen in other counties that once residents gradually start going out to bars and restaurants, they become more comfortable with different types of outings as well. Nationwide, retail sales were down 16.4% between March and April, though some businesses like bike shops and hardware stores have seen more robust sales. Also, an informal survey conducted by the Portland Business Journal finds that a large number of area workers are hesitant to return to their offices. Out of 1,261 responses, 48% said they would not feel safe returning to a shared office, 40% said they were ready to go back, and 12% were unsure.


Multi-Housing News reports that landlords in New York and Massachusetts have filed legal challenges to pandemic-related eviction bans. The New York lawsuit was filed by landlords in Westchester County against Governor Cuomo’s moratorium extension. In their suit, the landlords claim that the Governor’s action violates their due process rights and can be considered an improper taking of property. In particular, the lawsuit takes issue with the parts of the Governor’s order that extend the moratorium to August 19th and allow renters to use security deposits to cover rent payments. Meanwhile, two Boston landlords have filed an emergency petition to the state’s supreme court that seeks to nullify the statewide eviction ban in Massachusetts. The statewide ban prevents evictions except those for criminal activity or lease violations that directly impact the health and safety of other tenants. The filers, in this case, argue that Governor Charlie Baker’s order violates their constitutional rights and eviscerates the ability of landlords to evict tenants.


Amid the ongoing pandemic and deepening economic downturn, real estate companies have been in the news lately, with announcements about hiring, layoffs, and mergers. Portland-based vacation rental company Vacasa announced last week that it secured $108 million in new funding, which will allow it to recall some of the workers the company laid off in March. Meanwhile, real estate funding startup CrowdStreet has laid off 24 of its 110 employees due to the impacts of the COVID-19 pandemic. Before the downturn, CrowdStreet was on track to double its business, according to CEO Tore Steen. And the news is not limited to Portland-area businesses – Greystar Real Estate Partners announced last week that it has acquired the property management division of Alliance Residential for $200 million. Greystar was already the largest apartment manager in the nation, and this acquisition will add 130,000 units to its portfolio.


Finally, CityLab published an article by Brookings Institution Fellow Andre Perry, which is based on an excerpt from his forthcoming book Know Your Price: Valuing Black Lives and Property in America’s Black Cities. Perry details the experience of developer Brian Rice to illustrate the difficulties developers face when they try to invest in Black communities. Perry purchased and plans to revitalize nine buildings in Ensley, the largest neighborhood in Birmingham, Alabama. These buildings were once part of a vibrant commercial corridor that has become blighted after years of disinvestment. East Ensley is a low-income historically Black neighborhood that lost 81% of residents between 1970 and 2010, but Rice believes that the neighborhood has potential. He envisions a community filled with food carts, an outdoor patio, pop-up shops, and office spaces for nonprofits and mentoring programs. He believes that if he succeeds, the neighborhood could thrive once again. But Rice has faced significant hurdles when it comes it financing his vision – six months after he purchased the properties, he was only able to secure a single $50,000 loan. Appraisers have valued the buildings at $45,000 - $170,000 for land and property value, minus $125,000 for demolition costs. But Rice believes the appraisers used the worst possible comps for his property, some of which were not even within city limits. Perry attributes the barriers Rice is experiencing to disparities in how loans are distributed to Black vs. white businesses – over half of Black business owners who apply for financing are denied, a higher percentage than any other race or ethnic group. Rice points out that banks have chosen not to invest or establish branches in the Ensley neighborhood, though he is working to recruit banks and credit unions to the area. Perry points out that Black neighborhoods and Black-owned development and investment companies are also largely being left out of the Opportunity Zones program. Perry argues that local governments should do more to support developers like Rice. They see the potential in communities that have experienced systemic disinvestment and continue to suffer as a result.

Friday, June 5, 2020

King County Assessor Proposes Plan to Lower Taxes for Landlords

Washington State Capitol Building in Olympia
King County Assessor John Wilson proposed a plan to the state legislature Thursday aimed at helping multifamily and commercial landlords who have seen a decrease in rent collections due to the COVID-19 pandemic. Wilson's plan would allow counties to lower the taxable value of commercial properties that have seen a drop in rent collections. It would apply to property taxes for the second half of 2020. Read more.

Wednesday, June 3, 2020

Washington State's Eviction Moratorium Extended Through August 1, 2020

Washington state, eviction moratorium, seattle,
On June 2nd, Washington Governor Jay Inslee extended the state's eviction moratorium by an additional 60 days, to August 1, 2020. The moratorium, which has been the topic of recent HFO-TV segments and related lawsuits in Massachusetts and New York, is extended to August 1, 2020.





The new moratorium:
  • Continues to prohibit the service of any notice where remedy may include eviction, except where the action is necessary to respond to a significant and immediate risk to the health, safety, or property of others created by the resident.
  • Permits termination with 60 days' written notice of intent (1) to personally occupy the premises as a primary residence or (ii) to sell the property. Because of the timing, any termination under this section is likely to become effective August 31.
  • Creates a defense to eviction if the housing provider failed to offer a reasonable payment plan.
  • Exempts commercial properties from the rent control provisions where an automatic rent increase was agreed to and executed prior to February 29. 
  • Adds a retaliation provision for invoking their rights under any of the Governor's eviction Proclamation or other rights provided by the Residential Landlord-Tenant Act.
  • Permits reasonable communications with residents to explore repayment plans.  

Landlord Times: Handling Apartment Maintenance Issues During a Pandemic

Warren Allen LLP attorney Bradley S. Kraus explores the legal issues surrounding a landlord handling maintenance issues during a pandemic in this article from this month's Landlord Times. Read more. 

How The Strain From the Pandemic is Affecting Multifamily Managers

Ron Garcia of Garcia Group Property Management offers a stark look at what's happening 90 days into Oregon's non-eviction order from a rental management perspective. Read more in the Rental Housing Journal. 

Tuesday, June 2, 2020

Owners in Boston and New York Sue to Overturn Eviction Moratoriums

Landlords in New York and Massachusetts have filed legal challenges to eviction moratoriums, arguing the bans are unconstitutional. Read more.

Monday, June 1, 2020

More Than Half of Washington State Counties Get OK to Reopen; King County to Apply for Modified Phase 1

More than half of Washington State counties get approval to enter the second phase of the state's four-phase coronavirus recovery plan, the governor announced last week.

Meanwhile, County executive Dow Constantine announced Friday that King County will apply for approval to enter a modified Phase 1 reopening. 

HFO Multifamily Marketwatch - June 1, 2020

This week: Landlords grow concerned over the upcoming end of increased unemployment benefits; King County sees mixed results from homeless hotel housing as Portland mulls a similar plan.


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According to the National Multifamily Housing Council, 90.8% of renters were able to make full or partial rent payments by May 20th, an improvement over April despite the continued economic downturn that has led to unemployment rates reaching nearly 15%. A survey of apartment owners in Oregon and Southwest Washington found that just 9.46% of households were unable to pay rent in May. In the city of Portland, over 94% of renter households made a payment last month. But industry experts warn that renters may be relying on the extra $600 per week the federal government is providing for unemployment to pay rent. This boost to unemployment benefits is set to end in July, which could mean landlords will see a drop off in rent collections in August or September. According to CoStar, institutional apartment investors are already seeing a sharp increase in the number of tenants requesting rent deferments or payment plans. Rent collections appear to be strongest at high-end and subsidized properties. Landlords and property managers are continuing to lobby state and federal legislators for increased funding for rental assistance. Last week the Seattle Times’ editorial board called on the Seattle City Council to provide monetary support to renters and landlords to ensure mortgages, utility bills, and property taxes continue to be paid, as well as to ensure housing stability for renters.
Washington Governor Jay Inslee has approved 21 counties to advance into Phase 2 of his four-phase plan for reopening. Under Phase 2, high-risk populations must continue to stay home, but outdoor gatherings of 5 or fewer people who are not in the same household are permitted. Also, manufacturing, construction, in-home domestic services, retail, real estate, professional services, and personal care businesses can resume operation, and restaurants can operate at less than 50% capacity. Remote work continues to be encouraged for offices that can facilitate it. Spokane is the most populous county that has been approved to move into Phase 2. The approved counties are mostly along the Idaho border, though some western Washington counties, including Grays Harbor, Lewis, Wahkiakum, Cowlitz, and Skamania, were also approved. To meet eligibility, counties are required to have fewer than 10 new COVID-19 cases per 100,000 people for 14 days. The Seattle Times reports that King, Pierce, Snohomish, Yakima, Benton, and Franklin counties are the farthest from reopening. Clark County is eligible to apply, though its application is on hold while a recent outbreak at a food processing plant is being investigated. While over half of the state’s counties have now moved into Phase 2, these areas represent just 17% of the population.
Despite widespread economic turmoil that has forced mass layoffs and business closures, many tech companies have been embracing the shift to remote work. Facebook has announced that its employees will be able to work from home until at least the end of the year, and is unveiling plans to expand its offices in several cities outside of its Silicon Valley hub. A recent survey of Facebook employees found that 20% of the company’s current workforce is extremely or very interested in working from home even after the pandemic ends. This opens up new possibilities for the company, which has some satellite offices in tech hubs across the country but tends to be located in areas with high costs of living. The tech giant is focusing on Portland, San Diego, Philadelphia, and Pittsburgh for the first round of expansions. But CEO Mark Zuckerberg is not limiting his search for new talent to people who already live in the metro area. In his announcement, he made clear that the company will be recruiting talent from within a 4-hour drive of these cities, arguing that hiring people from a variety of places will bring fresh perspectives to the business. In Oregon, this could mean Facebook will take applications from residents of Corvallis, Eugene, Bend, Hood River, and many other areas well outside of typical Portland commuting distance.
The Seattle Times reports that a new King County program that houses homeless residents in vacant hotel rooms is having mixed results, as Portland’s Joint Office of Homeless Services proposes a similar plan. For many of the homeless individuals in the hotels, the program has been life-changing – some have been able to get free of addictions, and the number of fights, overdoses, and violent outbursts at the hotel is far lower than is typical at area homeless shelters. County officials are also finding that more people are staying in their hotel rooms rather than wandering around on the streets. Also, the program appears to have significantly mitigated the spread of coronavirus in vulnerable populations. There has not been a single confirmed case among the 200 people who have been tested at a hotel in Renton. The county estimates that housing 600 people at hotels through mid-May cost $2.7 million. But local business owners and the Renton Police Department believe the program may be hurting the surrounding community. Renton business owners find a recent uptick in shoplifting incidents is tied to the increase in homeless residents living in the community. And while there have been just 60 9-1-1 calls from the Renton hotel compared with 105 at a comparatively sized shelter in Downtown Seattle, the Renton police force is much smaller than Seattle’s and unused to the high volume of calls. In Portland, the Joint Office of Homeless Services is urging the city to spend nearly $40 million to house homeless residents in 495 motel rooms with wraparound services until there is a vaccine for COVID-19. The elderly and immuno-compromised would be prioritized. The Mayor and members of the City Council believe the price may be too high, however, and are considering alternatives like temporary housing units or existing vacant spaces such as the old Greyhound station in Chinatown or the Concordia University campus. Council members believe if the city plans to spend such a large amount of money, it should not just go to temporarily rent space that it will not be able to utilize in the future.
The LA Times reports that people who are looking to purchase homes amid the COVID-19 pandemic are finding it harder to get a loan. Lenders across the nation are becoming more cautious, requiring larger down payments and higher credit scores. So-called “jumbo” loans appear especially hard to come by. Also, banks, including JP Morgan Chase and Wells Fargo, have stopped issuing home equity lines of credit for existing homeowners. The Mortgage Bankers Association’s Mortgage Credit Availability Index is at its lowest level since December 2014 after experiencing a 12% decline between March and April. Although mortgage rates remain historically low, fewer home buyers will be able to take advantage of these rates due to the decrease in credit availability. Banks appear to be hedging against an expected increase in mortgage defaults as unemployment benefits dry up, and the economic crisis continues. Banks are already severely limiting the number of non-QM mortgages, which are typically utilized by self-employed home buyers. Joel Kan, Vice President at the Mortgage Bankers Association, expects overall mortgage lending to return to conditions not seen since 2011. Zillow expects home values to drop by 2-3% as a result of tighter lending standards and economic uncertainty.
Seattle-based aerospace manufacturer Boeing, which was already having a challenging year before the coronavirus pandemic, announced last week that it is in the process of laying off nearly 12,300 workers, almost 10,000 of whom work in the state of Washington. Boeing sent layoff notices to 6,770 workers last week and offered voluntary buyouts to an additional 5,500 workers. CEO Dave Calhoun cites the pandemic’s impact on the global airline industry as the primary reason behind the layoffs. At its peak in 1998, Boeing employed 98,440 workers. That number had declined significantly by 2003, but by 2012 company employment numbers had considerably rebounded, reaching 86,480 before falling again. Over the last two years, employment had been up slightly, but projected total employment at the company for 2020 is now under 62,000 workers. Boeing expects to cut an additional 4,000 jobs globally over the next few months. Many of the cuts will be for high skill, high wage jobs. Thomas Gilbert, a professor of finance at the University of Washington, told the Seattle Times that these cuts will be a permanent loss to the local economy.
Josh Lehner, an economist with Oregon’s Office of Economic Analysis, predicts that the pandemic could result in a sharp decline in in-migration. He predicts that there will be 34,000 fewer people than expected living in Oregon by 2030. He also believes state revenues will be significantly impacted by a decline in liquor and lottery sales in addition to slower population growth. In the near term, he expects state revenues to decline by $2.5 billion over the next biennium. Lehner balances his dire predictions by pointing out that the state was in an excellent financial position before the sudden downturn. The education reserve, rainy day, and general funds can all be used to cushion the blow and shore up essential programs. He also argues that Oregon will fare better than states with a higher dependence on tourism, leisure, and hospitality, which face a tougher road to recovery. Still, he believes that it will be at least a few years before Oregon’s economy will be able to bounce back from the pandemic-related shutdowns. The prevalence of smaller businesses, especially restaurants across the state, could lead to a higher number of business closures. And coastal counties that are more dependent on seasonal travel have been harder hit, and will likely take longer to recover.
Finally, BisNow reports that the pandemic-related economic downturn and stock market volatility have kindled renewed interest in the Opportunity Zones program, which was established as part of the Tax Cut and Jobs Act of 2017. Although uncertainty in residential and commercial rent collections has caused some property owners to hit pause on plans for buying and selling assets, opportunity zone investment activity has remained steady. Opportunity zone fund managers report an increase in fundraising in addition to transactions. The 10-year time horizon for the program—which seemed riskier to some investors when the economy was booming—is now being viewed as enough time for the country to weather the current downturn. Jeanine Blake, co-principal of Opp Zone Capital, believes at least some of the new interest in opportunity zones is coming from investors who pulled money out of the stock market amid the economic turmoil but are eager to avoid paying taxes on capital gains. At the same time, that investment is up, construction costs are beginning to trend downward, which could enable some projects that have been struggling to pencil out to finally move forward. Opportunity Zone investors have also started to step in to shore up plans that have lost funding from more traditional sources. Michael Wiener, a Tax Partner at Greenberg Glusker, points out that many investors anticipate an increase in taxes as local and state governments work to stimulate their economies. The promise of tax forgiveness at the end of a 10-year hold could insulate opportunity zone investments from some of these costs.