Wednesday, May 27, 2020

Coronavirus Causes Biggest Annual Rent Growth Slowdown in at Least Five Years

The Coronavirus caused rents to fall in 16 major markets across the U.S., according to Zillow, and the biggest rent slowdown since 2014 with rents up year over year 2.9%. Seattle rents were up 4.7% year over year in April and Portland metro rents were up 2.3%, according to the report.

Tuesday, May 26, 2020

Facebook Eyes Portland, Other Hubs, as Remote Workplaces

Facebook CEO Mark Zuckerberg has indicated half its workforce could be remote by 2030. It plans to hire new engineers in cities like Atlanta, Dallas, Denver, and Portland. It would allow employees to live within a four-hour radius of those hub cities.

Read more here and here

Multifamily Marketwatch - May 26, 2020

Oregon state economists warn Oregon will bring in $2.7 billion less revenue in the current biennium, and a prediction that homelessness could spike by up to 45% nationwide and $8.5 million approved by the legislature for rent payments to landlords will soon be distributed. Watch for our Washington State updates next week.


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Oregon held its primary election on Tuesday, May 19th, and several races in the Portland area are now headed to runoffs. Portland Mayor Ted Wheeler fell just short of the 50% he needed to avoid a runoff election with competitor Sarah Iannarone, who garnered 23.8% of the vote. And while Carmen Rubio handily won the race for Position 1 with 67.6% of the vote, the races for Positions 2 and 4 were much tighter. In the race for Position 2, Loretta Smith will face Dan Ryan in a runoff in November. Incumbent Chloe Eudaly received 31.3% of the votes for Position 4, while Mingus Mapps received 28.6%, and former Mayor Sam Adams received 27.7%. Eudaly and Mapps will face off again later this year. Mike Schmidt, a progressive candidate for Multnomah County District Attorney, won in a landslide victory over Ethan Knight. Still, a runoff will be held between Adrian Brown and Rima Ghandour for a Multnomah County Circuit Court Judge seat. Also, the race for the Democratic nominee for Secretary of State was so tight that many news outlets had to issue corrections after calling it for Mark Hass Tuesday night. By the time all ballots were counted on Wednesday, Shemia Fagan was declared the winner with 36% of the vote. Voters also approved several ballot measures – the Metro homeless services measure won with 53.8% of the vote, the Centennial and Canby school districts passed construction bonds, Wilsonville residents set term limits for City Council, and Washington County passed a library levy. Beaverton residents signed off on significant changes to their city charter. In Baker City, residents voted to sell an old backhoe. In all, a record number of ballots were returned statewide, though the percentage of eligible voters who turned out fell just short of the 2016 primary.

Oregon Public Broadcasting reports that the state legislature is now ready to start distributing the $8.5 million it allocated to rental assistance for low-income tenants. 18 local agencies have been charged with distributing the funds – these agencies are located throughout the state. They are typically county or regional level housing or service agencies, such as the Lane County Human Services Commission and the Mid-Columbia Community Action Council. Multnomah County’s Department of Human Services was given $1.6 million of the funding and is working on a system to ensure that the money is distributed equitably and efficiently. Renters who make up to 50% of area median income are eligible for the relief, which will be allocated based on need. Renters must show proof of a loss of income, but the type of evidence required will vary by agency. When a tenant is approved, the funds will go directly from the agency to the tenant’s landlord. OPB – Oregon Made $8.5 Million Available to Pay Rent. Here’s How to Get It

Earlier this month, most of the counties across Oregon were allowed to re-open businesses according to the Governor’s Phase 1 plan. But Multnomah, Clackamas, Washington, Polk, and Marion counties were unable to open at that time. Last Wednesday, Governor Brown gave the go-ahead to Marion and Polk counties, which were able to partially re-open on the 22nd, despite having some of the highest rates of new infections statewide. Marion County, which boasts the highest prevalence of infections, had 879 confirmed and likely cases at the time of the Governor’s announcement. 24 county residents have died. In the Portland Metro Area, Clackamas County also applied to begin re-opening businesses on the 22nd, but as of Thursday, the Governor had not responded to the county’s request. Washington County asked at the end of the week. Officials in both Washington and Clackamas Counties emphasize that even if their applications are approved, they may not open immediately. Washington County Chair Kathryn Harrington stated that they are working to onboard 142 new employees who will be engaging in various aspects of contact tracing, and the county will not open until all of these new hires are trained. Clackamas County Chair Jim Bernard cautioned that the state may have acted too hastily in allowing all retail stores to resume operations. Both Harrington and Bernard plan to continue monitoring the number of new cases to ensure it is safe to start opening more businesses. Multnomah County Chair Deborah Kafoury stated that the county needs $75 million over the next year to meet the criteria set out by the state. Under the CARES Act, Portland received $114 million while Multnomah County, which has been spearheading the public health response for the region, received just $28 million. Kafoury is negotiating with the city of Portland as well as the state to secure the necessary funding before applying to re-open according to the Phase 1 plan.

State economists in Oregon presented the June 2020 Economic and Revenue Forecast last week, which estimates that the state will likely receive $2.7 billion less than anticipated over the current biennium, and $4.4 billion less in the biennium ending in 2023. The economists also caution that 2023 will likely not be the end of the state’s budget woes – there could be an additional loss of $3.3 billion between 2024 and 2025. State economist Mark McMullen warned legislators that Oregon is particularly reliant on personal and corporate income taxes, making it more vulnerable during economic downturns. State Senator Betsy Johnson believes the legislature should take action to mitigate the potential budget cuts. Earlier this month, the Governor directed state agencies to craft budgets that included a 17% cut in spending in preparation for what is to come. But it is likely the state will not have to cut $2.7 billion in budgetary expenses over the next year – the country expected to have around $1.1 billion in cash on hand by the end of 2020, which could be used to fill in some of the gaps. House Speaker Tina Kotek believes that using this money and bonding for public infrastructure projects could help residents get back to work and improve the state’s economic outlook. Governor Brown acknowledged that the country will need to make additional cuts. Still, she called on the US Congress to provide stimulus payments to states to ensure that essential services continue to function.  OPB – The Coronavirus Will Blow an Enormous Hole in Oregon’s Budget, Economists Say

The Lake Oswego City Council voted last Tuesday to allow the owners of the Marylhurst University campus to rezone their properties to turn a portion of the school into affordable housing. Also, the Council authorized the City Manager to waive application fees for the project. The Sisters of the Holy Names of Jesus and Mary own both the Marylhurst campus and a nearby retirement community called Mary’s Woods. The Sisters issued a statement indicating that the planned affordable housing would primarily be reserved for employees of Mary’s Woods – they argue that housing local employees on the campus would mitigate traffic congestion on Highway 43 and boost housing supply in the area. In addition to providing affordable housing, the Sisters plan to maintain historic structures on the Marylhurst campus and designate areas for nonprofit uses. Open spaces would be made available for public use.


As problems persist at Oregon’s Employment Department, high profile lawmakers are calling on the state to do more to help vulnerable residents who are waiting on unemployment claims. According to the Oregonian, the average hold time for calls to the department reached 3.5 hours in mid-May, as 50,000 people across the state continue to wonder why they haven’t received their unemployment benefits. Some of these residents have been waiting for checks since March, and many had claims that were erroneously denied. Those who called to check on their applications or fix a mistake have been hung up on or encountered a busy signal. In some cases, they were left on hold for 6 hours. Last Wednesday, US Senator Ron Wyden and US Representative Earl Blumenauer wrote a letter to Kay Erickson, head of the state’s Employment Department, urging immediate action. They wrote that “Failure to clearly communicate and get unemployment benefits out promptly is failing all of us.” As the state jobless rate climbs past 14%, one in eight applicants for unemployment is still in the dark as to when they will receive a check. While Erickson has refused to answer questions, David Gerstenfeld, one of Erickson’s deputies, will testify before a legislative committee this week.


According to the Regional Multiple Listing Service, as of April, pending sales and listings in the Portland Metro Area were down 30% year over year. Meanwhile, closed sales were down 16.4%, and new listings were down 32.4% since April 2019. Between March and April 2020, the number of new listings fell by 17.9%. March and April are usually the peak time for sales in the region. Still, this year the pandemic and the sudden economic downturn due to business closures are having a significant impact on home sale activity. Eric Hagstette, the owner of Inhabit Real Estate, believes there will be a speedy recovery in home sales. And while the number of sales is down sharply year over year, home prices are still up by 4.7%. Hagstette predicts that there will be an increase in inventory as people move out of homes they can no longer afford. He expects to see more REITs and institutional buyers entering the Portland market. DJC – Regional Home Sales Drop amid Economic Shutdown.

Finally, CityLab’s Mimi Kirk interviewed Don Mitchell, author of the new book Mean Streets: Homelessness, Public Space, and the Limits of Capital about the history of urban homelessness, and what can be done to get people back into permanent housing. Mitchell points out that homelessness has changed since the early 1900s. Previously, homeless residents tended to be migrant workers. The latter would stay temporarily in “skid row” neighborhoods, which were typically home to boarding houses, single room occupancy hotels, and cheap bars and restaurants. By the 1980s, cuts to the public welfare systems and the shuttering of mental institutions contributed to increased homelessness. Residents without homes starting at that point were more likely to be people of color, including women and families. At the same time, so-called “skid rows” were targeted for redevelopment, and many of the affordable housing options like SRO’s were turned into higher-priced apartments or boutique hotels. Mitchell links the history of homelessness to the history of capitalism. He points out that the US was already experiencing a crisis of homelessness before the current public health crisis. He argues that some of the strategies used to mitigate homelessness and poverty between the Great Depression and the early 1970s could be revisited to minimize some of the “meanness” of capitalist systems. CityLab’s interview with Mitchell comes on the heels of a report by Columbia University Economics Professor Dr. Brendan O’Flaherty, who projects a 40-45% increase in homelessness across the nation this year. As the US works to get the economy back on track, it may be worth considering Mitchell’s advice to avoid an unprecedented disaster where 250,000 people lose their homes over the next several months.

Wednesday, May 20, 2020

Sold! 49 Units in Beaverton

HFO is pleased to announce its recent sale of the Fairwood Apartments in Beaverton, Oregon.

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Oregon Elections: Portland Races Head to Runoffs

As ballots continue to be counted, it appears that most of the city races in Portland are headed for runoff elections. Carmen Rubio was the only city council candidate to achieve an outright win, beating out closest competitor Candace Avalos for Position 1. The race to serve the two remaining two years of Nick Fish's term is extremely close, with the top 5 candidates each receiving between 12% and 19% of the vote. Front-runner Loretta Smith (19.1%) will face Dan Ryan (13.8%) in a run off in November. The race for Position 4 is another toss-up - incumbent Chloe Eudaly received 31.2% of the vote, while Mingus Mapps received 29% and Sam Adams received 28.2%. More votes will need to be counted to determine who will face Eudaly in the run off. As of Wednesday morning, it appears Ted Wheeler may be able to avoid a run off election, but it is still too close to call. The Mayor has a narrow majority of 50.4% of the votes, while Sarah Iannarone received 23.3%. Portland voters approved the gas tax, and voters across the Metro area voted in favor of the homeless services measure. Read more.

Monday, May 18, 2020

Portland's Unreinforced Masonry Building Owners Receive Some Good News

In an email to unreinforced masonry (URM) owners in Portland this week, the group Save Portland Buildings announced that Mayor Wheeler has removed the city's list of URM buildings and map from the Internet last week.

The group had sought the removal of the map and list due to inaccuracies, inequities, and burdens.

Over the past weeks the organization has expanded its coalition to include the NAACP, Portland Business Alliance, Music Portland, Masonry Building Owners of Oregon, the Old Town Hospitality Group, and the Hawthorne Boulevard Business Association.

The organization indicated that Pastor E.D. Mondaine of the NAACP took the lead in the request, by sending the following letter to the Mayor:

5/1/2020
Mayor Wheeler and Commissioners: 
In 2014, the City of Portland created the Unreinforced Masonry Building (URM) Seismic Retrofit Project to “develop a policy to require the mandatory retrofit of all URM buildings in the city and develop methods to assist building owners to implement the policy.” This initiative was led by the Portland Bureau of Emergency Management (PBEM) in collaboration with the Portland Bureau of Development Services (BDS) and Prosper Portland. 
The City hoped to identify funding to mitigate URM buildings, in part to help building owners retrofit their buildings to improve building performance during an earthquake, avoid displacement and to protect Portland’s historic buildings. 
On June 13, 2018, during a City Council meeting, a resolution was passed to require—effective March 1, 2019 —the placement of placards on URM buildings. The placards would include a warning to visitors in 30-point bold type that the building may be unsafe in the event of a major earthquake. Along with the placards, the City insisted upon recording a document for each affected property containing very problematic language regarding its URM status. As the Council is aware, a coalition of building owners took The City of Portland to court and on May 30, 2019, a federal judge issued an injunction against the placarding requirement. 
The Court concluded that the ordinance did not compel purely factual information because it falsely identifies some buildings as unreinforced and erroneously identifies some non-URM buildings as URM. While we are grateful the ordinance was stayed, we find that the issue at the core of our coalition’s complaint has not been fully resolved. The City-maintained URM database list was hastily put together and includes many buildings that, due to upgrades or being falsely identified, should no longer be classified as URMs. For building owners to confirm that they’ve adequately improved the safety of their URMs, it can be prohibitively costly to have an engineer assess the property. 
The list is a burden for building owners, making it difficult to secure loans and discouraging investment in the structures. The City of Portland acknowledges the database to be inaccurate and unable to predict building performance in an earthquake, but still requires “conclusive evidence”—a prohibitively high bar—that a building is no longer a URM in order for it to be removed from the list. Thus, the judge stated, “Some buildings, including those owned by two of the plaintiffs, remain on the list despite having been retrofitted with safety improvements.” 
The NAACP asks plainly that the City-maintained online URM database list be abolished. The inherent limitations on its accuracy acknowledged by the City render it an irresponsible means of tracking this issue. Judge John Acosta, who presided over the URM placarding case wrote, Plaintiffs have demonstrated that they will suffer imminent irreparable harm if they are required to comply with the Ordinance, and that the balance of equities tips in favor of the Plaintiffs and it is in the public interest to prevent the violation of Plaintiffs’ constitutional rights." 
Although we are not being ask to placard our buildings, the list still poses a threat to all building owners. 
Especially at this time, during a global pandemic and pending depression, our communities are hurting. People are afraid. People are Dying. Sick. Out of work, and overwhelmed. The trajectory of a potential recovery remains uncertain. As such, the call to abolish the online URM database list has become part of our larger call for government, organizations and residents to pull together and have each other's back. 
The effects of the pandemic will be with us for years. Efforts toward helping renters and small businesses will be ineffective if building owners walk away and buildings remain shuttered. No amount of relief or aid will help the recovery of our residents and small businesses if there are no buildings open to house them. 
And, of course, the disproportionate effect this will have on the Black community through the acceleration of gentrification and displacement remains a looming threat. As the NAACP has pointed out before, the existence of such a list “exacerbates a long history of systemic and structural betrayals of trust and policies of displacement, demolition, and dispossession predicated on classism, racism, and white supremacy.”
The NAACP calls—unequivocally—for the leadership of this city to remove any and all burdens on these property owners and any obstacles to their recovery from this crisis. The existence of the list acts as a modern-day redlining. This regressive action by the City cannot be tolerated under normal circumstances, but is especially intolerable during an economic crisis. 
Abolish the list. 
 /s/
E.D. Mondainé
VP - NAACP AWOSAC / 
President, Portland NAACP
Coalition Partners: 
Portland Business Alliance
Music Portland
Masonry Building Owners of Oregon
The Old Town Hospitality Group
Hawthorne Boulevard Business Association & Save Portland Buildings
The Portland Business Alliance also sent the following letter:

May 7, 2020
Mayor Ted WheelerCommissioner
Jo Ann HardestyCommissioner
Chloe Eudaly
Commissioner Amanda Fritz
City of Portland
1221 SW 4th Avenue
Portland, OR 97204
RE: Database of unreinforced masonry buildings
Dear Mayor Wheeler & Commissioners,
The Portland Business Alliance (the Alliance) is greater Portland’s Chamber of Commerce and represents the largest, most diverse network of businesses in the region. The Alliance advocates for business at all levels of government to support commerce, community health and the region’s overall prosperity. We represent more than 1,900 members, from 27 counties, 13 states and virtually every industry sector. More than 80% of our members are small businesses.
We write today to express our support for the request from the NAACP Portland Chapter, and several other organizations, to abolish the current city database of unreinforced masonry (URM) buildings. The Alliance has supported, and continues to support, the concept of maintaining a well informed and consistently updated database of building conditions based on shared agreements. However, the current list has so many problemsand exacerbates harm from past injustices and inequities, we believe the city needs to take the actions called for by the NAACP and start over.   
The problems with the current URM database are numerous, including the following:
1. The current list appears to go directly against the city’s policy of applying a racial equity lens to policy decisions and implementation. The very purpose of maintaining such a list must be clearly communicatedand be in alignment with the city’s racial equity goals, which it clearly is not in its current form.
2. If the purpose of this list were to be developed and agreed upon - with equity at the forefront - between the city, impacted stakeholders, and the community, there would also need to be a plan to develop the initial list, ensure it is “ground truth” and based on clear criteria. This list should also be regularly maintained and updated on to ensure its accuracy.  This does not currently appear to be happening. This only reinforces the perception that this list targets certain communities. Additionally, building owners have told us they have non-URM buildings, or buildings that were reinforced to past standards on the list, but the process to remove them is very difficult to fulfill.   
3. The maintenance and publication of this list with no specific plan to provide financial incentives and assistance to local building owners to upgrade their buildings gives the strong impression its only current purpose is to shame building owners into taking action many simply cannot afford.
The Alliance is strongly committed to continuing to be a partner in the city’s vital emergency preparedness planning work. Clearly, the entire community has a vested interest in developing a plan to ensure the entire inventory of buildings in Portland are improved to meet minimum standards of earthquake safety as quickly as possible. This is not a problem that can be solved by one sector alone. We must do the difficult work to develop a strong private, public partnership – including help from the state and federal government – to bring URMs up to modern standards.  In our last communication to the city, dated 5/15/18, we expressed our opposition to the placarding proposal (which we appreciate was put on hold), and suggested alternative forms of public disclosure that would be tied to a financial plan. 
The Alliance would consider supporting the development of a new list, one that is tied to a robust set of financial incentives and assistance, and tracks shared progress on a city-run, public-private retrofit program, with improvements listed, and anticipated dates of completion. This would be a much more positive, community-focused approach with shared accountability and metrics. We will also continue to advocate for state and federal assistance in solving this problem with Oregon’s leaders and congressional delegation.
We are committed to working in partnership with Rev. Mondaine and the Portland NAACP on this issue and will follow his lead on any further discussions regarding the URM list. We urge you to work with the coalition of organizations who joined their call to abolish the current list and begin again. 
Sincerely, 
Andrew Hoan
President & CEO 
While the list has been removed from the Internet, the organizations are awaiting a clarifying statement from City Hall.


HFO Multifamily Marketwatch - May 18, 2020

This week: Oregon recorded the nation’s second-highest percentage of renters paying on time in May, and the nation’s Congress remains divided along party lines over how soon more cash relief should be provided for families.



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Refusing to Pay Rent - A Cause or an Agenda?

by Zach Kosturos
President at Prime Location & Monolith Properties

There is a difference between a leader who fights for a cause for the betterment of their community and one who games the system in a hypocritical pursuit of their own agenda. In critical times such as these, we need more of the former and as few as possible of the latter.

On May 1, 2020, Renata Rollins, a member of the Olympia City Council, published an article telling her landlord that she wouldn’t be paying rent in May and didn’t know when she would start paying again, even though she hadn’t lost her job or received a reduction in pay. She called for other renters to follow her lead.

I am her landlord and I received her letter.

I would have preferred not to respond publicly, but for the health of our community, I feel I must.

Community leaders should help, not hinder
Renata is demanding free rent solely on the basis of Governor Inslee’s recently extended “stay” on evictions related to COVID-19.

That stay was put into effect to help individuals and households that are unable to pay rent because of a job loss, a reduction in hours and/or pay, and/or a business closure/reduction in revenue. Renata knows she does not qualify for special assistance, so her reason for not paying is that she wants to “preserve resources for future self.” This from a community leader?

As landlords, we are more than happy to work with tenants who find themselves out of work or in a legitimate position where they are unable to pay their rent, to the extent we are able. The vast majority of us are not greedy people getting rich by taking advantage of others. Most of us are small business owners who live and work in the community Renata talks about serving and trying to protect. We are part of her community and we provide housing, which our community desperately needs.

I have worked with Renata and with the Olympia City Council for years. Over the last several years, I have spent more hours of my time than I care to count developing a financial model to help jurisdictions, like Olympia, work with developers to make more affordable housing a reality. I have presented this work dozens of times to a wide variety of audiences in the state, and several jurisdictions in the state are currently using the model. Additionally, I sit on the City’s Home Fund Advisory Committee that is tasked with helping the City award funding to developers looking to build housing for our community’s most vulnerable populations. I have given my time and my expertise to the City, without pay or compensation of any kind because I, like so many other real estate professionals I know, care about my community and because I want to help those who are less fortunate have a chance at a better future. It is short-sighted actions like Renata’s that make private sector professionals, like me, hesitant to work with the public sector.

As an elected leader who professes to care deeply about housing, Renata should educate herself as to how the industry works. Unfortunately, her lack of understanding undermines the entire housing system in Olympia and, especially, the affordable housing she says she champions.

She fails to recognize that landlords have bills to pay too. Landlords don’t get bailouts, and we have no moratorium on paying Renata’s water, sewer and garbage bills, her toilet repair costs, her roof repairs, or paying taxes or the salaries of our employees who look after the unit that she says she loves. 

And why is it that Renata believes some products/services are more worthy of payment than her rent? Why does she believe the City should get paid for its water, sewer, and garbage service but that her landlord shouldn’t get paid for providing her with housing?

Should I be able to go to the grocery store or coffee shop and take their goods without paying? Should I be able to stop paying sales tax, property tax, B&O tax, payroll tax, and every other tax if I decide that I don’t like the taxation system? Should we all stop paying medical professionals for their expertise because “healthcare is a human right”?

Why do Renata and people who share her viewpoint, feel as though they should get to decide who gets paid for the work they do and the value they create and to what extent? That’s a very slippery slope.

Our economic system is much more complicated than she thinks
Renata seems to think that there is a simple solution, that if we enact a long-term mortgage/rent moratorium (and raise people's taxes, which is a whole other issue) everything will work out just fine. What she fails to understand is that PEOPLE own those mortgages. Those mortgages are part of tens of thousands, more likely, millions of Americans' retirement portfolios. Most mortgages are ultimately owned by endowment funds, pensions (including those for teachers, firefighters, police, and state workers), and individual investors all throughout our country. When we stop paying those, the people who rely on the passive income they create, many in retirement, are greatly harmed. When we stop paying bills, the result is, people in our communities suffer.

The reality of the financial world today is that it's all interconnected. You can't just take from those "who have" without it negatively affecting those who don't. Renata seems to miss that fact and here's an example...

She “has” the ability to pay her rent. She is refusing.

Her neighbor may not have the ability to pay his/her rent.

Both of them are asking for rent relief.

We must now negotiate with Renata and her neighbor instead of just her neighbor, who actually needs help.

Now we have less ability to help her neighbor because we are having to help her, even though she doesn’t need it. She is actually hurting her own cause.

Additionally, an unintended consequence may be that now people like me and my clients may not want to be property owners in Olympia and may stop investing or reduce our investments in real estate, thus reducing the availability of housing and increasing its real cost to people like her and her neighbor.

You see, in this scenario, Renata is the one taking from her neighbors - fellow community members - who are actually in great need. She says she’s doing it to "help the community” and to make a statement, but she didn't think it all the way through. She didn't see the full picture when she made her decision.

A glaring contradiction
Renata also stated to us that she wanted to save money for an unknown future. So, is it that she’s wanting to help the community or that she’s wanting to help herself?

Her statements are contradictory in nature. This is so often the case when we see these kinds of positions being taken. On the surface, they look like compassionate, “others-centered” acts but when the onion is peeled back, too frequently, it’s actually not about others at all. A true others-centered response, from a true leader, would have been to tell us that she was paying her rent so that we would have the ability to help more people who really couldn’t pay theirs.

She also stated that she thinks property owners should open their books and offer transparency so that people like her could "understand your business model and investment strategy.” Aside from that being a ridiculous statement, I can say I have already done that with the Housing Model the City of Olympia, and its City Council, are in possession of and have been using. It clearly shows everything Renata could want to see. Second, it takes about two minutes to do a Google search and find the kind of information she is looking for. Third, what business is it of hers what someone's business model and/or investment strategy is unless she’s interested in investing? Fourth, should every tenant be subjected to landlords scrutinizing their purchasing behavior and offering advice as to how to better spend, save, and invest their money? Come on. Her request is ridiculous, and I think she’d be appalled if I asked our tenants to let us scrutinize their finances to that degree.

What should happen during this time is that people who can pay their bills should keep paying their bills so we can help the people who actually need it. Now, that would be true community-minded action. Furthermore, that's how we will keep the entire economic system from becoming unrepairable. That's how we will mitigate the economic damage to the greatest extent possible.

My company houses more than 1,500 households in the area and since this lockdown began, we have been responding to those who live in our properties who have reached out to us for rent relief. Renata is the ONLY person who has stated she will not be paying rent though she has the ability. Every other tenant on our list has actually lost a job, had their pay cut, and/or their business closed. The other requests we’ve received have been honest and earnest explanations of need. She has only hindered, not helped their cause and the purpose of the Governor’s eviction moratorium.

Lead with integrity
Because their signature on a lease means something to them, the vast majority of our tenants who have requested rent relief have communicated that they will pay whatever they can, when they can. They are taking responsibility for the agreement they signed their name to. We are working every day with individuals on plans to ensure they stay in their homes. Stonewalling the payment of rent, when one is fully capable, lacks integrity, accomplishes nothing, and is a stark contrast to our other tenants' respectable and dignified requests. She would do well to follow their example.

Renata, you are an elected official. You are a community leader. What you are encouraging others to do is reckless and could result in irreparable damage to the people you say you care about. That’s not what good leaders do.

Our community doesn't need a politically motivated action right now. We don’t need our leaders working to incite even more conflict and destruction. Our community needs leaders who will work toward the good of all.

True leadership, at least in my opinion, would be to pay your rent because you can, even though you don't know what tomorrow may bring. True leadership would be to advocate through the proper channels for those in need without personally taking advantage of the system and, as a result, harming the people who truly need help. True leadership would be to encourage your constituents that while the system is far from perfect and certainly needs some fixing, our first priority is to get through this together and that gaming the system won't help us get through it, rather, it will make it worse.

True leadership would be to rally people to do what's right and what's right, at least as it relates to rent, is to be a person of your word and abide by the agreement you signed (as we have done) and pay your rent (and your other bills).

Zach Kosturos is the President of Prime Locations, Inc, a commercial brokerage firm. As a business owner, he has taken an active role in serving the community. He has been a key contributor to innovative solutions for increasing affordable housing in Thurston County.

Saturday, May 16, 2020

Survey: 11.8% of Oregon Renters Unable to Pay Full Rent in May

Multifamily NW and the Rental Housing Alliance collaborated to collect 519 surveys of housing providers to establish the impact on May 2020 rent payment of the COVID -19 crisis that has resulted in mass layoffs.

Roughly 20 percent of first-time unemployment claims came from accommodation and food services sectors, followed by the arts and entertainment sector, services, construction, and health care. A disproportionate share of initial unemployment claims occurred for those aged 25-34 – the same population that is likely to rent their housing and have accumulated fewer financial reserves to withstand an interruption in household income.

The survey asked: How many households were unable to pay full rent by the 8th of May? The study also adjusted for vacant units to arrive at the actual percentage of renters impacted. The broader impact on the market can, therefore, be extrapolated from these numbers.
  • Overall in the State of Oregon, 11.8% of renter households were unable to pay rent in May.
  • Statewide, of renter households living in Affordable Tax Credit units, 11.8% were unable to pay rent, which was consistent for the average of Oregon.
  • The impact is more significant for households living in non-assisted, conventional “Class-C” workforce multifamily housing, which experienced a 17.8% inability to pay rent.
  • Renters in single-family homes or duplexes within the city of Portland reported the highest inability to pay, at 22.7%..
  • Few Housing Providers reported Rent-Strikes or similar protest activity.
  • The survey data strongly suggests that the households living in moderately priced, conventionally financed apartments, or renting duplex/single-family detached homes are most in need of Short-Term Emergency Rental Assistance.
Respondents were also asked whether they were offering rent discounts. Of the 286 respondents, 110 answered the question. Of the respondents, 69 were offering some form of discount--generally 10% or $50-100. 



Note: Survey results exclude vacant units.

Source: Multifamily NW Association, Rental Housing Alliance

Wednesday, May 13, 2020

Sold! HFO announces sale of 82 Units in SW Portland for $24.5 million

HFO Investment Real Estate is pleased to announce the sale of Bethany West Apartments. This 82-unit asset in the Bethany neighborhood. This turnkey property features a diverse unit mix of large one-, two-, and three-bedroom units. Washington County remains the metro area's economic powerhouse.

Contact our office at (503) 241-5541 for additional information on this and other available listings, and visit our website at www.hfore.com for representative current listings.



Tuesday, May 12, 2020

Congressional Democrats Release Details of $3 Trillion Stimulus Plan, Including $100 Billion for Renters

Democrats in the US Congress have released details of a new $3 trillion dollar stimulus package that will go to the floor for a vote this Friday. The plan includes $875 billion for state and local governments as well as $20 billion for each tribal government. In addition, the bill allocates $75 million for mortgage relief and $100 billion in rental assistance. It would also provide $25 billion for the US Postal Service and $3.6 billion for election infrastructure. Households will also receive an additional $1,200 for adults making up to $75,000, and $1,200 per child. Read more.

Monday, May 11, 2020

HFO Multifamily Marketwatch - May 11, 2020

Oregon Governor Kate Brown faces complaints about her extension of Oregon’s state of emergency through July 6th; as activists across the country call for rent forgiveness, others are urging municipal governments to buy distressed properties.


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Governor Kate Brown announced on May 1st that she is extending Oregon’s state of emergency to July 6th. The extension allows the Governor to end statewide closures earlier if needed, but it gives the state room to implement a more gradual, incremental reopening of businesses and other services. Brown’s spokesman Charles Boyle emphasizes that the state’s plans for allowing people out of their homes will be based on science and data. But not all state leaders are supportive of Brown’s decision. The mayors of the Clackamas County cities of Molalla, Oregon City, Canby, Gladstone, and Sandy are urging the Governor to move more quickly. Brown’s benchmark for reopening rural counties requires these areas to create a workable system for testing, tracing, and treating COVID-19. The earliest she expects some rural counties to open is May 15th. The Mayors argue that reopening should be up to local jurisdictions, not just counties as a whole. At the mayors’ press conference last week, Oregon City Mayor Dan Holladay called on churches to reopen as an example for the rest of the state. Sandy Mayor Stan Pulliam believes that only the elderly are at risk in Oregon, and argues that this is not enough of a reason to keep businesses across the state closed. University of Oregon economics professor Tim Duy disagrees. Duy argues that state and federal safety nets are insufficient to meet this moment and says a second wave of the pandemic is likely, necessitating an additional future lockdown.

The Oregon Legislature released its rental assistance funding last week, to help low-income Oregonians who have been impacted by the COVID-19 pandemic. The state allocated a total of $12 million to address housing and homelessness – including $8.5 million for rental assistance, and $3.5 million for homeless services. The rental assistance funding was distributed to nonprofit and government housing agencies last week. In addition, Oregon Housing and Community Services is expecting $14.9 million from the federal government that is earmarked for housing vouchers, rental assistance, and utility payments. The $3.5 million set aside by the legislature for hotel vouchers and homeless services has not yet been distributed. A large portion of this funding will go toward housing for migrant and seasonal farmworkers, and the state has little experience administering this type of accommodation. The state is instructing Oregonians who think they qualify for rental assistance to call 211 for more information. Oregonian – Oregon Releases $12 Million in Housing Funds: Here’s What It’s for and How You Can Benefit

As the May 19th Oregon primary approaches, the Willamette Week reports that in Portland, political outsiders are attracting more individual donors than incumbents. Sarah Iannarone, one of the frontrunners in Portland’s mayoral race, has close to 3,000 donors – the most of any city candidate. These donations are eligible to be matched through Portland’s Open and Accountable Elections program. Ted Wheeler, the incumbent in the race, is not participating in the public financing program. He has received donations from just 354 individual donors in this election. The candidates for City Council who have attracted the highest number of donors are Carmen Rubio, who is running for Position 1, Margot Black for Position 2, and Mingus Mapps for Position 4. While Rubio has attracted around 370 more donors than her closest competitor, Candace Avalos, the other races appear tighter. While 805 donors have given to Margot Black, 717 have contributed to Dan Ryan’s campaign. In the race for Position 4, Mingus Mapps has 981 donors – just 13 more than Sam Adams. It is important to note, however, that the number of individual donors does not necessarily mean these candidates are frontrunners in their races. It will be up to each campaign to ensure that these donations can be translated into actual votes. Willamette Week – Political Outsiders Are Gathering the Most Individual Contributions in Their Bids for the Portland City Council

ABC News reports that as of May 1st, over 30 million Americans have filed for unemployment assistance since the COVID-19 pandemic began. Also, several workers have been furloughed or had their hours cut. To mitigate this sudden widespread loss of household income, many cities and states have implemented short-term eviction moratoriums for nonpayment of rent. These moratoriums allow vulnerable residents to stay in their homes during the ongoing emergency, but once stay at home orders are lifted, rents are set to come due even if the economy has not fully recovered. According to the University of Buffalo urban and regional planning professor Henry Louis Taylor Jr, this is likely to lead to mass evictions and permanent displacement in cities with low vacancy rates and high demand for rental units. Also, some smaller landlords may end up needing to sell their units, reducing the overall supply of rentals. And while the federal government has issued a moratorium on foreclosures for properties backed by federal loans, only 12.3 million of the nation’s 43.9 million rental units are federally financed. Emily Benfer of Columbia University’s Health Justice Advocacy Clinic agrees with Professor Taylor and argues that federal and state governments have not done enough to ensure housing stability. She believes that leaving renters and landlords to deal with this on their own will create a more significant economic crisis. The patchwork of protections and subsidies for renters and landlords is insufficient for the current level of need. It will likely exacerbate housing crises in cities and states that were already struggling with affordability issues before the pandemic. ABC News – “Mass Evictions” on the Horizon as the US Confronts Coronavirus Housing Crisis: Advocates

The Portland Business Journal reports that home services plan provider Frontdoor Inc.’s acquisition of Portland-based startup Streem is allowing the company to provide new tools to real estate and construction professionals who are practicing social distancing. Frontdoor is providing free access to an augmented reality tool developed by Streem to contractors and real estate agents to facilitate remote interactions. The augmented reality tool allows home repair professionals to remotely diagnose issues with plumbing or appliances to minimize the need for on-site services. The AR tool also allows real estate agents to conduct tours and facilitate inspections without needing physical access to the seller’s home. The device is being rolled out in select markets, starting with real estate brands owned by Realogy and Howard Hanna. PBJ – Portland AR Company’s Technology Made Available to Real Estate Agents, Home Contractors

Counties in Southwest Washington recently found out how much funding they will be receiving from the federal CARES Act, but questions remain regarding how that money can be spent. Clark County will receive $26 million from the federal government, while its largest city, Vancouver, will receive $5.5 million. Neighboring Cowlitz County will get $6 million, and the town of Longview expects $1.14 million. But this federal funding will be a drop in the bucket compared to what is needed, and the municipalities worry that they will not be able to use it to address some of the most pressing local needs. Vancouver is expecting a drop in revenue amounting to $45 million, primarily due to the sudden slowdown in construction activity and declining sales tax revenue. Clark County expects its revenues to drop by $13 million, while Longview is planning to lose $4 million. As the cities and counties wait for additional guidance from the federal government, they are forced to make tough decisions in the short term. At least 300 city workers in Vancouver found out last week that they will be subject to temporary pay cuts. Much of the federal aid is likely to be directed toward contact tracing initiatives, which public health experts argue is necessary for the reopening of local businesses and services. OPB – Struggling SW Washington Counties to Get Millions in Federal Aid for Coronavirus Costs

The State of Oregon has approved a land sale in Bend that will allow a large mixed-use project to continue moving forward. Late last month, the State agreed to sell a 382-acre parcel located within Bend’s urban growth boundary to California-based developer Lands Bend Corp. The plot is located at the intersection of Stevens Road and 27th Street on the eastern edge of the city of Bend. The $22 million sale was approved by Oregon’s Land Board late last year and is scheduled to close later this year, pending a due diligence period. The developer will conduct a master plan process to include input from the Bend community on the details. Still, the preliminary plan is for a, quote, “complete community with a mix of housing and employment types.” The state expects the development to generate $450 million in economic activity and over 800 jobs by 2028. DJC – Bend Development Plans Advance with Land Sale 

Finally, CityLab reports that some tenant advocates are expanding their calls for canceling rent into more significant ideas for more sweeping systemic changes. With sharply increasing unemployment and limited federal funding for rent subsidies, the idea of canceling rent has been brought into the mainstream, despite warnings from economists that it could have broader negative impacts on the economy. A new grassroots coalition, United for a New Economy, recently launched a platform called Our Homes, Our Health, which is advocating for lawmakers at all levels to suspend rent and mortgage payments for the duration of the emergency. The group has gained the support of progressive politicians, including Representatives Alexandria Ocasio-Cortez and Ilhan Omar. Chris Schildt, the senior associate for national research group PolicyLink, argues that it will not be enough to temporarily cancel rent and then go back to business as usual. In his words, the pre-pandemic “status quo was a perennial crisis.” To this end, the Our Homes, Our Health policy platform includes ideas for turning privately owned rentals into public housing. One part of the plan advocates for cities to use eminent domain to purchase AirBnBs and luxury housing. Also, the plan’s “Buy-Outs Not Bailouts” policy encourages public housing agencies to buy rental units from smaller landlords who are struggling with reduced income. Advocates believe these measures would prevent the corporate buyouts that were ubiquitous after the last recession. While these plans may have sounded like fantasies a few months ago, as more and more renter households find themselves in precarious situations, municipalities may become more open to drastic actions. CityLab – “Cancel the Rent” Could Be Just the Beginning

Thursday, May 7, 2020

HFO-TV: What the Eviction Moratorium in Washington and Oregon Means for Landlords

In this two-part interview, Ball Janik Partners Chris Walters and Ciaran Connelly discuss the eviction moratoriums and what it means for landlords.



Part 2 covers landlord legal challenges and strategies.


Wednesday, May 6, 2020

A Notable Recent Sale in Vancouver!

HFO would like to thank everybody involved from the lender, the escrow company, the property inspector, the management companies and the HFO team, in the recent sale of the Madison Square Apartments in Vancouver, Washington.

This was not HFO’s largest transaction but might be one of the first HFO closed during a pandemic. Madison Square Apartments is a 32-unit complex constructed in 2005. For additional information on this transaction, contact us at (503) 241-5541.

City of Seattle Adds Inability-to-Pay Defense to Evictions to December 4

On May 4th the Seattle City Council voted to add the inability to pay as a defense to eviction in court proceedings through December 4th. The Council also passed an ordinance to help with the creation of payment plans on an installment schedule. Read more.

Monday, May 4, 2020

HFO Multifamily Marketwatch - May 4, 2020

This week: Portland commercial real estate professionals push the state for mortgage relief; Tenants in major cities organize large-scale rent strikes.


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A new coalition of Portland-area property owners and other real estate professionals is pushing state legislators to provide mortgage relief for commercial properties. The group, known as United for Relief, is seeking a “right to defer” that would allow property owners to defer mortgage payments during the state of emergency without the risk of default. The proposal is meant to protect owners who are struggling to afford mortgage payments as a result of the Governor’s 90-day moratorium on evictions for nonpayment of rent. United for Relief emphasizes that they are not looking for a handout or full mortgage forgiveness – instead, they are hoping for the same relief provided to commercial tenants. While most of the group’s members received at least some rent payments in April, revenues are expected to decline considerably in May as many tenants face their second month of lost income. Portland Business Journal – Portland Commercial Real Estate Firms Seek Right to Defer Mortgage Payments

Governor Inslee of Washington announced late last month that he will allow construction work in the state to resume as long as project teams provide plans to implement social distancing protocols. In his original emergency declaration, Inslee prohibited construction work to continue unless it was related to essential services like health care, energy, low-income public housing, or emergency repairs. In Oregon, Governor Kate Brown’s order allowed construction work to continue with social distancing rules in effect – as a result, the state has seen a surge in OSHA complaints from construction industry workers. Still, construction has mostly been able to continue. Governor Inslee has warned that if social distancing protocols are not followed, he will shut down those sites found in violation. Inslee worked with the Building Industry Association of Washington, the Washington State Building and Construction Trades Council, and the Association of Washington Businesses to craft the guidelines that will allow construction work to resume. DJC – Construction Projects Can Resume in Washington, With Distancing

According to the US Commerce Department, the nation’s GDP shrank at a 4.8% annual rate over the last quarter – the most significant economic contraction since the fourth quarter of 2008, when it shrank by 8.4%. The Congressional Budget Office warns that the GDP report for the second quarter of the year could be significantly worse. They estimate that GDP could contract at up to a 40% annual rate. This would be four times greater than the most substantial quarterly contraction recorded since 1947. Consumer spending was down 7.6% over the first quarter, while business investment decreased by 2.6%, and investment in equipment dropped by 15.2%. At the same time, housing investment increased by 21% due to low mortgage rates. But with most people stuck inside in the second quarter, home sales have dropped. While some experts hope that there will be a “v-shaped” recovery after the pandemic subsides, others believe that there could be longer-term impacts leading to a slower economic rebound. If businesses are forced to close permanently, unemployment remains high, and people remain cautious about leaving their homes, it will take significantly longer for the economy to return to pre-COVID growth levels. Some health experts also believe that if restrictions are eased too early, and people do return to normal levels of activity and consumption, there could be a second outbreak causing another shutdown. Oregonian – US Economy Shrank at 4.8% Rate Last Quarter as Coronavirus Struck

As the Oregon Employment Department continues to struggle with processing an unprecedented number of unemployment claims, local stopgap measures are unable to meet the surge in demand. As of April 29th, the State of Oregon faced a backlog of 100,000 unemployment claims from the first five weeks of the Coronavirus outbreak. During the first month of the state of emergency, 330,000 Oregonians filed unemployment claims. The state is currently paying $119 million per week to unemployed residents but has failed to put in place a system to adequately handle the surge in claims.

In Portland, the Housing Bureau was tasked with distributing 742 VISA gift cards worth $250 each to low-income residents. The program opened to applicants at 10am on Monday, April 27th, and within 17 minutes, the city had run out of gift cards. 1,000 applications were processed during that time. The city is distributing additional cash assistance through local nonprofits that will provide gift cards to households within their networks.

The Portland Business Journal interviewed local real estate professional Don Ossey, founding principal of Real Estate Investment Group, about the impacts of the coronavirus pandemic on the commercial real estate industry. Ossey points out that while the retail and hospitality sectors have been the hardest hit, so far, multifamily and industrial have fared a bit better. He had less clarity on where the office market is headed; however – as more people get used to working from home, some offices may shift to that model and need less space. But it is also possible the pendulum could swing the other way. After months of working from home, employees could be more excited to go back to a dedicated workplace where they can interact directly with colleagues. Either way, office tenants are unlikely to implement expansion plans in the near term. Ossey is optimistic about the real estate industry’s potential for recovery. Once businesses can open up and those currently out of work go back to receiving regular paychecks, the sector should be able to bounce back. But he does expect the recovery to be relatively slow. Portland Business Journal – Virus Affects “All of Our Transactions,” Says Portland Real Estate Leader

According to the Oregon Employment Department, coastal counties and workers without a college degree are among the hardest hit by the current economic downturn. The data is based on unemployment insurance claims as a share of the labor force as of April 18th. Three coastal counties – Lincoln, Clatsop, and Coos – are in the top five for unemployment claims adjusted for population, along with Deschutes and Crook counties. The majority of job losses were in the travel and hospitality industries, and all five counties are heavily dependent on tourism. Also, while workers with a high school diploma or less make up just 28% of the state’s labor force, they account for 58% of recently filed unemployment claims. Meanwhile, those with a bachelor’s degree or higher account for 38% of the labor force but just 20% of new unemployment claims. Willamette Week – Employment Claims Show Greatest Economic Damage on Oregon’s Coast and for Less Educated Workers

The Oregonian reports that the state is facing sharp declines in revenue from all of its usual sources due to the COVID-19 pandemic. Transfers to the state from the Oregon Lottery, for example, are expected to decline by 20% to 40%, impacting funding for schools, state parks, the Oregon Health Authority, and other crucial state services that rely on lottery dollars. Other state revenue sources include lodging taxes, fuel taxes, personal income taxes, and corporate taxes – all of which are continuing to decline as business closures persist, and more people lose their jobs or work from home. Meanwhile, several state agencies, including the Health Authority, Employment Department, and DHS, are facing increasing demand for their services. So far, the federal government has failed to provide budget relief for states – Senate Majority Leader Mitch McConnell argued that the federal government should not be left on the hook for state missteps like underfunded pension plans, which were a problem before COVID-related closures. He recommends that states pursue bankruptcy if needed. Governor Brown acknowledged that the state’s revenues are “cratering,” but usual, austerity measures are off the table as more Oregonians need state services. Brown is reaching out to business leaders to solicit creative ideas for streamlining the budget. Still, she plans to wait until the May 20th revenue forecast is released before taking any action. Oregonian – Oregon’s Budget in the Age of Coronavirus: “Bad News on Every Front”

Finally, with May rents due and little relief in sight from states or the federal government, tenants in several large cities are organizing rent strikes. In Seattle, City Councilmember Kshama Sawant is urging tenants to use rent strikes to pressure landlords and legislators to provide rental assistance or cancel payments. But tenant advocates are warning that the rent will come due eventually. After eviction moratoriums are lifted, tenants who failed to pay rent during the emergency may not be able to pay the back rent. And some smaller landlords are warning that if all of their tenants refuse to pay rent, they will be less able to work out payment plans and discounts for the tenants that have the highest need. Many tenants are frustrated that so far, federal stimulus packages have provided relief to large corporations, but not for renters. In many major cities, the one-time $1,200 stimulus checks are not nearly enough to cover rent payments. In Los Angeles, New York, and Philadelphia, tenants are organizing one of the most significant coordinated rent strikes in decades, with tens of thousands of renters expected to participate. Cea Weaver, communications coordinator for New York-based housing advocacy coalition Housing Justice for All, argues that the movement is about advocating for relief funding for renters as well as apartment owners. But Bob Pinnegar, CEO of the National Apartment Association, believes rent strikes could have significant consequences for the economy. The National Apartment Association is instead supporting a bill sponsored by Rep Maxine Waters of California that would provide $100 billion in direct relief to renters, landlords, and homeless individuals.