Contradictory Court Decision on Portland Relocation Fee Classifies it Illegal "Rent Control"

The Oregonian/Oregonlive reports that a second lawsuit involving the City of Portland Relocation fee determined the fee to be illegal under state law as a form of "rent control." According to the report, the decision now leaves the relocation fee issue in limbo for some time as an Oregon Court of Appeals ruling on the issue is not expected for several months. The paper says until the appeals court makes a determination, "the relocation payments could be decided case by case and judge by judge."

Portland City Council to Vote on Security Deposit and Tenant Screening Reforms April 3, 4

Portland City Commissioner Chloe Eudaly plans to bring her proposals for security deposit and tenant screening reforms to the rest of the City Council next month. Her office has been working on drafting the changes for the past several months, and they were finalized on February 20th.

These items will be discussed in public hearings on Weds. April 3 at 2 pm AND Thursday, April 4 at Portland City Hall. City staffers have requested three hours per day for discussion and public testimony.

Please reach out to City Council (contact information below) with any questions or concerns regarding the policy proposals. Read and download the complete proposed draft here. 

Below are some of the key takeaways:

Screening Criteria

• Applications must be processed on a first-come, first-served basis
• Landlords may only screen heads of household unless the household or a co-applicant has been issued a violation notice in the past year
• Landlords must specify an opening date and time when applications will be accepted for a specific unit, and cannot accept applications for that unit outside of the advertised period
• The open application period must be posted 72 hours before the start of the application period
• Landlords cannot require proof of income greater than twice the amount of rent
• Applicants cannot be denied for:
• conviction of a crime that is no longer illegal in Oregon
• convictions in the juvenile justice system
• conviction of misdemeanor offenses older than 3 years
• conviction of felony offenses older than 7 years
• rental history judgment that was entered three or more years earlier
• Landlords cannot deny tenants due to credit scores above 500 or a lack of credit history
• Landlords must consider supplemental evidence submitted by the applicant
• Applicants must be allowed 30 days from the date a denial is issued to request an appeal and present evidence

Security Deposits

• If a landlord requires last month's rent to be paid as a condition of tenancy, the security deposit cannot be more than one half of a month's rent
• If a landlord does not require last month's rent to be paid as a condition of tenancy, the security deposit cannot be more than one month's rent
• "Ordinary Wear and Tear" is defined as deterioration that occurs without deliberate or negligent destruction, damage, or removal of any part of the premises, equipment, furnishings, or appliances by the Tenant, a member of the Tenant household, or other persons on the premises with the Tenant's consent
• In the event new carpet is needed, the landlord can only take into consideration the cost of the contiguous area where the carpet must be replaced due to damage
• Landlords can only charge for repainting if repairing specific damage made to a wall beyond ordinary wear and tear
• Movable property is presumed to depreciate at a rate of 3.6% per year over a period of 27 years
• Any damage for which a landlord intends to withhold a portion of a tenant's security deposit must be documented in writing and include proof of depreciated value, such as original receipts
• Landlords must place tenants' security deposits in a separate checking, savings, money market, or client trust account and provide the bank institution name and account number
• If the account bears interest, the landlord is required to pay it in full to the tenant, minus a 5% deduction for administrative costs

City Council Contact Information:

Mayor Ted Wheeler

mayorwheeler@portlandoregon.gov

503-823-4127

Commissioner Nick Fish

nick@portlandoregon.gov

503-823-3589

Commissioner Chloe Eudaly

chloe@portlandoregon.gov

503-823-4682

Commissioner Jo Ann Hardesty

joann@portlandoregon.gov

503-823-4151

Commissioner Amanda Fritz

amanda@portlandoregon.gov

503-823-3008

On its website 

After Recent Decline, Portland & Seattle Rents Climbing

Rents in Seattle and Portland have increased the past two months after some recent decreases. Read the details on Portland's and Seattle's rents in these stories from the Rental Housing Journal.

Report: Hoarding is Protected as Disability by Fair Housing Act

In a new report, editors of the Rental Housing Journal write "Hoarding is a mental disability you may encounter as you work on a property. People who suffer from hoarding are protected under fair housing law and are entitled to reasonable accommodations in the same way people with other mental or physical disabilities are." Read the full story.

U.S. Census Bureau: Greater Portland Rental Vacancy Ties for Nation's Third Lowest at 2.4%

The U.S. Census Bureau reports that fourth quarter 2018 rental vacancy rate for the Portland/ Vancouver/ Hillsboro metro area was 2.4%, a decrease of 0.2% from a year earlier.

Seattle/Tacoma/Bellevue's metro area vacancy rate was listed at 5.0%, up from 3.4% one year earlier.

The nation's lowest rental vacancy rates:

1. Akron, OH 1.3%
2. Fresno, CA 1.6% [tie - 2nd]
3. Worcester, MA 1.6% [tie - 2nd]
4. New Haven-Milford, CT 2.4% [tie - 3rd]
5. Portland-Vancouver-Hillsboro, OR-WA - 2.4% [tie - 3rd]
6. Boston-Cambridge-Newton, MA-NH - 2.9% [tie - 4th]
7. Tucson, AZ - 2.9% [tie - 4th]
8. Rochester, NY - 3.6%

Average National Rental Vacancy Rate
The average national rental vacancy rate for Q4 2018 was 6.6 percent for multifamily dwellings of five or more units -- 0.3% lower than one year earlier, despite ongoing delivery of multifamily units throughout the national market.

Year-over-year vacancy rates in the Western U.S. decreased, from 5.8% to 5.1%.

Click to Enlarge

U.S. Homeownership Rate Increases
After falling to a 26-year low in 2016, homeownership rate increased to 54.8%. The current homeownership rate in the West increased from 60.0% to 60.9%.

Click to Enlarge

Washington Post Report: "Homeownership is Back In."

The Washington Post reports on a sharp increase in the number of homebuyers in 2016 as the once-rapid growth in renter households stalled. Read more.  

After Sharp Drop, Seattle Home Prices Jump $45,000 in One Month

The Seattle Times reports that as condo prices and single family home costs in neighboring counties continue falling, King County homes increased sharply. Read more.

Brookings Institute: "Oregon's New Law Will Not Fix the Underlying Problem of High Housing Costs"

Jenny Schuetz, the David M. Rubenstein Fellow at the Brookings Institution, wrote an article discussing the shortcomings of Oregon's new rent control program. According to Schuetz, "Oregon's new law will not fix the underlying problem of high housing costs, and it could even make matters worse for vulnerable families." She highlights the two biggest problems exacerbating housing affordability across the US:

1. Low wages and unstable incomes generated by labor markets
2. In-demand cities failing to build enough housing to keep up with demand, particularly in neighborhoods with good public schools and access to jobs and transportation

While she acknowledges that Oregon legislators made efforts to avoid some of the pitfalls of previous rent control programs, she does not believe it will be enough to stave off unintended consequences. As an example, she states that a developer who had planned to build 8 units may now build only 5, in order to stay under the threshold that would trigger rent restrictions. Schuetz also believes the increased tenant protections included in the bill could encourage some landlords to screen out less desirable tenants, such as families with young children. Read more.

Educational Events on Oregon's Statewide Rent Control Law

Lunch Training - Wednesday, March 20th

On Wednesday, March 20th, Multifamily NW will offer a training seminar on SB 608 - Oregon's rent control legislation.

Where: Multnomah Athletic Club, 1849 SW Salmon Street, Portland 97205

When: 11:30 AM - 1 PM

Who: Marcel Gesmundo, attorney at Greenspoon Marder LLP 

Cost: $50 for members, $75 for non-members

Click here to register. 

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Webinar - Friday, March 22nd

The Oregon Association of Realtors offers a live webinar to answer questions on Oregon's new statewide rent control bill.

When: Friday, March 22, 2019

Time: 9-10:30 am

Host: Leah Sykes, Partner at Greenspoon Marder LLP

Cost: $29 for members, $39 for non-members

Register here for the live webinar. 

SB 608 Frequently Asked Questions.

Statewide Rent Control in Oregon Means New Renter Forms: Order Yours Here

Multifamily NW has new forms available for Oregon rental properties.

Click here to preview and download the order form. 

Fill out the attached form and send to Multifamily NW by email or fax.

• Blank printed forms should be available by the end of this week or early next week.
• The forms can be mailed to you, or you can make an appointment to pick them up from Multifamily NW’s offices.

List of Updated Forms 

This forms update is in response to the passing of Oregon Senate Bill 608, which was signed into law effective immediately on Thursday, February 28, 2019, and created statewide rent control.

M001 OR Rental Agreement
Language was changed under “Tenancy” on page one to make the agreement a true “fixed term” so that an end of tenancy notice can be used during the first year of the occupancy. The space for the amount of the early termination fee was removed, and the early termination language was revised to tie into the new Section 4. Section 4 was changed to give the Owner/Agent the option of charging an early termination fee or “actual” damages. The election can be made when the resident leaves. The resident no longer has the right to leave by simply paying the early termination fee. Section 5 was changed to require the resident to give at least 30 days’ written notice of their intent to leave at the end of a fixed term that expires during the first year of the occupancy since the new law no longer requires such notice from the resident. Section 6 was changed to reflect the conversion of a fixed term to month-to-month under the new law.

M201 OR Single Family/Condo/Multiplex Rental Agreement
Language was changed under “Tenancy” on page one to make the agreement a true “fixed term” so that an end of tenancy notice can be used during the first year of the occupancy. Section 5 was changed to require the resident to give at least 30 days’ written notice of their intent to leave at the end of a fixed term that expires during the first year of the occupancy since the new law no longer requires such notice from the resident. Section 6 was changed to reflect the conversion of a fixed term to month-to-month under the new law.

M011 OR Notice of Rent/Monthly Charges Increase
Checkboxes were added for an Owner/Agent to claim the exemptions to the maximum rent increase of 7% plus CPI.

M019 OR End of Tenancy Notice - First Year of Occupancy Only (MTM or Non-Renewal of Lease)
This notice is now used only during the first year of the occupancy. The section for later terminations has been removed. PLEASE NOTE: The previous version of this notice will still be available as well. The previous version is to be used only when terminating a fixed term tenancy that existed on or before February 28, 2019, and the termination is occurring at the end of its term.

M049 OR 90-Day End of Tenancy Notice - First Year of Occupancy Only (MTM or Non-Renewal of Lease)
This notice is now used only during the first year of the occupancy and only in local jurisdictions that require more than 30 days’ notice (Portland and Milwaukie city limits). The section for later terminations has been removed. PLEASE NOTE: The previous version of this notice will still be available as well. The previous version is to be used only when terminating a fixed term tenancy that existed on or before February 28, 2019, and the termination is occurring at the end of its term.

M065 OR Renewal Offer/Rent Increase Notice
Checkboxes were added for an Owner/Agent to claim the exemptions to the maximum rent increase of 7% plus CPI. Also, the word “rent” was added after “parking” and “storage” to clarify that these are also “rent” for purposes of the 7% plus CPI ceiling.

M067 OR Fixed-Term Renewal Offer - At End of First Year of Occupancy Only (No MTM Option) This notice can now only be used for a fixed term that expires at the end of the first year of occupancy since rent cannot be increased during the first year of the tenancy. After the first year of the occupancy, if the Resident does not accept the offer of a new fixed term, the agreement automatically rolls to month-to-month, and Owner/Agent cannot refuse to renew a fixed term rental agreement without cause.

M083 OR Termination For Cause (90-Day Notice of Non-Renewal/Termination of Fixed-Term Tenancy for Repeated Violations of Rental Agreement) NEW FORM! - This is a new form that allows termination at the end of a fixed term if the Owner/Agent has issued three or more violation notices (can include 72 hour and “for cause” notices that the resident cured) in the 12 months preceding the end of the fixed term. WARNING: Each violation notice used to support this termination notice must: (a) be in writing; (b) served at the time of the violation; (c) specify the violation; and (d) contain the following language: “The conduct described above is a violation of your rental agreement. Owner/Agent may choose to terminate your tenancy at the end of the fixed term if there are three or more violations within a 12-month period preceding the end of the fixed term. Correcting the third or subsequent violations is not a defense to termination under ORS 90.427(7).” 

M084 OR 90-Day Termination For Cause - Qualifying Owner Reason (For Terminations Issued After First Year of Occupancy)
NEW FORM! - This new form allows termination under a limited set of circumstances as identified in the notice. In most cases, Owner/Agent must pay the tenant one month's rent with the notice. The payment requirement does not apply if the Owner has an ownership interest in 4 or fewer dwelling units. There is a checkbox on the form to claim this exemption.

M085 OR Termination Without Stated Cause - Owner Occupied Property with Two or Fewer Dwellings (For Terminations Issued After First Year of Occupancy) 
NEW FORM! - This form can only be used when the rental unit is in the same building or on the same premises as the Owner’s primary residence. It is used only after the first year of the occupancy. During the first year of the occupancy, use form M019 or M049 as applicable.

M015 OR 144-Hour Notice of Termination for Nonpayment of Rent 
M016 OR-WA Notice of Parking Violation 
M017 OR Notice of Noncompliance 
M020 OR 72-Hour Notice of Termination for Nonpayment of Rent 
M021 OR 24-Hour Notice of Termination
M023 OR Notice of For Cause Termination
M029 OR Notice of Termination for Nonpayment of Rent (HOME Program)
M031 OR Notice of Violation-Failure to Pay Money 
M040 OR Notice of Violation
M041 OR Notice of Tampering with Alarm/Detector
M042 OR-WA Notification of Balance Due
M081 OR 10-Day Pet Violation-First Notice

These notices have a new "Warning Notice" section. The warning language was added so these notices can be used to support a 90-day termination using the new Termination For Cause (M083).

Apartment List: Portland Saw 10th Highest Growth Rate for High Income Renter Households

According to a new report by Apartment List, the number of high income renters in the Portland Metro Area grew by 93% between 2008 and 2017, the 10th highest growth rate in the nation. During that same period, the population grew 12% and the total number of renters grew by 19%. The report defines high income renters as those making more than $100,000 per year. Portland's growth rate for high income renters is almost double the nationwide growth of 48%. The Seattle-Tacoma-Bellevue metro area saw a 95% increase in high income renters. Read more.