Seattle Council Approves Requiring Six Months Notice of Rent Increases, Relocation Assistance

The Seattle City Council approved two bills this week that require landlords to provide six months' notice of rent increases and, in some cases, pay tenants who move after a significant rent hike. Landlords are calling the bills tantamount to rent control. Read more on Reason.com. 

Sold! 9 Units in SE Portland

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HFO is pleased to announce the sale of Christopher Crest in SE Portland. This community is convenient to Warner Pacific, Portland Community College, and Mt. Tabor Park. Congratulations to HFO brokers Greg Frick, Lee Fehrenbacher, and the rest of the HFO team!
 

Webinar: Multifamily still most favored asset class despite potential headwinds

Eighteen months into a pandemic that some thought would undermine the apartment sector for the foreseeable future, rent growth in some markets has exceeded pre-pandemic levels, while investor interest is as keen as ever. That’s despite potential headwinds, some deriving from the pandemic and others from legislation making its way through Congress. 

These are among the insights shared by a panel of industry leaders in Connect CRE’s latest webinar, “Buy, Build, Sell, Hold or Trade Apartments,” now available for on-demand replay. Sharing their expertise were Doug Bibby, president of the National Multifamily Housing Council; David Schwartz, CEO of Waterton and chair of NMHC; and Jeffrey DeBoer,  president and CEO of the Real Estate Roundtable. Daniel Ceniceros, founder and CEO of Connect CRE, moderated the conversation. 

Since the onset of the pandemic, NMHC has published a Rent Payment Tracker monitoring the rate of rent collections, and their timeliness. Bibby said that for most of the past 18 months, the Tracker has seen an average of 95% of apartment renters making full or partial payments each month. Most recently, though, that has dropped by seven percentage points. 

“We think it’s a combination of the delta variant beginning to show its ugly face and businesses beginning to get a little hesitant to reopen,” said Bibby. 

That hesitancy is having a ripple effect among small businesses located near currently empty office buildings. “We’ve got to get people back in their workplaces,” said DeBoer. “I hate it when people say, ‘We’ve got to get people back to work.’ People are working, but we’ve got to get them back in their workplaces.” 

In the meantime, there’s some $46 billion of rent relief monies allocated by Congress. Schwartz noted that rollout of the funds has been slow as it passes through multiple jurisdictions. “Some states are good at it, and some aren’t,” he said. 

Congress’ potential impact on the industry isn’t limited to the Emergency Rental Assistance Program. All three panelists weighed in on the provisions of infrastructure packages being considered by the House and Senate—sweeping legislation that naturally raises the question of how to pay for it. 

At present, DeBoer is feeling “pretty good” about the prospects for the 1031 exchange to lawmakers’ efforts to fund the wide-ranging investments in infrastructure, as well about as other tax issues pertinent to real estate. He cautioned that the infrastructure program likely will mean tax increases for the industry’s highest earners—but the increases will come because they’re making money, not because they’re making it from real estate. 

Schwartz said Waterton has been a net buyer of apartments throughout the pandemic, in an environment that has become increasingly competitive due to all the capital in the marketplace. “In spite of various challenges—potential tax headwinds and regulatory headwinds—it’s still the most favored asset class of all the food groups,” he said. 

Click here for replays of the webinar.

Sold! 38 Units in SE Portland

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HFO is pleased to announce the successful sale of the Tabor West Apartments in SE Portland. Congratulations to Greg Frick, Lee Fehrenbacher, and the rest of the HFO team. 

Reports: Updates on Oregon's Slow Rental Relief Distribution Rates

 Sunday's Oregonian included a story with these statistics:

• Across Oregon, nearly 36,000 households have requested more than $251 million in rent and utility assistance, but only about 19% or 6,908 renters have received aid so far. 
• In August, Oregon hired Public Partnerships to process roughly 8,500 emergency rental assistance program applications. So far, the company has paid out rent for 600 tenants, with 29% of applications still pending initial review.

A similar story emerges for funds being distributed in the tri-county area, where the Portland Tribune reports nearly 15,000 applications for assistance are incomplete.  

• Multnomah County has distributed money to pay rent for 987 tenants, or 8.3% of those who have applied.
• Washington County has distributed money for 219 renters, or 4.5% of those that have applied.
• Clackamas County has distributed money to 80 renters, or 4% of those who have applied.
• Beginning tomorrow, the U.S. Department of Treasury can reclaim funds provided to states that are unable or unwilling to spend the money.  

Multifamily Marketwatch Podcast - September 27, 2021

This week: Renters call for a special legislative session; the city of Portland sets up a mediation program for landlords and tenants facing eviction; and a look at how luxury apartments impact low-income renters.

Listen to our latest podcast.

Washington Extends Eviction Moratorium Through October

Last week, Governor Inslee extended the state's eviction moratorium through October 31. As before, non-rent-related terminations are permissible provided the housing provider complies with the just cause eviction requirements established by state law.

The Bridge moratorium applies to all rental properties in the state, except in Seattle, Kenmore, and Burien, where more restrictive moratoria exist. 

Rent Increases: Rent increases are permitted anywhere in the state regardless of local moratoria, with sufficient notice provided by state or local law. 

Late Fees: Late fees are prohibited through December 31, 2021.

Payment Plan: Each tenant who has not paid their rent in full must receive an offer of a reasonable payment plan that does not exceed three months for every month the tenant is behind. The tenant must be offered a payment plan before any collection efforts for any past due rent owing.

Rent owing before July 31, 2021: The tenant must be offered a payment plan, described above, and the following programs must be "operational" in the county where the property is located before issuing a 14-day notice (1) a rental assistance program and (2) an eviction resolution pilot program.  

• List of operational rental assistance programs.
• List of operational eviction resolution pilot programs. 

Rent owing after July 31, 2021: Where the tenant owes rent and has not made a partial payment or applied for rental assistance and the application has not been approved or denied, a housing provider is prohibited from serving a 14-day notice. Otherwise, the landlord should -  

• Offer a payment plan for August, September, and/or October rent, described above,
• Serve an Eviction Resolution Pilot Program Notice, and 
• Serve a 14-day notice. 

A court proceeding cannot proceed where the right to counsel has not been established. Most counties should have certified right to counsel programs beginning tomorrow, with Spokane certified in about two weeks. 

Update courtesy of the Washington Multifamily Housing Association.

Multifamily NW: Open Letter to Oregon Housing Stability Council Seeks Answers

On Monday, September 20, 2021, Multifamily NW Executive Director Deborah Imse sent the following letter to the Oregon Housing Stability Council. This letter has been shared with the news media. To date, no response to this letter has been received.

Good Afternoon,

Dear Members of the Housing Stability Council

Thank you for holding a special meeting on Friday, September 17 to discuss critical rental assistance oversight. As the leading association of housing providers in Oregon we watched with great interest. 

Unfortunately, little time was allowed for questions that the commissioners had prompting the Council to suggest a follow-up meeting or taking the issues off-line.

We request that these discussions occur publicly and not be taken off-line. The stark contrast in testimony given by Oregon Housing and Community services and Local Program Administrators demands full transparency.  

 We are writing to ask that the council seek responses from Oregon Housing Community Services on the following issues:

1. Claw Back - We are no more confident or clear about the September 30 Treasury deadline, and how much current or future ERAP funding is at risk. If the Public Partnerships LLC (PPL) is doing so well why was $40 million redistributed from the vendor?

2. Best Practices - Director Bell focused on decentralization as the reason why Oregon has underperformed.  What is her reasoning for this? Decentralization was not a takeaway from the White House press conference on best practices. (Best practices for Grantees’ ERA program websites | U.S. Department of the Treasury)  At the White House press conference, program leaders shared out the following best practices.

a. Housing providers and Residents working together.  

b. Involvement of Housing Associations at the outset as critical partners.

c. Partnership between State agencies and Court systems to prioritize those residents close to eviction. Including Self-Attestation.

d. Establishing a Learning Cohort with bi-weekly meetings to remove red tape.

e. Focus on Efficiency, Innovation and Equity.

3. Indemnifications - We were astonished to learn during the meeting that contractual indemnification for implementing best practices was not extended to the Local Program Administrator (LPA) network, but is offered to the private contractor Public Partnerships LLC.  Is this correct?

4. Realistic Projections - The projected period for clearing completed applications was changed from 6-7 weeks to 9-13 weeks in the OHCS testimony.  Are there benchmarks being set to determine if the 9–13-week goal is achievable?

5. LPA Testimony - The testimony from Mr. Cooper raised additional questions.

a. Dashboard Reporting: We have been relying on the dashboard for data and in fact OHCS frequently points to the dashboard for answers on performance. However, Mr. Cooper pointed out serious discrepancies in the data. Is someone looking into those discrepancies and reporting back to the Council? 

b. Aging DOS-based system: We learned that prior to the pandemic, when confronted with replacing the archaic OPUS system, Margaret allegedly responded “You do know that Director’s careers die on big data systems, right?”   Was the Council ever notified that the agency was running 1980’s programming in OPUS?  How will the needed systems upgrades be addressed?   

c. Disengaging LPA’s - LPA’s can monitor court dockets, have 1/3 of landlords on ACH, guarantee demographic equity based on the locations across the state, are able to meet with applicants in person and have good relationships with local housing providers.  Have these potential losses in service capability been considered or defended by OHCS leaders?

I sincerely hope that the Housing Stability Council will hold OHCS to the high levels of accountability Oregonians demand and press for responses to these inquiries. We truly appreciate your service to Oregon and thank you for your consideration of this matter.

Deborah

Deborah Imse, MPA
Multifamily NW
Deborah@multifamilynw.org
Executive Director

Tenant Groups Want Special Session to Speed Up Distribution of Rental Aid, Pause Evictions

Last Friday The Oregonian ran a front-page expose on the fact that despite the fact that nearly 34,000 Oregonians have requested more than $202 million in rent and utility assistance since May, their requests have been bogged down by a glitchy computer system and overwhelmed state workers. Employees have managed to approve or fund only about 20% of the applications. More than 9,300 applications have been in the system for more than 60 days. Last month the state hired an outside vendor to process up to 8,500 applications in Multnomah, Clackamas, and Washington Counties. 

Making matters worse is the fact that the federal government's allotted $204 million to Oregon for emergency rental assistance could be clawed back. Effective September 30 it has the right to reclaim funds from states that are unable or unwilling to distribute the money. The Treasury can take money back and reallocate it to states that are successful with their distribution.

In the latest twist, nervous tenant groups are demanding a special legislative session to deal with housing issues. The groups are asking for the re-implementation of an eviction moratorium, and faster distribution of housing funds.

Multifamily NW is also seeking answers to critical questions from the Oregon Housing Stability Council.

City of Portland Launches Free Landlord/Tenant Mediation Pilot Program

With funding from the Portland Housing Bureau’s Rental Service Office, Resolutions NW has launched a new Landlord-Tenant Mediation Program.  

The program provides free professional mediation services to landlords and tenants with a dispute related to a rental unit within Portland city limits. Mediation allows parties to engage in a full discussion and generate creative and flexible solutions to housing disputes. Mediation often results in higher rates of compromise, compliance, and satisfaction than adjudication. 

Through this program, Resolution NW’s hope is that tenants can avoid losing their home, landlords can avoid needing to engage in a court action, and most importantly – relationships can be improved. 

Either landlords or tenants can initiate contact with the program by calling (503) 595-4890 or emailing info@resolutionsnorthwest.org. 

California to End Traditional Single-Family Zoning Restrictions Beginning January, 2022

California Governor Gavin Newsom has signed legislation ending traditional single-family zoning restrictions in most neighborhoods statewide. Senate Bills 9 and 10 take effect on January 1st, making it easier to build more than one housing unit on many properties currently reserved for single-family homes. 

Oregon became the first city in the nation to pass similar legislation in July of 2019. The new zoning requirements for smaller Oregon cities took effect on June 30, 2021, and larger cities have until June 30, 2022, although Portland's laws took effect on August 1, 2021 as we recently discussed in an episode of HFO-TV.

Despite the legislative changes, it is expected to be several years before the change has much of an impact.

Meanwhile in Seattle, the City Council Land Use Committee is continuing discussions to change a zoning term from "single-family zoning" to "neighborhood residential zoning." And although there is a bunch of discussion about it, it isn't really going to change anything, according to MyNorthwest.

Oregon Sets Maximum 2022 Rent Increase at 9.9%

by Josh Lehner, Economist
Oregon Office of Economic Analysis

I know some of you may be scratching your heads given inflation is currently running hot and the recent deep dive into the outlook for inflation. The reason why next year’s maximum allowable rent increase is relatively tame comes down to fact the law uses as 12 month moving average. Specifically see ORS 90.323 (2) where it reads, in part, “the annual 12-month average change in the Consumer Price Index for All Urban Consumers, West Region (All Items).” Currently the economy is experiencing a rapid increase in inflation, but it takes some time for that to feed into a 12 month average. The current calculation includes some weak months along with the strong inflation readings in the past handful of months. Combined, they result in inflation of 2.9%, making the maximum allowable rent increase in 2022 9.9%.

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As such, this also means that the current bout of inflation will mostly be reflected in the 2023 maximum allowable rent increase which our office will announce a year from now. This will be the case even if underlying inflation slows further in the months ahead. This is simply due to the difference between noisy monthly data and a more stable 12 month average. As a stylized example, you can see this difference in the chart below. The hypothetical scenario here has inflation slowing to a 2% annual pace (the Fed’s target) starting next month. You can see that a year from now the single month inflation readings would be back down, but the trailing 12 month average will still be elevated. This means 2023’s maximum allowable rent increase will higher than this year’s.

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See more including a downloadable spreadsheet with all the data  

HFO Multifamily Marketwatch

This week: How landlords are faring during the pandemic, how collection issues affect rent growth, and an update on the distribution of rental assistance in Oregon.

Listen to our latest podcast.

Portland Metro Apartment Update with HFO Partner Greg Frick

HFO Partner Greg Frick at his most animated--offering his thoughts on current apartment market trends in the Portland Oregon metro area.

Rent Collections Down Even as Rent Growth Breaks Records; Portland Up 11.3% and Seattle up 9.5% Year-Over-Year

In a retroactive survey of 2020 rent collections survey results show a significant decrease in collections. Rent growth in 2021 however appears to be another story. 

• Bloomberg Harvard City Leadership Initiative, the Harvard Joint Center for Housing Studies, and the Housing Initiative at the University of Pennsylvania conducted the 2020 rent survey from February-April of 2021. The findings show that small owners had the highest exposure to rental non-payment both prior to and during the pandemic, but mid-sized owners saw the largest increase in non-payment. The findings highlight the preexisting financial precarity of small property owners, as well as the tenuous financial position of mid-sized owners in 2020. The full 50-page report can be downloaded here. 
  
  
• In its latest report for August 2021, Yardi-Matrix reports asking rent growth is breaking records across the country with asking rents up an astounding 10.3% in August on a year-over-year basis. Portland exceeded the national benchmark with rents up 11.3% and Seattle has come in just under at 9.5%. 
  
  
• Also in Yardi's report is an updated rent growth forecast for 2021. 
• Portland 2021 rent growth is forecast at 9.1% 
• Seattle 2021 rent growth is forecast at 7%

HFO Multifamily Marketwatch - September 13, 2021

This week: rents grow at historical levels, and multi-family investors remain attracted to Portland.

Listen to our latest podcast.

Where's the Money? Landlord and Tenant Groups Threaten to Sue King County

Things in King County, Washington are similar to Multnomah County and the rest of Oregon in terms of funding distribution of tenant and landlord COVID relief funding. But in this case, the landlords and tenants are threatening lawsuits. Read more in the Seattle Times.

Attorney Update for Oregon Landlords on Recent Legal Decisions

Oregon landlords have become accustomed to the frequency with which laws, regulations, and obligations change. This has been even more true during COVID-19, and this column has detailed many of those changes. This past month was filled with more of the same. At a national level, the Center for Disease Control eviction moratoriums case made its way to the U.S. Supreme Court. At a local level, the chief justice of the Oregon Supreme Court issued another order related to eviction cases and scheduling. In my opinion, only one of these items is likely to have a real effect on Oregon landlords.

The challenge to the CDC’s actions finally made its way to the U.S. Supreme Court . . . again. The first time around, even though landlords won on summary judgment at the lower court level, they lost their request to vacate a stay related to the judgment, and the moratoriums were allowed to stay in place. The request to vacate the stay was denied because, as Justice Kavanaugh noted, the CDC’s moratorium was set to expire only weeks later. Landlords had won on the issues, but effectively had the clock run out on them.

After the previous CDC moratorium expired, Congress did not act to extend the moratorium. But due to political pressure, the CDC soon enacted another moratorium. This second action by the CDC was quickly challenged, briefed, and decided. After following a similar path through the lower federal courts, the Supreme Court held that the CDC lacked the authority to impose such a nationwide moratorium, and this time, overturned the stay in place. Thus, the CDC eviction moratorium is no more.

"But what does this mean for Oregon landlords? Surprisingly, not much in my opinion." says Oregon attorney Brad Kraus. 

Read more in the Rental Housing Journal.

U.S.: Rents Grow as Vacancies Reach Historic Lows

The Rental Housing Journal reports on data provided by Apartment List on national rent trends. Read the story.

Sold! 5 Units in Tigard

 

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HFO is pleased to announce the successful sale of this Tigard 5-plex for our client! Congratulations to HFO brokers Stephen Wendt, Greg Frick, and the rest of the HFO team.

Demand Governor Brown Distribute Rent Relief Funds Now!

Multifamily NW has launched an informational campaign to help Oregonians better understand the Rental Housing Crisis created by COVID-19 policy decisions and the failure to disperse rental assistance aid.

Visit OregonRentCrisis.com to quickly and easily send your thoughts to Governor Brown and read the latest stats on the hundreds of millions of pandemic rental assistance STILL sitting in Oregon's bank account.

If you have been financially impacted by COVID-19 and need help with your rent, apply for financial assistance today: OregonRentalAssistance.org.

Multnomah County Says it May Not Disburse All Rental Funds Until After March, 2022

Street Roots news is reporting that county officials say it will take until next March to review all applications and they're not sure when they will dispense all funds. The County also has no idea how quickly they can distribute federal funds for approved applications. 

Multnomah County has received an estimated 14,000 applications and has paid out 160 claims with 664 households approved for funding. Read more.