Sold! 52 Units in Tigard, OR

We're thrilled to announce the successful sale of Tigard York, a 52-unit garden-court apartment community in the heart of Tigard, a vibrant westside suburb of Portland. Kudos to Greg Frick, Rob Marton, and Tyler Johnson for navigating this complex transaction and helping a 1031-exchange buyer secure funding, showcasing HFO's ability to secure a successful outcome for all parties even amidst market challenges. 🚀💼 

Check out more recent HFO transactions at HFORE.com.

Citizens’ Initiative 2023-01: How Your Vote Could Impact Tacoma's Rental Landscape

On August 30th, a significant decision was made regarding Tacoma's rental housing landscape. A judge ruled against including the already-passed Measure No. 2, which expanded renter protections, on the November ballot as an alternative to the proposed "Citizens’ Initiative 2023-01." The Tacoma City Council had voted to include Measure No. 2 on the ballot as an alternative to the initiative, despite it being an existing law that wouldn't be impacted by the results of the vote. 

Ballots will be mailed out on October 20th.

What is Citizens’ Initiative 2023-01?

The initiative aims to further refine the city's rental housing code, introducing more comprehensive rights for tenants than those provided by Measure No. 2. 

Here are some of the proposed changes under the initiative:

Resident Fees:

• Move-in fees capped at one month, encompassing only a screening fee and a 25% pet fee.
• Late fees restricted to a maximum of $10/month.
• Rent increase notifications become more stringent, requiring two notices: one between 6-7 months and another between 3-4 months prior.

Relocation Assistance:

• Rent increases below 7.5% will necessitate a payment to the tenant of 2x the monthly rent.
• Increases between 7.5% and 10% will require 2.5x the monthly rent.
• Any increase above 10% will require a relocation fee of 3x the monthly rent.
• Notably, there will be no appeal process or means testing.

Eviction Limitations:

• Evictions during the school year will be prohibited for students, educators, and school associates.
• A winter eviction ban will be in place from November 1st to April 1st.
• A new category of protected renters will be introduced, safeguarding groups like the military, first responders, seniors, healthcare providers, educators, and their residing family members from eviction.

What Does This Mean for Multifamily Investors and Owners?

The potential passage of Citizens’ Initiative 2023-01 could introduce a more regulated environment for multifamily property owners and investors. The restrictions on fees, the stringent requirements for rent increases, and the broadened eviction limitations could impact operational flexibility and profitability. It's crucial for stakeholders to be informed and prepared for these changes should the initiative pass.

What Can Multifamily Investors and Owners do to Make Their Voices Heard?

If you're concerned about the potential ripple effects of Citizens’ Initiative 2023-01, consider supporting the Washington Multifamily Housing Association's efforts to challenge the measure. Donations can be made via Ryan Makinster at ryan@wmfha.org.

Stay tuned for more updates and in-depth analyses on this topic. If you're a multifamily investor or owner, understanding the nuances of such measures can be pivotal for your investment strategy.

Analysis Finds Owning a Home 70% More Costly Than Renting

Recent analysis by the real-estate technology platform Cadre reveals that for many Americans, renting might be the more economical choice given the skyrocketing costs of homeownership. With mortgage rates surpassing 7% and home prices at an all-time high, combined with fierce competition due to limited home listings, potential buyers are finding homeownership increasingly out of reach. 

A comparison of owning versus renting costs shows the most significant disparity since 2000, with it being approximately 70% more expensive to buy a home than to rent as of August 2023.

Key Highlights:

• Mortgage rates are over 7%, and home prices are elevated.
• In July 2023, it was 62% more expensive to buy than rent.
• Cadre's analysis indicates a 70% cost difference between owning and renting in August 2023, the widest gap since 2000.
• The median home price in the U.S. in July stood at $406,700.
• Median rent in August was $2,052, while the estimated median monthly mortgage payment was $2,632 in September.

Cadre's data sources include CoStar Group, the St. Louis Fed, and Zillow, ensuring a comprehensive overview of the current real estate landscape.

Read more at MarketWatch.com.

Yardi Matrix Trends Report: Transactions, Pipeline, Rents, Occupancy, and Operating Expenses

Yardi Matrix is out with a new report on multifamily housing. Here are the highlights: 

Construction Pipeline Falling

• Construction financing is in short supply, likely significantly reducing deliveries between 2025-2027. This coincides with a similar report from RealPage.
  
• Regulatory costs account for 40% of multifamily development costs with high-cost jurisdiction oblivious to the drag on construction. Political will to address the housing shortage may be finally turning as municipalities realize their fees are a drag on supply

Click to enlarge

• The supply shortage in U.S. housing is likely to last up to 10 more years, supporting rent growth and capital appreciation.

Transactions Slowing

• Transactions have and will continue to slow until inflation is under control and interest rates come down, which Yardi predicts will happen Q3 2024. 
• Initial pre-distress and distress is emerging.

Occupancy Flat

• Remote work has led people to move outside urban areas to larger units with more amenities.
• Oregon and Washington are among the top three states offering flexible work, with 86% of companies allowing work-from-home. Technology, media, insurance, professional and financial services are among the most likely to allow work-from-home.

Population Aging

• The US population will grow older for the next several decades, with Boomers retiring, but will fare better than much of the world. China has the fastest aging society in human history. Japan and parts of Europe will also suffer.

Rent Growth Slowing to Pre-Pandemic Levels

• National multifamily rent growth is strong but decelerating. Rent growth recovered faster in tech hubs than gateway markets.
• Renting is still a better deal than owning, due to the high cost of interest and rising home prices

Operating Expenses Climbing Fast

• Operating expenses for multifamily properties are increasing nationwide, up 5.5% in 2022 and 8.5% in 2023.
• Portland's operating expenses are up 10% in 2023
• Seattle's operating expenses are up 5.5% in 2023

Click to enlarge

Portland City Council Greenlights Tax Incentive to Boost Downtown Business

The Portland City Council has unanimously approved a tax incentive aimed at retaining businesses in the city's downtown, Old Town, and Lloyd and Lower Albina districts. This credit, designed to reduce business license taxes, is available to companies with a minimum of 15 employees that sign or extend a lease for at least four years in the specified urban areas. To qualify, businesses must also ensure that their employees spend at least half their working hours in the city core. While the incentive caps at $250,000 per taxpayer, it's expected to be implemented for the 2023 tax year. City officials believe that even though smaller businesses might not directly benefit from the tax break, the increased foot traffic from larger businesses will indirectly boost their operations.

Andrew Fitzpatrick, the mayor's economic development director, and Andrew Hoan, president of the Portland Metro Chamber, both stressed the importance of the incentive in preventing businesses from leaving the city. Mayor Ted Wheeler and Commissioner Carmen Rubio, who played pivotal roles in formulating the measure, expressed optimism about its potential positive impact on the city's business landscape.

Key Highlights of the DBI Credit:

• Eligibility Criteria: 
• Sign a new or renewed lease during 2023 or 2024 for a minimum of four years or own and occupy a building within the eligible sub-districts.
• Retain a minimum of 15 employees who work at least half-time in the leased/owned building throughout the four-year duration.
  
  
• Credit Amount:
• Maximum credit per taxpayer: $250,000, spread equally over four years starting from the year of origin (either 2023 or 2024).
• The credit amount is the lesser of (in the year of origin):
• 100% of the City of Portland Business Tax liability
• 1% of City of Portland “income subject to tax”
• $30 per square foot of leased building space
  
  
• Additional Provisions:
• The city can set further limits on individual taxpayer credits if the total credits applied for surpass the $25 million DBI credit pool.
• Annual attestation is mandatory over the four-year credit period.
• Failure to meet requirements results in repayment of the credit with interest.

Read more at Portland approves downtown business tax break - Portland Business Journal (bizjournals.com)

The Future of Housing? Greystar Modular Home Factory Puts Out

Greystar, a leading multifamily developer and the largest operator of multifamily housing in the U.S., has begun work on its first U.S. modular housing project named Ltd. Spring Run in Coraopolis, Pennsylvania. This 312-unit property, constructed entirely from modules produced at Greystar's Modern Living Solutions factory in Knox, Pennsylvania, represents the third installment in the Ltd. by Greystar brand. This brand emphasizes affordable housing by capping annual rent hikes at either 3% or the trailing 12-month rise in the Consumer Price Index, whichever is higher. Following Ltd. Spring Run, Greystar plans to introduce the Ltd. Chesapeake Club in North East, Maryland, and two additional Maryland projects, cumulatively adding 1,600 units over the forthcoming 18 months.

Dive Insight reveals that Ltd. Spring Run, constructed from over 880 prefabricated modules, will span six residential buildings on a 24-acre plot. These units will be almost fully finished upon arrival, with only utilities, slab preparation, and exterior finishing remaining. Andy Mest, who supervised Greystar's initial modular projects in the U.K., including the world's two tallest modular residential structures at 38 and 44 stories in London, highlighted the company's success in integrating U.K. experiences into their U.S. operations. 

While the current focus is on the Mid-Atlantic region, Greystar envisions expanding its modular manufacturing to other parts of the U.S. in the future.

New Eugene Rental Housing Laws Now in Effect

On July 24, 2023, the Eugene City Council passed Ordinance Number 20694, amending various sections of the Eugene Code related to rental housing, effective August 25, 2023.

Click here to read and download a copy of the complete ordinance. 

Key Highlights: 

• Security Deposits: Landlords can't ask for more than two months' rent as a security deposit. However, additional deposits may be required for things like pets or special circumstances, but renters must be given at least three months to pay these extra deposits.
  
  
• Applications: Landlords must clearly state when they start accepting rental applications. They also need to record the date and time they receive each application, and process them in the order they're received. If someone needs more time to apply, they can request it, and the application date will be adjusted accordingly.
  
  
• Relocation Assistance: If a landlord ends a month-to-month tenancy without cause, they must give at least 90 days' notice and provide relocation assistance equal to two months' rent. Similar rules apply in case of a qualifying landlord reason. For fixed-term tenancies, renters can request to renew their agreement within 30 days, or the landlord may offer a renewal. If the rent increases by the maximum allowed by law (10% for 2023), renters can request relocation assistance.
  
  
• Rent Increases: If rent increases by the maximum allowed by law, renters can ask for relocation assistance within 30 days of receiving the notice. The landlord must pay it at least 45 days before the increase takes effect.
  
  
• Reporting Requirements: Landlords must report certain actions, like termination notices and legal actions, to the city within 30 days.
  
  
• Exemptions: These rules don't apply to week-to-week tenancies, some owner-occupied situations, certain types of housing, or if rent increases are below the maximum allowed by law.
  
  
• Enforcement and Penalties: Landlords who violate these rules may have to pay relocation assistance, damages, and attorney fees to renters. There are also penalties for not following security deposit and screening rules.

Please note that this summary is for informational purposes and not legal advice. Consult an attorney for specific guidance on rental housing matters. For more details and updates, visit the City of Eugene's website.

Report: CPI Likely to Continue to Falling as Flat and Declining Rents Impact Future Reports

ApartmentList.com is well known for its meticulous and transparent analysis of U.S. rental market trends. Their recent studies highlight the relationship between U.S. inflation trends and changes in the apartment market.

Impact of Rent on Inflation:

• In 2021 and 2022, post-pandemic rent increases significantly influenced the rise in overall consumer prices.
• Rent is a major consumer expense; thus, an increase in rent leads to higher inflation.

Comparison with Official Data:

• There's a discrepancy between market data (like that from ApartmentList.com) and the rental price inflation used by the Bureau of Labor Statistics (BLS) for the official consumer price index (CPI).
• Market rent changes influence the CPI but with a slight delay.
• ApartmentList.com's data can predict how rent changes will impact the official inflation rate in upcoming months.

Chart Significance:
The chart compares ApartmentList.com's rental inflation estimate, the BLS's rent inflation estimate, and the overall CPI.

Click to Enlarge

Insight from Rob Warnock of ApartmentList.com:

• The Apartment List National Rent Index is a robust precursor for the CPI housing and rent components.
• In 2021, when their index showed a record rent growth of 17.8%, the CPI's rent component was just beginning to rise.
• By 2023, while their index indicates a cooling rental market for a year, the CPI housing component has only recently peaked.
• Although the CPI's housing inflation remains high, the overall inflation has considerably decreased.
• As the CPI housing component starts to reflect this cooling trend, it will further reduce overall inflation in the coming months.

Current Rental Market Trends:

• Rents are decreasing in most U.S. markets.
• 72 out of the 100 largest markets have reported year-over-year declines.
• This decline is supported by factors like the completion of new apartments and a vacancy rate returning to pre-pandemic levels.

Future Outlook:

• The data suggests promising improvements in housing affordability in the upcoming year.
• This will also result in decreased headline inflation rates.

Portland's Downtown Is Doing Much Better Than You've Been Told

 

City Observatory blogs this week about a recent story in Portland's Street Roots newspaper by Mary King, professor emerita of economics at Portland State University, which exposes serious flaws in cell phone data used to measure downtown's recovery.

The local and national press have flogged downtown Portland's supposedly tepid recovery from the Covid pandemic based on statistics from the University of Toronto. That study looked at pre- and post-pandemic cell phone data for selected neighborhoods in major US cities and rates Portland second to last for the percentage of activity recovered since 2020.  

The University of Toronto data looks at only a single (and unrepresentative) part of downtown Portland (with only about 1,000 residents) and counts only changes in unique visitors (effectively discounting daily, repeat travelers.  The study uses widely varying geographies for different cities; San Diego's counts reflect both its airport and famous Zoo and naturally show a dramatic rebound in unique visitor counts.  As King reports:

"Counting all visits and using a much bigger definition of downtown, the Portland Metro Chamber reports Portland had nearly two-thirds as many visits in June 2023 as in June 2019. In stark contrast, the Toronto study asserts that there were just 37% as many visitors to “downtown Portland” from March through May 2023 as in 2019."

In short, the University of Toronto data don't offer an apples-to-apples comparison of cities; more robust data suggests that Portland's experience is similar to other US downtowns.

Washington State's Eviction Process, Simplified - with Brad Kraus

 

HFO founding partner Greg Frick welcomes Brad Kraus, a landlord-tenant lawyer, to discuss the state of Washington's landlord-tenant laws. Brad discusses eviction actions, security deposit obligations, and the impact of the CARES Act issue on Washington eviction notification.

Watch this video and hundreds more of our exclusive interviews on our website at: https://www.hfore.com/videos.aspx 

HFO-TV: How Will Recent Legislative Changes Impact Housing? Marcel Gesmundo Explains New Oregon Laws

 

 

HFO Founding Partner Greg Frick is joined by Marcel Gesmundo, Partner at Andor Law Firm, to discuss changing regulations, the pros and cons of localized rental housing rules, and how property owners can stay informed and advocate for themselves and their residents.

Watch this video and hundreds more of our exclusive interviews on our website at: https://www.hfore.com/videos.aspx 

Proptech: Michael Gratteri of Swiftlane on the Use of Facial Recognition for Apartment Security

Michael Gratteri of Swiftlane specializes in smart building technology, particularly in facial recognition access and video intercom for multi-family security. Swiftlane's facial recognition technology allows tenants to access their units without physical keys or phones, enhancing security and convenience. Benefits of this technology include lower friction, higher security, and the ability to prevent key cloning. The system captures 3D maps of faces during registration, making it resistant to changes in appearance such as growing a beard or wearing makeup.

According to Graterri, Swiftlane integrates well with existing systems, offers vandal-resistant hardware, and places a strong emphasis on data security and privacy compliance. Learn more at swiftlane.com.

Watch this video and hundreds more of our exclusive interviews on our website at: https://www.hfore.com/videos.aspx 

Manning & Lake Oswego Top the List of Highest-Earning Zip Codes in the Portland, Oregon Metro Area

Originally published on Stacker

The 2020 median household income in the U.S. was $67,521, a decrease of 2.9% from the 2019 median of $69,560, according to the U.S. Census's annual analysis of income and poverty in the U.S. COVID-19 in 2020 drastically altered income and poverty levels, along with consumer habits and job opportunities — the fallout of which continues today.

Stacker compiled a list of the highest-earning zip codes in Portland-Vancouver-Hillsboro, WA using data from the U.S. Census Bureau. Zip codes were mapped to city using Simple Maps. Counties are ranked by 2019 five-year estimate median household income.

Education levels and occupation contribute mightily to salaries, but where a worker lives can give a boost to employees across the board — or result in diminished earnings. It's not just a location's tax rates and cost of living, either. According to a Brookings study, simple geography is responsible for a large variation in earnings: Sebring, Florida, for example, has the low median earning of just $26,000, while the metro area of San Jose-Sunnyvale-Santa Clara in California boasts a median earning figure of $65,000. The same study found that overall workers in the top-earning 30 locations across the U.S. earn an average of 37% more than the workers in the bottom 30 locations.

Silicon Valley boasts a workforce that Sebring, Florida, simply can't. In addition to powerhouse hubs like Silicon Valley, cities in general also boast higher wages for workers than their counterparts living outside of cities. High-paying firms are often located in cities, drawing talent who earn top dollar.

In the Portland metro area: 

#10. 98606 (Brush Prairie)
- Median household income: $103,295
- Households earning over $100,000: 52.1%%

#9. 97106 (Banks)
- Median household income: $103,958
- Households earning over $100,000: 53.8%%

#8. 97212 (Portland)
- Median household income: $106,705
- Households earning over $100,000: 53.7%%

#7. 97140 (Sherwood)
- Median household income: $106,855
- Households earning over $100,000: 53.5%%

#6. 98607 (Camas)
- Median household income: $108,321
- Households earning over $100,000: 53.9%%

#5. 97068 (West Linn)
- Median household income: $113,389
- Households earning over $100,000: 55.1%%

#4. 97221 (Portland)
- Median household income: $122,096
- Households earning over $100,000: 56.9%%

#3. 97229 (Portland)
- Median household income: $122,881
- Households earning over $100,000: 58.7%%

#2. 97034 (Lake Oswego)
- Median household income: $128,048
- Households earning over $100,000: 59.2%%

#1. 97125 (Manning)
- Median household income: $165,909
- Households earning over $100,000: 80.8%%

Rents Fell in Cities Post-Pandemic, but In the Burbs, Not so Much

ApartmentList has a new interactive chart available demonstrating rent trends for metro areas throughout the United States. While rents soared in early 2021, rents dropped by January of 2022 and increased again in September 2022. 

Since November of 2022, rates have generally flattened, with current rent growth for Portland and Seattle reported as follows:

City        Rent Growth, City Core        Suburb Growth                Gap

Portland             1.7%                                22.8%                            21.1%

Seattle                2.0%                                19%                               17%

View all charts and search metro areas throughout the U.S. here. 

RentCafe: America’s Apartment Boom: 1 Million Units Built in 3 Years, Another Million to Be Added By 2025

RentCafe reports that apartment construction is having some of its biggest boom years ever. The construction cycle is expected to slow significantly after 2025 due to construction loan rates, currently averaging 8%. 

Read more. 

Washington Multifamily Housing Association Endorses Candidate for Governor

The Washington Multifamily Housing Association Board of Directors has endorsed Senator Mark Mullet (D-Issaquah) for the next governor of the State of Washington. The association plans to actively support his campaign through public outreach, member engagement, and industry education efforts. 

In a prepared statement, the association provided the following reasons for its endorsement:

The Hidden Truth of Oregon's HB 3042: How It Redefines Oregon’s Subsidized Housing Market

One bill that passed the last legislative session in Oregon that has not received wide media attention is HB 3042.

About HB 3042: According to attorney John A. DiLorenzo, Jr., under the previous system: those with a tax credit deal would sign a rent regulatory agreement with the state, lasting for an initial 15-year period. After this period, rents could be raised to market levels. However, Bill 3042 added another three years on top of the initial agreement. During these additional three years, rent increases are permitted only with the approval from Oregon Housing and Community Services (OHCS), and are generally limited to 5%.

Legal Concerns: DiLorenzo voiced concerns about the bill’s legality, specifically regarding contracts' obligations. He cited previous eviction moratorium cases in Oregon, where a judge had ruled that obligations of contracts could be impaired during emergencies like the pandemic. However, HB 3042 does not have such an emergency justification. DiLorenzo indicated that organizations like More Housing Now are considering legal action.

State Perspective: The State of Oregon aims to control rents in buildings after they exit the tax credit programs. The state was aware of their own timelines, and were unprepared, and instead, passed this bill in order to retain control.

Effects of the Bill: DiLorenzo says that the bill might further deter new investment in housing in Oregon due to the risk of further "surprise" legislation down the road. The state's approach, he argues, will end up raising rents as supply remains stagnant and demand increases. DiLorenzo also indicated other legislation which has been a burden to landlords and requires them to participate in rental assistance programs. Non-compliance can lead to dismissals in evictions, making the eviction process more complex and costly for landlords.

Comparison with Other States: When asked about other states' positions, DiLorenzo stated that Oregon was the first to enact this type of legislation and emphasized the importance of ensuring that the state never enacts vacancy control, which would be an additional detriment to housing investment here.

Conclusion: Multifamily owners are feeling an urgency to address HB 3042, as it unilaterally extends their rent regulatory agreements. Owners must work to keep informed and stay proactive in local and state government to prevent further erosion of their rights and challenges to maintaining property investments.

Senate Bill 35: California’s Secret Weapon Against the Housing Crisis?

California's Senate Bill 35 has sparked significant growth in affordable housing construction by reducing local opposition. With 156 projects approved or under review, resulting in 18,000 new units – 62% of which are reserved for those earning below 80% of the median income – it's proven effective. The Terner Center's recent study highlights its success, though there's still much work ahead. [Read the full story here on Business Insider.]

Lawsuit Ahead? Oregon House Does The Two-Step on Low-Income Housing Tax Credit

In this HFO TV episode, partner Greg Frick and attorney John A. DiLorenzo, Jr. of Davis Wright Tremaine discuss lesser-known HB 3042, its implications for Low-Income Housing Tax Credit (LITEC) subsidized units, and the likely legal challenges. They delve into the extended use period, rent increases, and the need for rental increase permission from Oregon Housing and Community Services (OHCS). The conversation also touches on rent control, housing supply, and changes in eviction Forcible Entry and Detainer (FED) laws. DiLorenzo argues that all the new regulations on rent control, inclusionary zoning, and evictions will only reduce the housing supply.

Revealing Today’s Renter: Key Insights from Apartments.com's Latest Study

Nearly 60% of U.S. renters plan to move when their lease is up. 

At the recent NAA Apartmentalize conference, Chris Hood from Apartments.com delved deep into the mindset of today's renters. Data from a survey of 37,000 renters and visits to the Apartments.com website revealed a changing landscape, with factors like affordability, lifestyle changes, and safety playing pivotal roles in their decisions to move. Conversely, inflation keeps many from making the move. The search process is faster, with most renters making informed and decisive choices. How should apartment communities adapt? By understanding and addressing these evolving preferences in their marketing strategies. Click here to read more. 

Meanwhile, RealPage conducted its own recent survey of 2,000 renters from across the nation representing various demographics. Their survey unveiled at the RealWorld 2023 conference found 66% of renters content with their current housing and enjoying financial freedom and flexibility. Their survey found that Gen Z particularly feels renting trumps buying, with 51% leaning toward rentals. Technology and safety are paramount, with Gen Z willing to shell out more for smart technology. Furthermore, community integration, quality of life, and financial freedom emerge as new priorities in the rental world. The RealPage annual conference has over 1,400 attendees with a combined 5 million rental property units under management or ownership.  

Kotek Announces New Task Force to Revitalize Portland's Economic Future

Oregon Governor, Tina Kotek, in collaboration with the Oregon Business Council, introduced the Portland Central City Task Force this Wednesday. This move comes in a bid to rejuvenate Portland’s economic prospects, assembling local elected officials, business magnates, and community figureheads to address the pressing economic issues of Portland’s Central City. In recent years, downtown Portland has grappled with numerous challenges, many stemming from growing pains that intensified during the global pandemic. Such concerns, affecting Oregon’s premier city, have escalated to state-level economic matters. Gov. Kotek emphasized the need for united, equitable strategies, thanking all individuals devoted to Portland's bright future.

Initiated following a strong public appeal, the task force’s objective is clear: to navigate the city’s challenges. Co-Chair Dan McMillan — the president and CEO of The Standard — acknowledged the gradual positive shift in Portland, with rising foot traffic and diminishing property crimes. He expressed gratitude to Gov. Kotek for her proactive stance, championing cooperative efforts to secure the city's future prosperity. The task force’s inaugural meeting is slated for August 12, with another in October. They will present their recommendations at the Oregon Business Plan Leadership Summit come December.

Read more at KOIN.com.

The Battle Over Tenant Screening Fees in Eugene, Oregon

 

In this episode with attorney John A. DiLorenzo, Jr., partner Greg Frick discusses the controversial screening law in Eugene. Learn why limiting screening fees to $10 sparked a legal battle and how it affects landlords and prospective tenants. Discover the court ruling that deemed the local ordinance preempted by state statute, and find out why the City of Eugene is appealing that decision. 

Transcript:  (Edited for clarity)

Greg: Now to the City of Eugene the screening law, when they tried to pass the law about the criteria on screening and the cost.

John: This is typical of a circumstance when people who are making decisions about housing have never managed housing and have never owned housing. Okay. So, the city council in Eugene comes up with this idea that they should limit screening fees to $10, because paying $40 for a screening is just way too expensive for some. Well, the problem is you can't find a company to screen for under $40, and it was even worse because, you know, at 40 bucks or 50 bucks for a screening, prospective tenants are somewhat circumspect as to where they apply, right? So, they actually read the criteria first before they spend the 50 bucks. If it's only 10 bucks, it's like a shotgun. And so, you end up having a landlord have to be $40 a piece in the hole every single time for people who have no intention of living there or who will never be able to qualify. So, who ends up paying for that?

Greg: The property owner.

John: The existing tenants and the property owner. Yeah, I mean, so, we believed that that offended a statute, an Oregon statute that allows landlords to recover their average costs. And so, we filed suit in circuit court in Eugene and Judge Fennerty ruled that the local ordinance was preempted by the state statute. And so, that brought an end to the Eugene screening ordinance, but undaunted, Eugene asked its legislators to introduce a bill in the legislature that was going to abolish that preemption statute. So, we had to fight that. We are able to kill that in committee. So, instead, they've now appealed their loss to the court of appeals, so we'll see what happens.

Greg: So, they're not going the legislative way, they're gonna try to appeal the...

John: Yeah, they're gonna try to appeal that at the court of appeals.

Greg: And what's your thought on that?

John: Well, I think they're gonna lose. And I mean, I think it's pretty clear that the state statute preempts that sort of thing.

Greg: And the reasoning behind, I mean, what was their argument for this? Just that the rental housing providers are making a load of money on running credit checks?

John: Well, yeah and they believed some tenant advocates who came in who said, "Oh, we could do screening for $10." Well, I don't know who "we" are. You know, any reputable screening company is gonna charge 40$ or 50$. And we did a survey, we did a survey around the state, and that's what it costs.

Greg: So now we've gotta wait and see when this appeals and how that happens.

John: Yeah.

Greg: Are there any other cities talking about this? 

John: Well, there were going to be until we beat them in court, so that's one of the reasons why it's so important to either try to maintain a presence in the legislature and in the courts at the same time, because sometimes you can get in the legislature what you can't get in the courts, and sometimes you can get in the courts what you can't get in the legislature.

Census Reports: Portland & Seattle Rental Vacancy Rates Remain Below U.S. Average

Seattle's vacancy rate increased from 3.3 to 3.8% in Q2, ranking #15 lowest in the country, while  and Portland's vacancy rate declined slightly from 5.6% to 5.4%, a ranking of 24th lowest. Both have vacancy rates below the national average of 6.3%

Of the top 75 metro areas, Portland-Vancouver-Hillsboro's vacancy rate of 5.4%, was up from 3.3% year-over year. Seattle-Tacoma-Bellevue's vacancy rate of 3.8% was up slightly from 3.4% a year earlier.

U.S. Rental Vacancies Increase
The average national rental vacancy rate for Q2 2023 was 6.3 percent for multifamily dwellings of five or more units, up from 5.6% a year earlier. 

Click to enlarge

Year-over-year vacancy rates in the Western U.S. increased from 4.3% in Q2 2022 to 5.0% in Q2 2023.

Click to enlarge

U.S. Homeownership Rates
After falling to a 26-year low in 2016, the national homeownership rate now stands at 65.9%, unchanged from Q1 2023. Homeownership in the West has increased in the past year from 60.2% to 61.9%.

Pandemic's Effect on Income Migration: Multnomah County's Billion-Dollar Loss

Multnomah County experienced a significant migration of residents during the first year of the pandemic, leading to a net loss of over $1 billion in income, The Oregonian reports. This phenomenon was largely attributed to the rise in remote work, which allowed individuals to retain their urban jobs while relocating elsewhere. IRS data from 2020 and 2021 revealed that 14,257 tax filers and their dependents moved out of the county, marking the first time in a decade that the county's net income loss exceeded $1 billion. Furthermore, the average income of residents who left in 2020 was 14% higher than those who moved out the previous year, reflecting a trend of higher earners relocating. This change was a departure from previous patterns, where typically those who relocated had lower incomes than those who stayed.

While the county lost residents primarily to nearby suburbs such as Clackamas County, some moved to more distant destinations. Economists predict that these trends could result in a significant loss of tax revenue for the county and the state of Oregon, which heavily relies on personal income taxes from high earners. There is concern that if this trend continues, it could lead to budget shortfalls and cuts in local programs and services. The average household income of residents leaving Multnomah County has increased over the past decade, though it's unclear if this is primarily due to the departure of the highest earners. Depending on income levels, migrants from Multnomah County generally moved either to out-of-county areas with more space or to more affordable counties within Oregon. 

Read more at OregonLive.com.

Clearing the Sidewalks: How Disabled Citizens Sued Portland - Insights from Attorney John DiLorenzo

In this informative video, HFO partner Greg Frick sits down with attorney John A. DiLorenzo, Jr. for a detailed discussion about a landmark lawsuit involving disabled citizens who sued the City of Portland for not maintaining clear sidewalks as required by the Americans with Disabilities Act (ADA). DiLorenzo, who represented the plaintiffs, sheds light on the case's proceedings, the specific violations of ADA law, and the resulting outcome of the lawsuit. This dialogue provides valuable insights into the intersection of urban management, ADA law, and citizen rights, particularly in the context of managing encampments in city environments. Watch now for an in-depth look at this pivotal case, its implications, and the resulting policy changes.

Decoding the New Rental Housing Fee Initiatives: Perspectives from the White House and NMHC

Yesterday, The White House unveiled a comprehensive initiative addressing the ongoing concern of "junk fees" in the rental housing market. The announcement emphasized what it described as burdensome and often misleading fees millions of families encounter during rental application processes and lease durations. As part of the initiative, major rental housing platforms such as Zillow, Apartments.com, and AffordableHousing.com have committed to providing renters with transparent and upfront cost information. In addition, several states have taken legislative action to control and regulate these fees:

• Colorado: Implemented two House Bills, one allowing application reuse without additional fees and the other controlling disguised fees.
• Rhode Island: Introduced House Bill 6087 to regulate rental application fees.
• Minnesota: Senate File 2909 mandates a clear display of all fees on lease agreements and advertisements.
• Connecticut: Senate Bill 998 sets fee limits and prohibits specific fees.
• Maine: Legislative Document 691 controls application and screening fees.
• Montana: Senate Bill 320 dictates refund conditions and sets fee caps.
• California: Senate Bill 611 calls for comprehensive monthly rent rate disclosures.

In response, the National Multifamily Housing Council (NMHC) agreed on the importance of cost transparency in rental housing for both renters and housing providers. While the NMHC supports the voluntary measures announced by the White House, they took issue with the notion that rental housing residents are widely exploited by housing providers, emphasizing the absence of concrete evidence to back such claims. The Council suggests that any misconduct by housing providers should be tackled through existing legal channels. Notably, the NMHC highlighted that regulations governing the relationship between housing providers and residents are primarily managed at the state and local levels, tailored to the specific needs of individual communities.

Given the significant housing affordability challenges nationwide, the NMHC has encouraged the White House and lawmakers to prioritize policies that reduce housing expenses. They particularly championed the Biden administration’s Housing Supply Action Plan, which proposes several measures to lower housing costs. The Council's final call to action urged leaders to adopt solutions that expand housing opportunities rather than pushing for further regulations that could potentially deter housing development and inadvertently elevate costs for renters.

In summary, while both the White House and NMHC concur on the importance of transparency in rental housing costs, their perspectives diverge on the extent of the problem and the best strategies to ensure fair pricing and practices in the rental housing market.

Portland’s Inclusionary Housing Policy: Truth or Exaggeration? Watch Council Workshop Live: Tuesday 7/25 9:30-11:30 am

The public is invited to watch a crucial work session on housing production to shed light on the city's current housing predicament. The session is scheduled for Tuesday, July 25, from 9:30 to 11:30 a.m., with doors to the city council chambers opening to the public 15 minutes beforehand. If you cannot attend in person, you can tune in live on YouTube or Cable TV (Xfinity Channels 30 and 330 and CenturyLink Channels 8005 and 8505). You can also watch live online.

The primary focus of this meeting lies in the presentation of the Inclusionary Housing (IH) Working Group Recommendations, a cost comparison analysis, a local policy impact analysis, and a discussion on recommendations to address housing feasibility issues.

In the spotlight is the city's IH policy, which has faced scrutiny since its initiation in 2017. A specialized work group, convened last fall, was charged with examining the efficacy of this policy. Members of this group, who hail from a variety of backgrounds, have voiced concerns about the city's alleged overestimation of the number of housing units created through the policy.

As the Portland Business Journal uncovered in December 2022:

...the Portland Housing Bureau's (PHB) claim of having assisted an estimated 891 people living in IH units and having another 1,250 people on the waiting list for IH units under construction was significantly inflated.

The reality, as the work group discovered, was that the actual number of people in private developments was significantly lower, at 587. An additional 576 were headed for units still under construction. These revised figures were obtained via a copy of corrected PHB data, suggesting that the city combined private and affordable projects to inflate the total number of people being helped by the IH.

With a need for at least 23,000 additional housing units to cater to low and moderate-income households, Portland's housing challenge is daunting. The PHB's Inclusionary Housing Program is aimed at fulfilling this need by promoting economically diverse neighborhoods and housing affordability.

Nonetheless, the city’s budget office estimates the cost of constructing 20,000 affordable housing units to be a whopping $9.8 billion. The City of Portland's contribution would be $3 billion, based on the current rate of $150,000 per unit. This fiscal challenge, coupled with the perceived inefficiency of the IH, indicates that the upcoming work session will be a pivotal event in shaping Portland’s future housing landscape.

Whether you're a concerned citizen, a housing developer, or simply interested in the future of Portland, this work session is an important opportunity to understand and engage in the city's housing strategy. Be sure to mark your calendars for this critical discussion on Portland's housing crisis.

Additional Reading:

Affordable Housing Mandate Remains Expensive for Developers, Study Finds

A recent study funded by the City of Portland and conducted by BAE Urban Economics found that Portland's "inclusionary housing" policy requiring some units in new apartments be affordable for low-income tenants is not as costly for developers as initially feared. Instead, the study indicated that other construction factors had a more significant impact on development costs. 

The policy, introduced in 2017, mandates that all new apartment complexes with 20 or more units should keep 20% of rents affordable for people earning 80% or less of the median income, or alternatively, 10% of units for people making 60% of the median income. In return, developers receive certain development fee waivers and 10 years of property tax exemptions for the affordable units.

While the policy seems to work well in the central city due to heightened incentives, it is less lucrative in areas outside the central city's boundaries. The policy has resulted in 1,000 new affordable rental units in Portland since its inception more than six years ago (Feb. 2017). 

In addition to the inclusionary housing policy, the study found that the biggest cost to apartment developers is system development costs (SDCs) which can account for over 6% of total development costs. The study also suggested ways the city could reduce building costs, including:

• An increase in city incentives to offset worsened market factors
• Reducing risk and uncertainty to developers by streamlining permit approvals
• Considering policy adjustments to decrease costs such as reducing required bike parking spaces, system development charges, etc.

Overall the feasibility analysis indicated that at the current time cost increases outweigh revenue increases and that:

• Rents must increase between 15-35 percent, or
• Hard costs must decrease between 15-40 percent; or
• Investor return requirements decrease to pre-pandemic levels (this exact amount was unspecified in the report)

The study revealed that building an apartment in Portland costs 10% more than in Seattle or Sacramento and is 4% cheaper than Denver. Despite these insights, some developers argue that the inclusionary housing policy may have hindered the construction of additional overall units. 

The study also failed to take into account the number of apartment buildings not constructed or built with reduced density to avoid the city's requirements. 

How Oregon's Rent Control Will Reduce Housing Supply

 

In this HFO-TV Episode with John A. DiLorenzo, Jr., host Greg Frick discusses recent developments in Oregon housing legislation, specifically the SB 611 rent cap and its implications for landlords and tenants. Learn about the modifications made to the bill and the potential effects on the housing supply. Discover why many in the industry believe the tenant advocates' agenda works against their own interests.

HFO Op-Ed: Is Portland's Affordable Housing Spending a Failure?

In this thought-provoking video, HFO Client Services Director Aaron Kirk Douglas share's HFO leadership's opinion on Portland's affordable housing spending and raises essential questions about its effectiveness. 

This critical viewpoint argues that the current approach has resulted in wasteful expenditure without achieving the desired outcomes. Several specific examples are discussed, shedding light on projects that received significant funding but failed to adequately address the city's affordable housing crisis. The video proposes alternative strategies, such as increased private sector involvement and market-based solutions, to optimize the impact of housing spending. By encouraging a reassessment of Portland's affordable housing approach, this video aims to spark a constructive dialogue on achieving more efficient and impactful results. Join the conversation and share your thoughts on this complex issue in the comments below.

Rent Control vs. Rent Stabilization: A New Name for a Failed Concept

(NMHC Research Notes - Summary)

There are widespread consensus among economists that rent control is a failed policy, as it reduces the quantity and quality of available housing. There are also documented negative consequences to rent control, including poor targeting of benefits, decreased property maintenance, and a decline in rental housing supply.

Despite this consensus among economists, many states have introduced rent regulations that limit rent growth under different names, such as "rent stabilization" or "anti-gouging" laws. Proponents argue that these new regulations are less restrictive compared to traditional rent control policies because they allow for increases tied to inflation, aiming to promote renter stability and affordability without the adverse effects of absolute rent ceilings. However, opponents contend that these terms are often used interchangeably, and the underlying concept remains the same: government intervention in setting rental prices.

Here are some specific examples of "rent control" and "rent stabilization" laws in different states. See if you can guess the difference!

1. New York City:
New York City has one of the most well-known and restrictive rent control programs in the country. The program, which dates back to the 1940s, applies to apartment units built before 1947 and continuously occupied since 1971. Rents are limited to a "Maximum Base Rent" adjusted every two years to reflect changes in operating costs. The Housing Stability & Tenant Protection Act of 2019 further tightened allowable rent increases in controlled units. In 2017, the median rent for a one-bedroom apartment under rent control was just $840, significantly lower than the median market-rate rent of $2,555.

2. Washington, DC:
Washington, DC has its own rent stabilization laws. The current iteration, effective since 2006, caps rent increases by the lesser of inflation (Consumer Price Index) plus 2 percent or 10 percent. However, the law is not universal, exempting units in buildings with fewer than five units and those built after 1975. The original rent regulation in DC also allows for vacancy decontrol, enabling owners to raise rents by a maximum of 10 percent in between tenants or up to 30 percent if an identical unit in the building rents for that amount.

Recently, the DC Council passed legislation that further limits annual rent increases in stabilized units to 6 percent for the next two years. This change was made in response to a spike in rents in mid-2022 after the COVID pandemic. However, the legislation does not consider the rising costs of property insurance and other non-controllable expenses faced by housing providers.

3. California:
In 2019, California implemented the Tenant Protection Act, which is framed as a rent stabilization law. The act caps rent growth at the lesser of 5 percent plus inflation or 10 percent. However, similar to other jurisdictions, if inflation exceeds the cap, housing providers cannot raise rents accordingly. The law exempts rental units built within the last 15 years, as well as certain condos, single-family homes, and two-unit properties. Efforts have already been made to make the law more restrictive, with proposals to reduce the limit on rent increases to the lesser of inflation or 5 percent.

4. Oregon:
Oregon also passed a rent stabilization law in 2019. The law currently limits rent growth for multi-unit properties to 7 percent plus inflation. This means the maximum allowable rent increase under the law would be 14.6 percent. Similar to California, the law exempts multi-unit properties older than 15 years. Recently, Senate Bill 611 was passed in Oregon, further lowering the limit on rent increases to the lesser of inflation plus 7 percent or 10 percent.

These examples highlight the limitations and exemptions within rent stabilization laws in different states. Despite the variations in terminology and some adjustments to the regulations, the fundamental issues and criticisms associated with rent control persist. Rent stabilization laws:

1. Impose rent ceilings without considering the actual costs of maintaining rental housing
2. Fail to address the needs of vulnerable populations
3. Do not create new housing supply to reduce market rents
4. These laws are often not universally applied, exempting certain types of rental units from the regulations.

In conclusion, rent control and rent stabilization policies, whether under different names or with minor adjustments, are failed concepts that do not effectively address housing supply issues.

Unhoused Portlanders Challenge Camping Ban

Portland's recently implemented daytime camping ban faces its first legal challenge, from the Oregon Law Center, which represents 24 individuals experiencing homelessness. The new ordinance, approved by the city council, prohibits camping on public property from 8 a.m. to 8 p.m., enforcing limitations on where individuals can camp during remaining hours. Penalties increase for multiple violations and include a written warning, a $100 fine, and up to 30 days in jail. 

The plaintiffs allege this legislation violates both state and federal law, with critics arguing that it amplifies criminalization rather than addressing the core issue of homelessness. Mayor Ted Wheeler, who introduced the ban, will not immediately enforce it, aiming instead to educate the homeless population about the policy throughout the summer.

The policy update was purportedly necessary to align Portland with Oregon's House Bill 3115, which requires cities to make “objectively reasonable” rules for public property usage. The Oregon Law Center, however, disputes the “reasonable” nature of Portland's rule, suggesting that it unreasonably forces individuals to disperse during the day without offering viable alternatives for legal camping. 

The firm's arguments draw on the 2018 federal ruling in Martin v. Boise, which bars cities from arresting people for sleeping on public property unless sufficient shelter is available. This legal challenge, set to proceed in the coming months, could test the application of House Bill 3115 and its implications on ordinances aiming to regulate public camping. 

For property owners and investors in the Pacific Northwest, this case continues to influence investment, migration, and real estate markets in the region. 

Read more at OPB.org

Apartment Owners Call for Insurance Reform

A recent series of articles in Multifamily Dive covered increasing insurance rates in extensive detail. Below is a summary of those articles, which you can read in their entirety here. 

As the summer approaches, multifamily owners and landlords are facing a daunting reality: skyrocketing insurance premiums. Insurance renewals are resulting in significant cost increases for property owners across the country, causing concerns and uncertainties. This blog post dives into the reasons behind the surge in insurance costs and explores potential solutions for mitigating these expenses.

Key Points:

• Multifamily investors are experiencing a surge in insurance premiums, with rates increasing from 20% to as high as 500%.
• Weather disasters and climate-related risks are contributing factors, with areas prone to hurricanes, windstorms, and wildfires facing the highest premium increases.
• Replacement costs, driven by inflation, labor issues, and property value growth, are adding to the insurance burden.
• Multifamily leaders are exploring new ways to manage insurance costs, including shopping around for better deals, working with specialized brokers, managing risk, and self-insuring.
• Lender insurance requirements often pose a challenge, preventing owners from exploring alternative risk management strategies.
• Windstorm coverage, mandated by lenders in flood-prone areas, is a major pain point, with owners and insurance advisors advocating for a more data-driven approach to reduce costs.
• The National Multifamily Housing Council (NMHC) urges owners to negotiate flexibility in loan agreements to account for insurance market volatility.
• Government intervention and policy reform, such as tort reform and incentives for private insurers, may be necessary to address rising costs and reduce litigation.

Conclusion:

The surge in insurance costs is posing significant challenges for multifamily owners and landlords, with premium increases ranging from moderate to exorbitant. Understanding the factors behind these rising costs and exploring strategies to mitigate them is crucial for owners seeking financial stability. By shopping around, managing risk, and advocating for policy reform, multifamily leaders can navigate the complex landscape of insurance expenses and work towards sustainable solutions for their properties.

Developers in Texas and Florida Struggling with Insurance Increases up to 337%

Developing apartment properties in the current landscape is challenging, especially with a shrinking pool of lenders and persistently high materials, labor, and land costs. However, developers in Texas and Florida are encountering an additional obstacle that sets them apart from other regions: soaring insurance costs.

One such developer experiencing the impact of rising insurance expenses is Doug Faron, the managing partner at Shoreham Capital, a West Palm Beach-based developer. Over the past few months, Faron has witnessed his insurance costs surge from $600 to $800 per unit at the beginning of the year to a significant range of $1,200 to $3,500 per unit, an increase of 100-337%.

These sharp price increases cause delays in project timelines, influence site selection, and sometimes lead to deals falling through entirely. Shoreham Capital, currently working on a development pipeline comprising 800 units divided equally between traditional apartments and build-to-rent townhomes, faces challenges due to these escalating insurance costs.

The mounting expenses have made it increasingly harder for developers like Shoreham Capital to find projects that balance capital costs, construction expenses, and insurance expenditures. This confluence of factors has significantly hindered the development process, resulting in a reduced supply of housing units and exacerbating the existing shortage of available housing.

The situation calls for attention to the regions where insurance costs pose the most significant obstacles and an exploration of the underlying causes behind these cost escalations. Identifying potential solutions and fostering collaboration among stakeholders is crucial to overcoming these challenges and revitalizing housing development in Texas and Florida.

#RealEstateDevelopment #InsuranceCosts #HousingSupply #Challenges #Collaboration

Portland Mayor Wheeler Pledges to Scrap Inclusionary Zoning if It's Not Working

More than six years after its implementation, a work group of professionals is having a fresh look at the impact of the city's inclusionary zoning on apartment development in Portland. The mayor has pledged to tweak or dump the policy if the work group decides it's not working. The work group's recommendations are expected by the end of July.

KOIN-TV reports that Portland's Inclusionary Housing Law, a pivotal ordinance in an attempt to control the city's escalating housing costs, is being scrutinized. Initially introduced in 2016, the law mandates that developers incorporate affordable housing units into their new construction projects, primarily those containing 20 or more units. Under the current provisions of the law, 20% of units in such projects must adhere to affordability standards, which are then offset by incentives such as tax exemptions offered to developers.

However, the definition of 'affordable' in this context is tied to median incomes, meaning that 'affordable' one-bedroom units could still cost approximately $1,598 per month, or $1,918 for a two-bedroom unit. The law has drawn criticism from various quarters, with detractors arguing it is one of the factors impeding overall development in the city.

Critics within the development community, including Patrick Gilligan of Lincoln Property Company CRE, have expressed their concerns about the legislation. "Our inclusionary zoning, unfortunately, if the intentions were to provide more affordable housing, has been a failure," Gilligan said. "It's very hard to underwrite in regards to how you're going to finance a project to go forward."

The law and other barriers to development, including the city's slow permitting process, were highlighted during a January symposium of the commercial real estate group called "Revitalize Portland." Jerry Johnson of Johnson Economics noted that the law had the unintended consequence of making housing less affordable overall.

Meanwhile, the City of Portland is grappling with a shortage of 25,000 affordable housing units, even after the construction of about 1,859 units across 169 inclusionary housing projects since 2017.

In response to the mounting criticism, the Portland City Council has formed a work group to assess the effectiveness of the Inclusionary Housing Law. The group, which includes Samuel Diaz of 1000 Friends of Oregon, is looking into whether the balance between incentives offered to developers and the costs of developing affordable housing is appropriate. 

The recommendations from this workgroup are highly anticipated, and they are expected after July's meeting. They could potentially influence the future of housing development in Portland, as Mayor Wheeler is quoted by KOIN as saying, “I’ve pledged that if it needs to be tweaked, we’ll tweak it. If the conclusion is that it hasn’t worked, then we’ll scrap it.”

Voter's Remorse? Oregon Considers Backtracking on Drug Decriminalization

Less than three years after Oregon's Measure 110, which decriminalized hard drugs, was approved, Clackamas County commissioners are deliberating on its potential reversal. They are exploring an advisory vote for the May 2024 ballot as a means to assess public sentiment about this contentious issue. The debate is driven by a desire to understand whether voters, who initially supported the measure, are now experiencing 'buyer's remorse' as Commissioner Schrader suggests.

The discussion among the commissioners extends beyond just the voters, though. Other options are being considered, such as requesting a special legislative session from Governor Tina Kotek or redirecting funds toward behavioral health resource networks. Commissioner Ben West is urging local communities to step up in support of their neighborhoods, schools, parks, and law enforcement agencies, emphasizing that the current legislative direction has proven inadequate. 

In April 2023, DHM Research polled Oregon voters about repealing portions of Measure 110 to bring back criminal penalties for drug possession, while continuing to use cannabis taxes to fund drug treatment programs. Key findings from the survey include:

• More voters believe that the root cause of homelessness is drug addiction and mental health problems rather than a lack of access to affordable housing
• A majority of Oregon voters think that Measure 110 has been bad for Oregon
• More than 6 in 10 voters think that Measure 110 has made drug addiction, homelessness, and crime worse
• 63% of voters support bringing back criminal penalties for drug possession while continuing to use cannabis taxes to fund drug treatment programs
• Voters become more supportive of bringing back criminal penalties for drug possession when hearing about the state’s struggles standing up treatment programs

Read more at Clackamas County, OR commissioners consider overturning 'failed' Measure 110 (koin.com) and Oregon voters support bringing back criminal penalties for drug possession - DHM Research

Applications Open for Prosper Portland "Small Business Restoration" Grant Funds

In response to the closure of numerous small Portland businesses since 2020 due to the adverse impact of the COVID-19 pandemic and ongoing vandalism, the city's economic and urban development agency Prosper Portland has introduced the Small Business Stabilization Restore Grant. This program is set to provide up to $25,000 in grant funds to a selection of eligible businesses using money drawn from the American Rescue Plan Act.

To qualify, businesses must have reported an Annual Gross Revenue between $300,000 and $3 million in 2019, commenced operations before the pandemic was declared in March 2020, and currently employ at least three people. Applicant businesses should be located along designated commercial corridors of Portland, "82nd Avenue, East Portland (I.e., east of I-205), N/NE Portland, Central City, or Inner Westside Portland."

The grant money can cover certain operational costs like security measures, interior repairs resulting from vandalism or break-ins, and equipment replacements. However, costs such as graffiti removal or window repair are excluded as they're covered by Prosper Portland's existing Local Small Business Repair Grants.

Applications for the grant will be open from June 16th to June 26th, with the selected recipients to be notified on July 10th. Companies will be evaluated based on number of employees, annual gross revenues from 2019 to 2022, and if they're based in an "underserved and underrepresented" part of Portland. Businesses requesting over $10,000 must provide referrals from other programs and a list of received grants over the past year. Additional grant cycles are planned for late 2023 and early 2024.

Learn more and apply at ProsperPortland.us.

Pandemic Relief Fraud Alert: Lessons for Rental Owners in Oregon and Washington

In an unexpected turn of events, six people have been indicted on federal charges for making false claims for Seattle rental assistance funds. The group reportedly utilized falsified documents and pretended to be landlords to illegally apply for emergency rental assistance designed to stop tenant evictions, according to the U.S. Department of Justice.

The defendants allegedly stole over $2.7 million from the King County rental assistance program. This strategy was designed to take advantage of the emergency assistance for renters facing eviction. The accused also allegedly tried to defraud the unemployment systems in Washington, California, South Carolina, and Nevada.

The 26-count indictment was discussed by Nick Brown, U.S. Attorney for the Western District of Washington, who called the operation a “wide-ranging fraud scheme.” Phoenix resident Paradise Williams, 29, was held up as the plan’s mastermind. There were many arrests of the group members, including two in Phoenix, one in Houston, and three in Washington State.

Williams and her accomplices used the pandemic relief programs—intended to help small companies and others at risk of eviction—for their own gain. Brown noted that these dishonest actions took much-needed aid away from truly needy individuals.

Williams prepared fictitious paperwork and instructed her associates to pose as renters and landlords. According to reports, each dishonest landlord received sizeable fees totaling tens of thousands of dollars for each fictitious tenant application.

Williams was also accused of using at least 21 fake rental assistance applications to pose as the landlord to steal approximately $740,000 in emergency funding. It was discovered that neither Williams nor her companions were the tenants they had represented themselves as, nor did they own any rental properties.

Williams was not the only defendant the grand jury indicted.

• 32-year-old Seattle, Washington resident Rayvon Darnell Peterson
• 28-year-old Tia Janee Robinson, Fife, Washington
• 45-year-old Houston, Texas, resident Jahari Asad Cunningham
• 37-year-old D’arius Akim Jackson from Bonney Lake, Washington
• 32-year-old Pacific, Washington resident David Jesus Martinez

The defendants allegedly submitted at least 35 false applications for Economic Injury Disaster Loans (EIDL) between June 2020 and August 2021, requesting more than $3.7 million from the Small Business Administration (SBA). Due to the success of two of the applications, $30,000 in losses resulted. Williams allegedly tried to defraud the SBA’s Paycheck Protection Program (PPP) as well.

The money gained fraudulently is said to have been wasted on expensive holidays, trendy clothing, jewelry, and even plastic surgery. According to the indictment, if proven guilty of wire fraud, the culprits may receive up to 30 years in jail and a $1 million fine. A 20-year prison sentence may be imposed for money laundering.

The FBI is handling the matter with assistance from the Small Business Administration and the Office of the Inspector General. 

This incident serves as a sharp warning to all landlords to be on the lookout for such fraudulent operations in their homes or business dealings. We should all aim to have our tax dollars reach people who genuinely need it.