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.