Portland’s divisive rental relocation ordinance rides on—until October, at least.
In a decision today, an Oregon tax judge ruled against landlords who’d claimed the new policy violates Oregon law and the state constitution. In a seven page decision, Judge Henry Breithaupt found that wasn’t the case, agreeing with the city on four separate challenges to the law.
The decision marks a bit of good news for tenant advocates, who just saw their best hopes for new statewide protections dashed to pieces in the Oregon Senate.
To back up: The relocation law passed by City Council in February requires landlords to pay between $2,900 to $4,500 in relocation fees to tenants when they’ve a) raised rents by 10 percent or more, or b) issued a no-cause eviction notice.
The law is despised by the landlord lobby. Days after it passed, two landlords, Michael Feves and Phillip Owen—represented by high-profile lawyer John DiLorenzo—challenged the ordinance in court. Their suit argued that the ordinance amounts to rent control (which is preempted by state laws), illegally curbs no-cause evictions (which are allowed), hampers existing contracts, and unlawfully allows tenants to sue when landlords don’t pay up. Here’s Breithaupt’s decision dismantling those claims:
Owen Opinion (PDF)
Owen Opinion (Text)
Of all the arguments landlords were making, the claim that relocation payments violated the state preemption on rent control seemed to hold the most promise for landlords. But Breithaupt concluded that the law didn’t explicitly prevent landlords from raising rents.
“It is difficult to imagine that the legislature intended something other than proscribing restrictions that would affect all sellers in the market—landlords,” the judge wrote. Later he writes: “The Ordinance—while it applies throughout the city—will apply to any individual landlord only if conditions or contingencies are also satisfied as to that individual landlord. The landlord must raise rents by more than a specified amount in a specified period.”
City officials cheered the ruling. Jamey Duhamel, the policy director for Commissioner Chloe Eudaly who was instrumental in bringing the law forward, issued a statement saying: “At a time when the legislature has so blatantly turned its backs on tenants in Oregon, it is deeply gratifying to know that the only tool available to us has been upheld in the courts. Relocation assistance helps stabilize families and we intend to make sure as many tenants as possible know about it.”
In a letter to officials, Deputy City Attorney Dennis Vannier boasted that Breithaupt “just comprehensively rejected John DiLorenzo’s challenge to the City’s relocation-assistance ordinance enacted earlier this year, and conclusively ruled for the City on every claim…”
The relocation ordinance amounts to the strongest renter protection the city has—especially now that the legislature killed a proposal to open the door for rent control policies in the state. But the law is also maybe finite. It will die when the Portland City Council allows the city’s housing state of emergency declaration to lapse. [Nope. I’m wrong. It’s going to be reconsidered when the city’s housing state of emergency declaration is taken up in October, but isn’t explicitly tied to it.]
Duhamel tells the Mercury that today’s ruling provides firm footing for the city to rejigger the policy, though she won’t say whether her office will argue to make it even stronger.
“There’s going to be a whole lot of push back, from the landlord lobby in particular,” she says. “I think it would be wise as a council to take this fairly slowly. We know it’s legal now. We know it’s been working for a while. What I’d like to see us do is collect some data over the next two months.”
Duhamel says the City Attorney’s Office has suggested it’s unlikely DiLorenzo and his clients will appeal the matter because the ruling was “really solid in our favor.”
But DiLorenzo says that’s not exactly true.
“We appreciate the time and effort which the court has put into this case but must respectfully disagree with the rationale expressed in the opinion,” the attorney wrote in a statement. “Whether we appeal will be dependent, in part, upon whether the City intends to renew the ordinance when it expires on its own accord.”
Duhamel plainly doesn’t intend for the expiration to go forward, though council will have the ultimate say.
As it happens the council next Thursday will consider tweaks to the ordinance proposed by an advisory body. Those tweaks would give qualifying tenants 45 days to indicate they want to receive relocation payment (and move) following notice of a rent increase, as opposed to two weeks. And they would give tenants six months from the time their rent is hiked to either decide to stay in place—in which case they’d be subject to higher rents and have to pay the relocation money back—or move.
Landlord posts that rent control will turn Portland into San Francisco in 5, 4, 3, …
Horrible decision.
If you drive over a particular speed, you get fined a particular amount. Apparently this judge wouldn’t consider that a speed limit, since he doesn’t consider a fine for raising the rent past a certain percentage to be a “rent control.”
And yeah, albert, it could be San Francisco, or NYC, or Los Angeles, or Santa Monica, or everywhere else rents are astronomical thanks to rent control provisions. Economists know this with the same consensus as climate scientists agree on climate change.
The correct outcome. John DiLorenzo loses yet again.
albert an Euphonius must be renters. Greedy cash grab by them at the expense of everyone else, including future renters who will now see even higher prices than ever before.
Called it!
Also, rents in SF, etc, are out of control because of supply and demand, not rent control.
Wow Albert, you “called it.” that’s because it’s a completely reasoned argument to suggest that something historically problematic in other cities will repeat itself in our city.
Be careful what you wish for. All this will do with my few rentals is automatically trigger a 9.99% annual increase to offset a future problem. I normally go a couple years without raising rents at all. And it’ll stop more development in Portland. I already purchased a Plex in Vancouver because Portland is getting onerous. The tenants will always pay more when demand outpaces supply.
Ironically, you don’t realize that RC also manipulates the market to further restrict supply,while every other renter subsidizes it. But whatever, I already own so you’ll find out soon enough.
If we’re making easy calls to pretend we’re clever, albert will soon be priced out of Portland, and won’t realize the irony. Calling it now.
this will also probably make small landlords (who own a few houses or whatever) get out of the business. A lot of those new apartments might become condos. The market always wins. People will take their investments elsewhere. It’s not hard to figure out unless you are on city council, it seems.
I have been and am a landlord in another city (because we moved from there and it was easier to keep something than sell quickly) — and I would never ever think to become a landlord in Portland. it just wouldn’t be worth it. Which means I will invest my money elsewhere. How does that help renters in portland?
I feel for renters, my kids can barely afford to live here in Portland. The market is crazy. I was once a renter. But I took a risk, a big risk and bought a place, stretching funds, fixing it up, spending spare cash and weekends on the house. The market was good, I sold it and bought more. I am one of those who is keeping the Portland bungalows alive. I worked p/t and never had much savings except for an extra house or two that I rented below market. I still put my extra cash and labor into them. They are investments. I consider myself a good landlord, yet I am vilified along with rental management companies and slum developers. Not only do I need to keep my house in shape, I now have to worry about a relocation fee that does not have any flexibility about situations. It just pisses me off . When I gave a tenant 90 days notice that we would be moving into the house when the lease was up, he said he was thinking of moving to Costa Rica. That relocation fee will go far in Central America….. Not a scenario in the new ordinance. I guess its time to get out of the business. So long small bungalows, hello more awful apartments!
Yes, librarian, the ordinance that was pushed through by Eudaly and co. without any input or commentary whatsoever from the landlord side (her aides were openly hostile whenever a landlord tried to contact them with input), not to mention simply ignoring decades of established economic and urban/housing policy research, has horrible and unintended consequences for our local Portland market. Who on earth could have seen this coming, except for everyone besides Eudaly, Margot Black, and the selfish group of activist tenants who simply want to lock in their own personal gravy train at the expense of everyone else.