When a new company purchased the Prescott apartment complex in Portland’s Overlook neighborhood in 2021, tenant Kelsey Schreiner expected to get a rent increase. 

“The previous owner didn’t increase it often, so I figured we’d maybe get a five percent rent hike—something like that,” said Schreiner, who lives in a two-bedroom apartment with her four-year-old daughter. 

Schreiner’s apartment is one of 31 units in Prescott that are designated “affordable” under a city of Portland program that waives property tax for building owners who keep 20 percent of their residential units below market rent. That program, called the Multiple-Unit Limited Tax Exemption (MULTE), is what allowed Schreiner to move into Prescott in the first place in 2014. 

It’s also why she was surprised to learn that, a year after they purchased the property, her new landlords would be raising her rent 50 percent. According to a notice Schreiner received in the mail in August 2022 from the property owner, a Portland company called Green Cities, her $833 monthly rent was going to increase to $1,236 on November 1. 

“My first thought was, ‘What am I going to do?’” recalled Schreiner. “I couldn’t afford the increase. And I can’t afford rent elsewhere in Portland, so I knew I’d have to move.”

Schreiner runs a business from her apartment—she rents out three cars via the peer-to-peer car sharing company Turo—and said that moving would undermine that work. She’s also working towards an associate's degree in psychology, but doesn’t know if she can afford to return to college this fall if she’s forced to move or pay more in rent. A move would also mean pulling her daughter out of school, which she just began attending this year. 

“This means giving up my business, changing my entire life, changing my daughter’s life,” said Schreiner. “We’ve worked hard to make a life here. It doesn’t seem right.”

Yet, thanks to a variety of exemptions tucked into both local and state rent protection policies, Schreiner’s shocking rent increase is completely legal. Her story—and the stories of several other tenants living in affordable units at Prescott who were hit with equally high rent spikes—shows how, in a city that touts its numerous renter protections, vulnerable renters are still able to fall through the cracks. The result is the constant displacement of longtime Portlanders to other towns, states, or to the streets. Without making changes to local or state policy, this cycle will continue. 

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“This means giving up my business, changing my entire life, changing my daughter’s life. We’ve worked hard to make a life here. It doesn’t seem right.” — Kelsey Schreiner, Prescott tenant

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Schreiner’s rent increase skirts several tenant protection policies meant to keep low-income Portlanders in stable housing. First, it dodges the state’s rent control law, enacted in early 2019. That law, which sets an annual percentage cap for how high landlords may raise rents, prohibits landlords from raising rents more than 9.9 percent in 2022. Yet the law carves out an exemption for rental properties that are less than 15 years old. The Prescott was built at the corner of N Prescott St. and N Interstate Ave. in 2013.

Second, the city’s MULTE program only penalizes property owners enrolled in their program if their affordable units no longer meet the local affordability requirements. Which, even at a 50 percent increase, Schreiner’s apartment price tag continues to meet. That’s because “affordability” defined by the city is determined by the median family income, or MFI, of the entire Portland metropolitan region. In 2022, the metro area’s MFI for a family of four is $106,500. 

To meet the MULTE program’s standards, a Portland landlord must make 20 percent of their apartment’s units affordable to people making at least 60 percent of the region’s MFI. Based on the most recent calculations, a two-bedroom apartment at 60 percent MFI cannot cost more than $1,438 monthly. Because Schreiner’s previous landlord voluntarily kept rents low—at about 35 percent MFI—the $400 increase from Green Cities pushed Schreiner’s rent all the way up to the 60 percent MFI limit. (Property owners are required to subtract a certain amount from a rent increase to accommodate for utility costs, which is why Schreiner's increase is still around $200 below $1,438).

Basing housing costs on MFI rates has plagued affordable housing advocates for years. Many argue that rents at 60 percent of MFI are still too close to the region’s market rate rents to genuinely assist low-income tenants. 

“The truth is that our subsidies are too shallow across the board,” said Kim McCarty, director of the Community Alliance of Tenants (CAT), who was alarmed to hear of Schreiner’s 50 percent rent increase.

It costs the same to build market rate housing as it does affordable housing, meaning for-profit landlords need a strong incentive to offer lower rents. In the MULTE case, landlords are incentivized by not having to pay property tax for ten years. McCarty said the city, state, or federal government needs to propose better incentives to establish housing characterized as “deeply affordable housing,” a term for housing for tenants at 30 percent or below MFI.  

It doesn’t help that Portland’s MFI has sharply increased in recent years. According to US Census data, the Portland metro area—which stretches to include Hillsboro and Vancouver—saw a 30 percent increase in MFI in just the past five years. In 2018, the MFI for a family of four was $81,400. This price hike is in line with what other west coast cities observed in the same time frame. The Seattle area’s MFI jumped 30 percent in that five-year period, while the San Francisco Bay Area saw a 23 percent increase. 

“Unfortunately, regional median incomes increased dramatically prior to the pandemic, which led to cap increases, despite renters in Portland not seeing comparable increases in income,” wrote Portland Housing Bureau spokesperson Martha Calhoon in an email to the Mercury. Calhoon confirmed that Schreiner’s surging rent at Prescott does not appear to exceed the city’s 60 percent MFI rate.

“It is certainly possible that rent increases of this size still fall under the rent caps if the building owner hasn’t increased rents in the past three to five years,” she added.

At least four tenants at Prescott living in affordable units told the Mercury that the August notice from Green Cities was the first time they had ever received a rent increase at their apartment.

Calhoon pointed to one rental protection policy that Schreiner’s situation triggers: Portland’s rental relocation assistance program. Since 2018, landlords who raise their tenants’ annual rent 10 percent or more must offer to financially support tenants who are forced to move due to the rent increase. Depending on the size of the apartment, landlords must pay several thousand to help that tenant with moving costs caused by their decision to hike up the rent. In Schreiner’s case, Green Cities would cut her a $4,200 check if she chose to leave her two-bedroom apartment in Prescott. Schreiner has applied for relocation funds. 

“I’ve requested [relocation assistance] only because I have a limited amount of time to make a decision, and I want to have all options available,” Schreiner said. Per the relocation policy, renters only have 45 days to apply for relocation funds after receiving a rent notice. Schreiner said she’s prepared to return the funds if she finds a way to stay in her apartment, but is unsure what the future holds.

“It’s the unknown factor that stresses me out: I don’t know what’s supposed to happen next,” said Schreiner. “It’s exhausting, I’m losing sleep over this. But I don’t feel that we are supposed to leave here right now.”

Aside from disrupting her job, education, and her daughter’s school year, Schreiner worries about leaving behind her parents, who live in the same apartment building. Schreiner’s parents live in two separate affordable Prescott units and haven’t seen their rents increase in years. Not only is Schreiner not wanting to distance herself from them, she worries that they’ll soon be receiving a similarly unmanageable rent hike and won’t be able to pay. She said neither of her parents are “in a good financial situation.”

"I feel like, with the economy where it is in Portland right now, people who are in low-income programs are being overlooked," she said. "It makes me feel extremely vulnerable."

Schreiner is just one of several tenants in Prescott’s 31 affordable apartment units who's already been sent a rent increase notice that could upend their life. 

David Schneider, 72, moved into Prescott with his wife in 2013, and successfully applied for an affordable two bedroom unit in the building in 2016. The couple have been paying $1,000 in rent each month ever since. Both Schneider and his wife are retired and living off of monthly Social Security Income (SSI) payments. In August, they opened their mail to find a notice that their rent would be increasing nearly 30 percent to $1,361 in two months.

“The most shocking thing was the suddenness of it all—it doesn’t give you much time to react,” said Schneider. “And we’re not exactly in a position to do a lot to respond. We’re dependent on the whims of the apartment owners, and they know that.” 

Schneider has Parkinson’s Disease and his wife serves as his main caregiver. He doesn’t think they’ll be able to find a cheaper apartment in Portland that will meet their needs by the end of October. He said he and his wife will have to stretch their budgets to make the new rent work. 

“I think there are two types of affordability: Short-term and long-term,” he said. “Can I afford to stay here? Yeah I guess I could, technically. But that doesn't offer much certainty down the road. It changes our financial security in a year, two years in the future.”

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“We’re dependent on the whims of the apartment owners, and they know that.” — Dave Schneider, Prescott tenant

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There’s another wrinkle in the city’s MULTE program that could impact Prescott tenants in two years’ time. The ten-year tax incentive program is set to expire in June 2024, meaning all affordable units could jump back up to market rate prices overnight. When the MULTE program was created in 2012, the city didn’t include a strategy for making sure low-income tenants weren’t immediately displaced after the tax exemption period concluded. All that’s required is that landlords give the housing bureau 240 days notice before increasing rent after that period. 

In 2017, the city instituted a new affordable housing program called Inclusionary Housing, that folded in the MULTE’s tax breaks and required future MULTE programs to maintain affordability for up to 99 years. But those MULTE programs that began before 2017—like Prescott—are still subject to the ten year affordability expiration date. 

According to city records, at least eight apartment buildings enrolled in MULTE before 2017, meaning nearly 450 affordable apartment units could disappear in the next five years.

The Prescott’s landlords are certainly aware of this expiration date. Representatives from Green Cities were involved in establishing the city’s MULTE program. Before 2021, Green Cities went by the name Gerding Edlen Investment Management. Former Gerding Edlen Vice President Jill Sherman sat on a Portland Housing Bureau committee convened to fine-tune aspects of MULTE a decade ago, allowing her company to have a direct influence on how the program operated. 

Green Cities did not respond to the Mercury’s request for comment.

McCarty with CAT said that it’s understandable that for-profit investment companies like Green Cities and others are driven by squeezing tenants dry. 

“More and more, the housing market is being driven by investors and banks, not ‘mom and pop’ landlords,” said McCarty. “It’s not surprising that we will get into more situations where people will be priced out like this. We have to understand that housing should be considered more of a public right and less of an investment instrument.”

Schneider said he and his wife have always “kept our heads down and paid rent” without interacting much with their landlords, and have never had a problem. But this rent increase has sparked his frustration against Green Cities’ management.

“Maybe this is naive,” said Schneider. “But you’d think that just one time these guys would look down in the depths of their money-grubbing souls and say ‘Maybe it’s okay to make money in other areas but maybe we can just break even or lose a little money in this area.’ I know that’s not how capitalism works, but these are human beings’ lives.” 

But Portland may not need to dismantle capitalism to safeguard tenants from these kinds of rent hikes in the future.

The city doesn’t have to look further than the federal housing agency (and another wonky acronym) for inspiration. The Low-Income Housing Tax Credit (LIHTC) was established by the US Department of Housing and Urban Development (HUD) in 1986 to give private investors tax credits as an incentive to make equity investments in affordable rental housing. That equity then goes towards developing new and existing rental properties. To be eligible for those investments, property owners must ensure a certain percentage of their housing project is below MFI for 30 years. Although it offers a different form of incentive, it’s clear the MULTE program was inspired by LIHTC.

However, there are protections LIHTC upholds that MULTE skips. Under LIHTC, landlords must request permission from the state and local public housing agency if they want to increase a tenant’s rent by more than 5 percent. And after a building reaches its 30 year expiration, its property owner may not evict any tenants or raise rents for the following three years, allowing tenants time to plan for what’s next.

“We have to understand that housing should be considered more of a public right and less of an investment instrument.” —Kim McCarty, CAT director

There’s no reason the city of Portland can’t use similar tools to prevent displacement, according to Lisa Bates, an urban studies and planning professor at Portland State University. 

“The city can be proactive about this, and it's a mistake that they haven't been,” said Bates. 

Bates suggests that the city follow up when buildings that include affordable units are sold or purchased to ensure that the new owner doesn’t institute huge rent hikes or to connect with tenants when a rent increase hits to see if the city can provide support beyond relocation assistance. 

She also suggested that MULTE adopt the 5 percent rent increase cap instituted by LIHTC. 

“Why hasn’t that been considered?” Bates asked.

The city did, in fact, consider it—and chose to pass. In 2018, the Portland Housing Bureau instituted a new policy that would cap annual rent increases at 5 percent at any city-subsidized rental. A city document explaining the change reads: “The bureau is concerned with potential displacement and financial hardship resulting from possible rent increases.” The policy, however, explicitly notes that all housing included in the MULTE program is exempt from the new rule.

The city isn't discounting policy changes going forward. City Comissioner Dan Ryan, who oversees the housing bureau, said that his office is working to "identify immediate solutions" to help Prescott residents at risk of displacement. He did not clarify what those solutions could look like.

“Anything and everything is on the table when it comes to anti-displacement strategies," Ryan said, "and I am committed to keeping Portlanders housed while making housing providers whole."

Ryan said that the MULTE expirations, paired with waning COVID protections for tenants, and the state legislature’s decision in increase the annual rent control cap to 14.6 percent "a concerning storm" of events for Portland tenants.

It’s easy to see the particular scenario facing the Prescott low-income tenants as an unlucky confluence of unfortunate policy exemptions and bad timing. But, Bates said, it’s unwise to shrug this situation off as a fluke. 

“I don’t think this is infrequent,” said Bates. “What’s unusual is the previous owner not raising the rents at all over the years. But to see owners rush to price out tenants to increase overall profits…that’s business.”