Portland referendum to stabilize rents: Fair or foul?

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PORTLAND — Will local Question 1, the Fair Rent ordinance stabilize city neighborhoods or destroy them?

“Rent stabilization protects working and middle-class housing, with housing being a crucial resource in the city,” Jack O’Brien of Fair Rent Portland said Monday.

O’Brien, a professor of statistics at Bowdoin College, is leading the grassroots effort to pass the measure that would cap some rent increases throughout the city.

But Brit Vitalius, president of the Southern Maine Landlord Association, said the proposed ordinance is bad policy from top to bottom.

“To be clear, we are not saying there are not housing challenges for people in Portland,” Vitalius said Oct. 6. “We are saying this isn’t the solution. We are saying we need more housing.”

If passed, the Fair Rent ordinance would last until Jan. 1, 2025, and limit annual rent increases in specific housing units to the rate of increase in the regional measure of the U.S. Department of Labor’s Consumer Price Index.

Landlords would be allowed to increase rents if the city property tax increases by dividing the amount of the increase for a building by the number of affected units it contains.

Exempted from the ordinance are public-housing units, dormitories, “in-law” units attached to private homes, and owner-occupied buildings with two or three rental units. Buildings constructed after Jan. 1, 2018, are also exempt from the ordinance, as are landlords who own no more than five covered units.

Additional rent increases to cover costs of uninsured repairs, building improvements or “increased housing service costs,” could be allowed annually after a review by a seven-member Rent Board the ordinance establishes.

Overall, the ordinance caps annual rental increases at 10 percent and allows landlords to “bank” increases not made one year to be applied in future years. In applicable units, landlords must notify tenants of potential rent increases 75 days in advance, and rents can only be increased once a year.

The ordinance requires landlords to register covered units with the city, including showing proof of rent charged as of Nov. 1; those rents become the base for future increases. By Sept. 1 of each year, the city Housing Safety Office would be required to set “the Allowable Increase Percentage and the Tax Rate Rent Adjustment for the following calendar year.”

The rent board would hear appeals on rental increases and evictions, although it is not empowered to overturn eviction rulings made by the courts. It could fine landlords if it is determined the eviction had insufficient notice or impermissible reasons. 

Gentrification is at the heart of the ordinance, O’Brien and Nick Pellenz of Fair Rent Portland said.

They said their research shows rents in Portland have increased 40-50 percent over the last five years. With 62 percent of the city renting, O’Brien said the proposed ordinance could cover 40 percent or more of rental units.

The ordinance went through several drafts before it was submitted as a citizen’s initiative. If passed, it could not be altered by the City Council for five years.

“We drafted something we thought was quite suitable for the city, to moderate rent increases and create some more stability,” O’Brien said.

With measures in West Hollywood and Berkeley, California, as well as Takoma Park, Maryland, in mind as models, O’Brien said it’s expected the rental board will be flexible and considerate of variables such as improvements to housing units, and not as punitive as it has been painted by opponents.

Provisions governing evictions are mirrored in state law, he said, and landlords are not required to automatically renew leases with their current tenants, O’Brien said.

Vitalius, who has owned buildings in Portland for more than a decade and compiles his own data on rents, said the Fair Rent Portland data overstates the increases in the last half decade. More to the point, he said, the measure is about rent control because it sets limits that also apply after an apartment changes tenants.

Say No to Rent Control, organized to oppose Question 1, raised $146,000 in cash and received $26,000 from in-kind contributions by Sept. 30. Vitalius said support from landlords facing an increase of $30 per unit in registration fees in the ordinance has been a big reason, but the group is also emphasizing the eviction provisions and powers of the rent board as reasons to vote against the referendum.

Vitalius said landlords will not be able to end tenancies when leases expire, although doing so now is often the easier and more cost-effective way of getting rid of problem tenants.

“Try and prove in court the tenant is making too much noise, smoking or dealing drugs; it can’t be done,” he said.

While the intent of Question 1 is to allow landlords to make profits from their buildings, Vitalius said the measure would be a disincentive for landlords to spend on improvements because the return on the investment will be meager.

“The best I could do is 10 percent, but I would have to invest $15,000 to 20,000,” he said.

David Harry can be reached at 781-3661 ext. 110 or dharry@theforecaster.net. Follow him on Twitter: @DavidHarry8.

Brit Vitalius of the Southern Maine Landlord Association said Question 1 in Portland is a rent control measure with other provisions that will hurt housing in the city.Question 1 is needed in Portland to stabilize housing and fight gentrification, Nick Pellenz and Jack O’Brien of Fair Rent Portland said.

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Portland City Hall reporter for The Forecaster. Baltimore native, lived in Maine since 1989. A journalist since 2005, covering much of Cumberland and York counties. I joined The Forecaster in 2012.
  • Chew H Bird

    The real question is whether or not it is “right” for a local government to determine what a private business owner can charge? Would a “coffee control” regulation limit what coffee shops can charge and would it be right to implement “coffee control”? How about used car dealerships? How about grocery stores?

    Problems with rent prices being too high for many residents ultimately stem from high costs associated with taxation, regulations, fees, interest rates, and maintenance costs as municipalities attempt to wring every last dollar out of taxpayers. Sure there are supply and demand economics (ever price a summer rental on Cape Cod)? However, Portland has a year round problem exasperated by employer overhead burdens, high costs of living in general, and the matrix of traditional business, service businesses, and profitable white collar professions. The bottom line with rent control is it can really harm everyone, from those who need help to the landlords who become limited in their ability to maintain and upgrade their properties.

    • REdacted

      If only business could do whatever it wanted, everything would work out great. I suppose Martin Shkreli was just a good businessman following the natural order of the free market. The reality is that government at all levels impacts the cost of products on the market because it is essential to curb the impulses of business from making essential goods and services untenable for huge swaths of the public. Food, electricity, ect are all subsidized or price regulated by government because we have chosen an economic system that needs to be balanced in order to ensure everybody in our society has even a chance of a reasonable standard of living. Why should shelter from the elements be any different? Why is John’s right to profit greater than Dave’s right to fair housing? The evidence that unregulated markets don’t self regulate is all around us. I don’t think you can explain a 40% increase in rental costs over a 6 year period with taxes and operating costs alone..

      • Chew H Bird

        The difference with rent control is we all need public utilities and access to food and water regardless of where we reside. Where we choose to live is a different matter as we could live in Houlton, Palm Springs, Montana, Westbrook, or wherever we want and the options in each community are different.

        If I were to work in Portland I could easily choose to live outside of town. If I choose to pay a premium for my living space I could live in the city, or Falmouth (for example). If I have a tighter budget I would live in Standish or Buxton, or Gray (for example). The ability to live is a “need”. Where we live is a “choice” and choices should not be be considered the responsibility of the city to regulate.

        • REdacted

          Here we arrive at the point of a rent stabilization referendum. If you can’t afford to live where you want to live, you don’t have a choice but to go somewhere else. If we aren’t going to fix the other elements of our economic circumstances that make people unable to afford housing, such as fair incomes and fair price/access to goods and services, then we will continue to need to come up with ways to address the problem through urban housing policy. Urban communities are healthiest and most vibrant when they aren’t extremely stratified between the very wealthy and those struggling to afford to stay.

          • Chew H Bird

            If we do not correct the underlying economic dysfunction, all we are doing is adding layers of complexity to urban management. We need to simplify rather than add additional complexity to our economic condition. Rent control is putting a band aid on a leaking artery…

          • REdacted

            Well, I am glad we agree. I just happen to think a band-aid might be better then bleeding all over the place while some people get fat off the expense of others.