Portland, OR Landlords -- Please Take Note
Chico, CA · Member since 2016 · 12 posts · 2 votes
Portland, OR Landlords -- Please Take Note
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Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes
9y@Steve Moody the relocation subsidy would still apply for notices given before today. So if you gave a non-renewal of lease notice ("no-cause eviction") in December, the tenant is still eligible to receive the subsidy.
For any notices given before the ordinance was passed (a few hours ago), landlords have 30 days from now to either:
- Pay the fee
- Rescind the notice
- Amend the notice (e.g. increase rent to 9% instead of to 10%)
The fee does not apply to week-to-week tenancies, but it DOES apply in cases where a lease is simply not renewed.
In the case of a 10+% rent increase, the tenant has 14 days after a new notice is given (from today going forward) to inform the landlord, in writing, that they are moving. I believe they also have 14 days starting today even if the notice was previously given. If the tenant notifies the landlord within the 14 days, the landlord will be required to pay the relocation fee.
Based on what I read, it sounds like if the tenant notifies the landlord AFTER 14 days, the landlord would not be required to pay the fee.
The ordinance was amended today to exempt owners of a single rental unit (e.g. ADU in the back yard), and another amendment pushed the fee payout date to 45 days after the notice was given. This would help to address Steve's concerns about tenants not paying the last 3 months' rent. Says Chloe Eudaly.
The ordinance is tied to the "Housing State of Emergency," which is up for renewal/reelection this October. But this ordinance is not the end. Eudaly clearly wants rent control and will push for it as strongly as she possibly can. She will do this by pulling on heartstrings and making it impossible for the other commissioners to oppose her. Once you have a tenant crying at the mic because her kid has to move schools etc., it's over.
While I wholeheartedly agree that low-income tenants need protection, it's not the job of private landlords to provide a move-out subsidy. That's my issue with the ordinance. The burden should be shared by ALL members of our community--just as for food stamps--rather than scapegoating a small minority of individual housing providers.
If you want to subject yourself to the entire 6 hour session and hear the testimony and decisions, you can find the February 2nd video here: https://www.portlandoregon.gov/video/player/. My testimony is at 4:50:00. @Mike Nuss gave testimony towards the beginning. The reps from MFNW, whom Eudaly asked to speak to "represent the other side" before the public testimony, were abysmal IMHO.
Speaking of my opinion, many landlords did not present themselves that well today. Everyone's time was cut, yes, but there was a lot of talk about using no-cause evictions because they're easier and faster than for-cause evictions for bad tenants and don't go on the tenants' records. Some talked about how expensive it is to be a landlord, etc. Neither of these arguments carry any weight in this context when you compare it to what certain tenants have had to endure. The only type of appeal that would work is an equally disturbing emotional one, and landlords just don't have comparable stories to the ones we heard in advance of the public testimony. The other type of appeal that might have worked is if we could demonstrate that the ordinance is structurally invalid, in violation of some greater rule or law, the local version of unconstitutional. But in the end, it would have been a PR nightmare for any commissioner or the mayor to vote against the ordinance after hearing some of the terrible stories that some tenants told.
66 Replies
- Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes9y
1. Document bad tenants and always terminate with cause.
2. Don't raise rents more than 10% annually.
- Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes9y
looks like weekly rentals are going to be the new terms in Portland, along with keeping costs increases at 5 percent or less. (not 10, that would set off the owner having to pay the relocation assistance fee.
I would like to see what they put on owners for selling or realtor fee's next.
Not a plus in that market
- Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes9y
No, it's 5% max without 90 day notice. and over 10% a year serves as "effective eviction". So you can raise it up to 10% with effective notice.
I don't agree with it but it isn't currently overly constraining. We are still nowhere near as bad as California
- New to Real Estate · Portland, OR · Member since 2016 · 14 posts · 9 votes9y
This doesn't seem so bad...it actually seems very fair: tenants can't be priced out of a unit without consequences for the landlord, and even then, those consequences are negligible if the new rent you can secure makes up for it.
- Portland, OR · Member since 2016 · 20 posts · 4 votes9y
I had heard this was being floated but didn't know it was being pushed so aggressively. These relocation rpayments are concerning. I don't think its a bad idea on its face but the relocation assistance amounts are much higher than I think are necessary.
However, I'm not sure this is likely to pass since according to the Oregonian article it requires a unanimous vote. In addition this whole ordinance is only in effect until October 6, 2017 when it has to be extended. This isn't a permanent change.
- Investor · Portland, OR · Member since 2013 · 133 posts · 88 votes9y
Actually this is what is being voted on tomorrow:
Cannot raise rents above 10% for 12 months or the landlord will face relocation fees of up to $5,000 per unit. In addition any landlord who uses no cause eviction as a means to move a tenant out will also be subject to relocation fees. This is a rent freeze moratorium that city council you can bet will most certainly pass. The bill was introduced by two city council members so it only needs one more vote to pass. It's going to pass. Once this happens the city will be sued by a landlord coalition that will argue the fact that they are violating the Oregon state statute that prohibits any sort of limit on the amount of rent you can increase.
BUT this isn't the worst part. The state government is going to into their 2017 legislature meetings starting next week through July. There are several "rent control" type policies up for vote but the two big ones are state wide rent control limiting the increase in rents to no more than 5% each year and effectively removing all no-cause evictions. This would have a far greater impact as it would supersede the Portland rent freeze.
As of today, all rent increases require a 90 day notice in the state of Oregon. Additionally, if a tenant goes from a lease to a month to month, you cannot raise their rent for 12 months. The city of Portland also recently passed inclusionary zoning mandates that require any multifamily development that has over 20 units include 20% of affordable housing component.
This is just the beginning of the changing market in Portland and it's coming quickly..
- Portland, OR · Member since 2008 · 123 posts · 73 votes9y
If I had rentals in Portland right now I'd send all my tenants their 90-day notice before today's vote. There's some question about whether or not 90-day notices before the vote will be exempt. Evict all tenants, change lease agreement to say that they must leave after the lease ends or re-up to another lease (no more month-to-month in Portland). Raise all rents to market if they aren't there already and start over with a required deposit of first, last, and max moving away fee.
This part is troubling: "Within 14 days after a Tenant receives the Termination Notice, a Landlord shall pay to the Tenant..."
That means you have to pay them 76 days before they're required to leave. How does a landlord go about getting that money back when the tenant doesn't leave and they have to do a just-cause eviction? What will happen is a landlord will give notice, 14 days later pay the tenant $4500, tenant stops paying rent, landlord has to got to court to evict, landlord is out $4500, 3+ months rent, and whatever it cost to have an attorney do the eviction. No thanks, I'll look outside the city
- Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes9y
@Steve Moody the relocation subsidy would still apply for notices given before today. So if you gave a non-renewal of lease notice ("no-cause eviction") in December, the tenant is still eligible to receive the subsidy.
For any notices given before the ordinance was passed (a few hours ago), landlords have 30 days from now to either:
- Pay the fee
- Rescind the notice
- Amend the notice (e.g. increase rent to 9% instead of to 10%)
The fee does not apply to week-to-week tenancies, but it DOES apply in cases where a lease is simply not renewed.
In the case of a 10+% rent increase, the tenant has 14 days after a new notice is given (from today going forward) to inform the landlord, in writing, that they are moving. I believe they also have 14 days starting today even if the notice was previously given. If the tenant notifies the landlord within the 14 days, the landlord will be required to pay the relocation fee.
Based on what I read, it sounds like if the tenant notifies the landlord AFTER 14 days, the landlord would not be required to pay the fee.
The ordinance was amended today to exempt owners of a single rental unit (e.g. ADU in the back yard), and another amendment pushed the fee payout date to 45 days after the notice was given. This would help to address Steve's concerns about tenants not paying the last 3 months' rent. Says Chloe Eudaly.
The ordinance is tied to the "Housing State of Emergency," which is up for renewal/reelection this October. But this ordinance is not the end. Eudaly clearly wants rent control and will push for it as strongly as she possibly can. She will do this by pulling on heartstrings and making it impossible for the other commissioners to oppose her. Once you have a tenant crying at the mic because her kid has to move schools etc., it's over.
While I wholeheartedly agree that low-income tenants need protection, it's not the job of private landlords to provide a move-out subsidy. That's my issue with the ordinance. The burden should be shared by ALL members of our community--just as for food stamps--rather than scapegoating a small minority of individual housing providers.
If you want to subject yourself to the entire 6 hour session and hear the testimony and decisions, you can find the February 2nd video here: https://www.portlandoregon.gov/video/player/. My testimony is at 4:50:00. @Mike Nuss gave testimony towards the beginning. The reps from MFNW, whom Eudaly asked to speak to "represent the other side" before the public testimony, were abysmal IMHO.
Speaking of my opinion, many landlords did not present themselves that well today. Everyone's time was cut, yes, but there was a lot of talk about using no-cause evictions because they're easier and faster than for-cause evictions for bad tenants and don't go on the tenants' records. Some talked about how expensive it is to be a landlord, etc. Neither of these arguments carry any weight in this context when you compare it to what certain tenants have had to endure. The only type of appeal that would work is an equally disturbing emotional one, and landlords just don't have comparable stories to the ones we heard in advance of the public testimony. The other type of appeal that might have worked is if we could demonstrate that the ordinance is structurally invalid, in violation of some greater rule or law, the local version of unconstitutional. But in the end, it would have been a PR nightmare for any commissioner or the mayor to vote against the ordinance after hearing some of the terrible stories that some tenants told.
- Real Estate Broker · Portland, OR · Member since 2016 · 97 posts · 90 votes9yDani Z. Thanks for laying that all out. I am in the process of buying a duplex where the seller has a month to month tenant and one year lease tenant. As someone using an FHA loan, competing against cash buyers or non occupied conventional loans, this will make it even harder to convince a seller to pick me. Luckily I'm in contract already and informed the seller in advance of these potential changes. The seller said they didn't want to post 90 day notice yet, which I guess wouldn't matter since it's retroactive to pending posts. I'm curious, if I'm living in one side of the duplex, managing the other unit, does that make me exempt from this since it's only 1 unit (similar to ADU)? I need to eventually raise rents to market next February on that other unit.
- Portland, OR · Member since 2008 · 123 posts · 73 votes9y
@Account Closed's question, do you know if the "one unit" exemption rule is for a single tax unit, or a single door (e.g. if someone owns a SFH they're in the clear, but what if they own one duplex?)
Sadly I've recently found a few duplexes in Portland that have numbers that might have worked, but with this I'm going to have to pull back and stop looking in the city, or at least add $375/mo in expenses so that I can cover the fees (likely to put me way into the negatives on any duplex in PDX).
I wonder if Chloe Eudaly doesn't understand how supply and demand works, or if this an attempt to force rents to increase even more, making the argument for rent control even stronger.
EDIT: I just watched your part of the video Dani, very nice job articulating the issues. Too bad Eudaly wasn't listening at all. Good job not giving her the bird for her "address me by my title" power trip as well!
- Portland, OR · Member since 2016 · 20 posts · 4 votes9y
Thanks for the writeup @Account Closed
I didn't expect this to sail through like it did. Commissioner Eudaly was well prepared and the opposition was not. I think the other commissioners are wary about getting into a fight with this new tenants rights group.
This ordinance has to be renewed in October but I agree with Dani that the goal is rent control. - Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes9y
Oh my, "All landlords are multimillionaires!" I do wonder though, would the city/county provide the same service at the expense of their general fund, to people priced out of their homes due to inflated assessed values and the resulting taxes?
Even the person who wrote an article in The Portland Mercury was shocked at the title remark by Eudaly.
I am interested though, what is everyone's plan in dealing with this going forward?
- Flipper · Portland, OR · Member since 2015 · 46 posts · 19 votes9y
Nicely Done @Account Closed Sorry I couldn't stay longer. Though glad to leave. In no uncertain terms Chloe is going after rent control. This action last night was just the first step. I assume in a matter of weeks we'll see the campaign to force rent control to ramp up.
And Chloe wanting to be addressed by her title. No thank you. Anyone hell bent on being addressed by title does not have the right focus.
- 9yMike NussPro MemberReal Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 327 votes
This is what I wrote last night and forgot to hit post. .....It got much more confusing today for people that have already initiated notices. The ordinace works retrospectively to notices that are currently in an active notice state. The 14 day rule you cited, was amended to 45 days. So, landlords that gave notice 46 days ago really have no clue what type of legal state they're in right now. Many property managers are worried right now (cause they know they're in limbo) and many more landlords that have no clue, very well could be out of compliance right now.
@Steve Moody and @Melissa Dorman the one unit exemption is just that, unit, not tax lot. Melissa, you will be exempt for your purchase.
There was also an amendment for people moving back into their homes. Although, that got so discussed I"m not sure what the final outcome was.
There was only once chance for a property owner "win" yesterday and that happened. A Rule making committee will be created and the housing bureau will be tasked with creating a "stakeholders" committee to inform that rule making process. That's not great, but at least there is a legitimate process to possibly negotiate our way through this.
Chloe used yesterday to run for her next campaign. She has the tenants backing and she has the support of the council. However, I do believe Commissioner Fish is looking for perspective. I believe Mayor Wheeler widened his perspective a bit yesterday. Amanda Fritz really wanted to add amendments, but had no clue how to do that.
Bottom line is our city councilors are not educated on housing. If property owners want to address this issue we have to get engaged. Otherwise, Chloe will be running her policy through Portland. Eudaly and Tina Kotek will then take the traction from Portland and leverage the State of Oregon. Big time changes are coming down the pipeline.
All in all though, I see this is a positive. There will be more buying opportunities, which is a good thing.
There's my quick rant/recap. I hope it helps.
- Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes9y
@Mike Nuss do you have anything written about how that 45 day amendment would work, or can point to where in the video footage they explained what you said? My understanding is that landlords have 45 days to pay, but that tenants must still inform the landlord that they are moving within 14 days of receiving a 10%+ increase (or within the implementation of the law, whichever is later).
Also, based on the testimony I heard, it seemed like the fee would apply to any notices currently in the pipeline, regardless of when they were given. So if a tenant hasn't actually moved yet, but were given the notice 4 months ago, it would apply. This is why they voted on and implemented the ordinance on the same day and also why it's retroactive--to prevent a flurry of notices before the policy became law.
From the original ordinance at https://www.portlandoregon.gov/eudaly/article/625340
- Investor · Portland, OR · Member since 2015 · 18 posts · 16 votes9y
Thanks for taking the time to testify @Mike Nuss and @Account Closed We sent in a written statement that I'm certain will receive due consideration.
If anyone watched to end of the hearing you may have noticed the rather nonchalant statement by a staffer confirming that they think that non-renewal of a fixed-term lease is also "no-cause eviction". I'm not a lawyer, but I suspect experts in real estate contract law may challenge the law from that angle. It effectively means a fixed term is in practice a lease in perpetuity until the tenant decides to terminate or the landlord pays a penalty.
My trend predictions for how the relocation fees will affect the Portland rental market. (Spoiler alert: It doesn't result in an increase of affordable rental housing.):
- Otherwise lenient landlords will become hardasses on enforcing every provision of a lease to document causes to evict. Coupled with more stringent screening standards that will result from this as well, things will get much harder for tenants than with no cause.
- Lower investor demand for deferred maintenance and below-market-rate multifamily properties with tenants in place. And subsequent deterioration of that stock. The BRRR strategy doesn't work nearly as well with an additional $2300-$4500 cost/unit thrown in.
- Conversely, higher demand and competition for vacant multifamilies. This, in turn will lead to selling landlords issuing no-cause notices to tenants prior to listing and building the cost of the relocation fees into the asking price. (Again, ultimately harming tenants.)
- The number of single family rentals will decrease as rental homes are sold to owner-occupants in this hot market. (With relocation fees worked into asking price.)
- The 1031 exchanges for #3 and 4 above will occur outside of Portland.
- The pace of tenant turnover will slow along as tenants stick around longer hoping to get a fat check before they move on. This could be a good thing for landlords as long as a tenants don't become troublesome in hopes of provoking a no-cause while staying under the threshold of for-cause eviction.
- This will not sunset with the ending of the declared housing emergency (in 10/17 or otherwise). The cash penalties for choosing to not continue renting to someone will become a permanent rent control measure.
- And lastly local Portland landlords will invest elsewhere--at least until the effects of this brilliant plan are absorbed into the market. That's our plan, anyway.
Mike, I'm curious how you see this will offer buying opportunities. What are you seeing differently?
- 9yMike NussPro MemberReal Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 327 votes
@Account Closed three things. 1) all of your points are valid points. There are plenty of economic factors we can discuss. What is 100% apparent from yesterday is this. It doesn't matter. Many of our "opinions" are simply taken as threats. Tenants rights have never been stronger, their representation has never been more emboldened and they're ready for a fight.
Tenants rights activists own Commissioner Eudaly (can't forget commissioner) and she clearly told everyone, multiple times, that rent control ban will be gone. She is 100% focused on this one issue at hand. Wheeler knows it and he gave her the floor yesterday because of it. The commissioners have to stand behind her right now because of the current housing market conditions. Portland is in serious growth pain and the political waters are heavily weighted on the tenant side of the story.
The proponents have all of the emotional fire power. The statistics are on their side and the announcement of Normandy Park and Titan Terrace in the media was perfectly timed. The ordinance passed before it went to vote. The only thing that mattered for owners was how many amendments would get included.
2) It is also 100% apparent that our City Council has very little knowledge about the rules and regulations of housing, and hence, the housing market as a whole. All they can do is talk about inclusionary zoning and design review, the hot button issues on the supply side (y the way, those supply side issues are a joke of a conversation that's not the solution to the problem. But we'll talk about that on another day). They had item 106 moved to a mayoral elective yesterday to address the design review issue. They're puppets in this manner. They asked multiple questions that were basic landlord tenant law and there were multiple instances when attorneys came to answer questions. At one point, an attorney giving public testimony, came back up to give a legal answer, I didn't totally understand her answer, but I think it could've been actually wrong.
Our leaders need education in this matter. They apparently are not getting it from anywhere. I had a conversation with Commissioner Fish and I think he gets it, but we'll see.
3) I believe that there are multiple portfolio owners who will make the decision to move their assets somewhere else. Since you can't move housing, that means they'll sell. Think of the owners from the 70's - 90's. How many units do they own? How many don't like liberal tenant laws? How many of them need to own Portland real estate anymore? We could start putting projections into some stats to come up with some numbers, but this is a great time to sell and if you're concerned about the future tenant laws, what's keeping you from selling? I got an email from one such property owner last night. He's out of town, actively looking at real estate. He owns close to 200 units.
I definitely see this as an opportunity for people that want to buy Portland real estate. I've been saying it at our meetings for months, I am not threatened by rent control at all.
I repeat, rent control is not scary.
I compare this to the HUD laws that popped up in the 1980's and my mentor's mentor, Abie Label's mindset at that time. "We will work harder than everyone else, we will know the code better than HUD knows the code. When someone needs to know about HUD. They call Abie Label". That's not a perfect quote, but I hear it in my head a lot lately.
We are living through what will be known as a defining time in Portland's history, right along with the creation of water front park. This isn't a time to sit on the sidelines. We should be more excited than ever to talk with property owners.
- Investor · Portland, OR · Member since 2015 · 18 posts · 16 votes9y
Ok, @Mike Nuss, I'll stop poring over maps of Beaverton for the moment.
I wondered about that LLC segmentation tactic as well but deleted it from my list of predictions because I didn't want to give Her Commisionerness any freebies when she googles her name tonight and reads this discussion.
I personally think the retroactive penalties will have a hard time holding up in court. (Again I'm no lawyer but it seems a bit ex post facto-ish) Even with their fig leaf (?), olive branch (?), red herring (?) to allow landlords to rescind notices already out there.
Next week's meeting should be a humdinger. Looking forward to it.
- Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes9y
I wondered what happens if 2 people co-own a property and one person has more than one rental and another one just has the one rental. Could you say, "for the purposes of this notice, the owner is Joe One-Unit Blow?" Is Joe One-Unit subject to the fee because his partner owns more than one?
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Brian Knier I have no dog in the hunt as I own no rental property in Oregon ( just sold my MHP) and your thoughts came to my mind.. Gresham Beaverton every where but Portland are going to be strong plays.. as long as they don't follow suit.
@Mike Nuss what if you simply do not pay the folks .. how will they enforce this law.
is it a civil matter ( small claims) or can the city line like a code violation.
I bet tomorrow you will see 1000 landlords in pioneer square demonstrating breaking windows and doing all manner of dectructive behavior.. ( Oh wait maybe that was the other clowns)
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed comments when he is talking to the city commissioners who are clueless about real estate and economics.
I suspect most landlords won't fight this and again as is your basic comments that NO one is going in front of the judge except in rare occasions....
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed land lords and tenants go to eviction court every day.. this is not a new concept ..
its part of landlording.. this is just a very draconian law PDX passed.. as the city is run by a bunch of liberal non business speaking people... and of course they are full of themselves.. they think PDX is the cats meow and everyone wants to live here so we can be as over bearing socialistic as we want it does not matter because we are PDX>
- Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes9y
@Account Closed Stop while you're behind. If a tenant did win a claim in court the landlord would simply pay the claim.
No lien against the property would get attached unless all other options were exhausted, and that would make the least amount of sense for both partys.
- Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes9y
Jay, and this is the problem with the San Franciscanization of Portland. Once the creators of the big government nanny state make conducting business in their own city prohibitive they leave for greener pastures and take their destructive politics with them. Ask Austin and Denver how they like it.
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