Brown signs rent control bill

Gov. Kate Brown holds up signed copies of the rent control bill. Alton Fagan Mau-Ghan, Sen. Shemia Fagan's 6-year-old son, flanks her to the right.

SALEM - Oregon on Thursday enacted the nation’s farthest-reaching law limiting rent increases and restricting no-fault evictions, providing immediate protection to roughly 1 million renters across the state.

Senate Bill 608, took effect with Gov. Kate Brown’s signature just after noon Thursday, making Oregon the only state in the nation with statewide rent control.

“This is a groundbreaking piece of legislation as we are the first state in the nation to enact this level of protection for our renters,” Brown said Thursday. “The bill is a critical tool for stabilizing the rental market throughout the state of Oregon. It will provide immediate relief to Oregonians struggling to keep up with rising rents in a tight rental market. But it doesn’t work on its own. It’s going to take much more work to ensure every Oregonian … has access to housing choices that will ensure that they and their families can thrive.”

A key component of the new law is that landlords in most circumstances can’t raise rents by more than 7 percent on top of inflationary increase tied to the Consumer Price Index.

That’s a bigger boost than some tenant advocates had wanted.

“Seven percent, plus CPI, could be too expensive for some tenants, but for a long time, some landlords have been giving 20 percent, 40 percent, 100 percent increases, so the sooner we can take those off the table, the more predictability and stability tenants have,” said Danny Moran, spokesman for House Speaker Tina Kotek, D-Portland.

The rent increase limits protect tenants in roughly five out of six of rental homes in Oregon.

There are an estimated 602,178 renter-occupied homes and 1,445,270 tenants, according the most recent estimate from the American Community Survey.

Rentals built after Feb. 28, 2004, aren’t subject to limit. Kotek who authored the bill, added that condition to encourage construction of rental units.

By legislative standards, the legislation passed at lightning speed.

“I have never heard of a bill moving this quickly before,” said Jim Straub, legislative director of the Oregon Rental Housing Association. Straub, who has been the association’s legislative director for 10 years, is the grandson of Gov. Bob Straub and a longtime observer of state politics.

The Legislature convened Jan.22, the Senate passed the bill Feb. 12, and the House followed suit on Tuesday, Feb. 26, sending it to the governor.

The law was a top priority for Kotek this year.

“We wanted this bill to move quickly in order to protect those tenants, which is why the bill has an emergency clause” to take effective immediately, Kotek wrote in an email to the Oregon Capital Bureau earlier this week.

“The Legislature was very close to passing significant tenant protections in 2017, and I consider this bill unfinished business. There is also more work to be done on housing this session, including addressing housing supply.”

Legislative leaders in both chambers agreed that no amendments to the legislation would be entertained, an unusal practice in the give-and-take process in the Capitol. Allowing amendments could have killed the effort, according to several people close to the process.

Senate Majority Leader Ginny Burdick, D-Portland, said the bill was a good balance between the interests of landlords and tenants.

“There was a lot of effort to get the first draft in good shape,” Kotek wrote to the Capital Bureau. “This wasn’t a new topic, and the approach was reasonable and balanced. The House (Committee on Human Services and Housing) took time to hear hours of public testimony, and (a majority of) members of the committee ultimately decided that none of the proposed amendments reflected the intent of the bill.”

While attention has been focused largely on the rent limits, the bill is just one of several this year that seek to increase the housing supply in Oregon, Kotek said.

Some legislators want to allow multiple units on land traditionally reserved for single homes. They also want to budget millions of dollars to subsidize new homes for low- and middle-income families.

Oregon needs about 150,000 more homes to meet residents’ needs, according to recent report by Up for Growth, a national coalition that promotes higher housing density close to workplaces, stores and transit.

State economists and housing advocates have said the discrepancy between supply and demand means rents and house prices are higher, people pay a higher percentage of their income toward housing, more people are homeless and more people are at risk of becoming homeless.

Deborah Imse, executive director of MultiFamily NW –  an association of landlords that own about one-fourth of the housing rentals in Oregon – said her organization is scrambling to provide details to members about how they can comply with the new law.

Here is a guide compiled by the Oregon Capital Bureau on how the law works for both landlords and tenants:

How do landlords calculate the maximum rent allowed under the new law?

Until Sept. 30, the state will use 3.3 percent for CPI, according to Kotek’s office.

The law does not apply to rent increase notices sent out before Thursday.

Rental homes that were built less than 15 years ago are exempt from the rental increase limit.

How does the rent cap pencil out?

The median rent for a 2-bedroom unit in Oregon in 2017 was $1,043 per month. The maximum increase in a year under the law would be $107.42 for that two-bedroom apartment.

In Portland, a 2-bedroom unit averages $1,217. The maximium increase would be $125.25.

Who is exempt?

Two types of landlords have exemptions in the law.

-          Landlords who own rental homes with a certificate of occupancy dated before Feb. 28, 2004, are not restricted by the 7 percent, plus CPI, cap. They may raise rents as much as they want. They still have to pay the relocation fee if they evict a tenant for no fault.

-          Landlords who own four or fewer rental units are not required to pay the relocation fee equal to one month’s rent when they ask a tenant to move because they want to move into the property, sell the property or make major upgrades to the property. These landlords are restricted by the rental increase cap.

How is the law enforced?

Tenants may sue their landlord in court if the landlord violates the rent cap or evicts them at no fault for a reason other than those allowed under the law. Landlords may legally evict a tenant for no fault if the landlord plans to sell the property, move into the property or their family plans to move into the property. Landlords also may evict a tenant for upgrades and renovations that cannot be done while the tenant occupies the property. 

How do landlords increase their rents to market rate, if they are behind?

Landlords have two ways to increase rents to market rate, if they are behind. One is to gradually increase rents by the limit each year. Another is to reset the rent to market rate when a tenant moves out.

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