I have spent more than 20 years as a funder, policymaker, developer and property owner working to address the affordability of rental housing. Portland has a real issue with housing affordability, and we need to do more to address this issue.
Unfortunately, the proposed Rent Stabilization Ordinance (Question 1 on the city ballot Nov. 7) not only does not address the affordability issue but also undermines established tenant-landlord law while creating an enormous new bureaucracy to administer the ordinance.
The proposal erects significant barriers to removing problem tenants from stable apartment communities and imposes additional responsibilities on our police. The ordinance defines tenant behavior offensive enough to warrant eviction as five police-substantiated complaints within 60 days. Compare this standard for one apartment with the city’s disorderly house ordinance, which allows the city to shutter an 11-plus-unit apartment building for five police-substantiated complaints within 30 days. Put another way, the difference for grounds for eviction for one apartment would now rise to half of what is required for the city to close an entire apartment building and evict all of its residents.
A seven-person volunteer rent board would be charged with reviewing proposed rent increases for the roughly 18,000 apartments covered as well as hearing appeals from tenants evicted for non-financial reasons. This is an extraordinary addition to the city’s administrative workload – a workload with which it already struggles. (I find it ironic that the ordinance’s proponents are comfortable relying on the city to administer this byzantine structure when the city could not even tell them how to get their proposal on the ballot.)
The core flaw, however, of the ordinance is its failure to address the ability of renters to afford their housing. The proposed ordinance establishes restrictions on rents for most of the unsubsidized rental units in the city. The vast majority of these units are rented by people paying below 30 percent of their gross income (a commonly accepted definition of housing affordability). Often they are young people making a respectable salary in entry- and mid-level professional jobs at our region’s largest employers (such as Wex, Idexx, Maine Medical Center and others.)
Yet the proposed ordinance does not distinguish between these renters with the means to pay the going rent and those who are at risk of being priced out of the housing market. Instead, the ordinance limits rents on all apartments, regardless of the tenant’s ability to pay.
Why does this matter? Because these rent limits will be subsidized with Portland property tax revenue. Here’s how it works – rental properties are valued based on their potential income, and the ordinance would reduce their potential income which in turn will reduce property taxes collected from rental properties. This reduction in tax revenue from rental properties will be picked up by the city’s homeowners and other taxpayers.
Giving up tax revenue to cap rents for people who don’t need financial help doesn’t make sense. Fortunately, there is a much more efficient alternative that the city can use to help renters (and homeowners) who are struggling with the cost of housing.
State statue (36 MRSA §6232, sub-§1) allows municipalities to create a local “circuit breaker” program to benefit persons who live in the community. The only program requirements of the statute are that any local program a) “provide benefits for both owners and renters” and b) “calculate benefits in a way that provides greater benefits proportionally to claimants with lower incomes in relation to their property taxes accrued or rent constituting property taxes accrued.”
In fact, the City Council has already started down this path with the proposed Portland Senior Tax Equity Program, or P-STEP, which would supplement the Maine Property Tax Fairness Credit – but only for residents over 62. Both the state and local program would help with housing cost to households making less than $53,333 a year who do not already receive other forms of housing assistance.
The council can and should expand this proposal to eliminate the age restriction currently contemplated. The result would be relief targeted to both renters and homeowners who actually struggle to afford housing. Vote “no” on Question 1 on the Portland ballot and urge your city councilors to expand the local circuit breaker to cover everyone.
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