Laws written by zealots are usually unfair. That’s the situation with Portland’s referendum Question C, the so-called tenant protection question. When criticized, the advocates say that the law is like those of some other communities – a true claim. Omitted is that the other communities have fairness built into their laws – provisions missing or distorted in the Portland version. The latest – in St. Paul, Minnesota – is touted as the strictest rent control in America. If Question C passes, St. Paul’s days as No. 1 are over.
What is unfair?
Does the proposal treat similarly situated people differently? Yes. The best landlords – those with one or a few units, perhaps their former home or an investment to supplement retirement – have personal relationships with their tenants. The rent for 2019 – the crucial year – is etched in stone, not just for the current tenant but for all time. Too bad for any human trying to be decent to people.
In St. Paul, fairness is addressed. Not in Portland. Question C adds new ways to understand fair. For instance, no rent adjustments are allowed without proof that the owner was “prevented” from charging the rent previously. Those lost at sea, in solitary at a Turkish prison or in a coma – all set. Who else is prevented?
Guilt of landlords is assumed. Unless a renter moves “voluntarily” without being “unreasonably influenced,” the landlord suffers a major financial penalty. Not a problem for the megacorporate landlords, who already charge maximum rates. For Portland’s best landlords, the usual rental adjustments for another tenant get outlawed.
Does the proposal recognize economic change? It prohibits it. The law requires a novel valuation, specifically outlawing the methods used by courts, Portland tax assessors, appraisers, everyone. It defines value as 2019 cash flow (even if it all went to mortgage payments) set for all time. Portland, unlike St. Paul, has a convoluted definition of adequate return, one that gives the appointed board virtually unlimited discretion. It then instructs us that this is the fair rate of return and the only valuation for consideration.
Anybody will quickly understand this means the value of essentially identical properties will now be wildly different and unstable. It also means that any landlord who doesn’t act like Shylock or Simon Legree will suffer harm. By the way, the law reduces the recouping of future inflation by 30%, apparently just for the hell of it.
It requires endlessly complex paperwork for the few minor changes allowed. Experience proves that elaborate process is a guarantee that small landlords will err, give up or simply act outside the law. What happens then?
Every minor paperwork error is a failure to comply, triggering a mandatory fine. Most violations require the rent board to fix a penalty. No standards. That’s right, a phony court assessing penalties and fines without any requirement of training or education, experience or guidelines. And the law requires that city attorneys pursue enforcement as Portland’s highest legal priority. Typical municipal fines are $100 a day – a tenancy dispute in Portland’s newest amateur court could easily cost thousands. For any landlord, that risk is intimidating. For the zealots, intimidation is the point.
Portland needs a much better solution. In the early 2000s, we identified the city’s regional role to include being home for 25% of the Cumberland County population. That translates to about 75,000 people. With prevailing demographic circumstances (single-family homes house a little over two people on average, apartments fewer), we are easily 5,000 homes short. That explains high rents, not Airbnbs, not Snidely Whiplash landlords, not condo conversions.
We have city programs that have been great, even spectacular successes. The economy of the city has never been better. We can do this, but not this way.
Question C belongs in the trash, and you should help make it so.
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