Nearly three years into rent control, Portland is still working through kinks in its policy.

Those who wrote the ordinance say it’s helping stabilize costs for tenants and available housing. But city staff who oversee rent control say that parts of the ordinance are hard to implement and that they struggle to keep up with questions and complaints.

Meanwhile, frustrated landlords keep looking for ways to make changes.

Three months after voters soundly rejected one change to the ordinance, the city is preparing for another rent control referendum in November.

And no matter how that goes, more changes could be back on ballots next year.

A proposal from city staff seeks to clarify parts of the ordinance that they say are vague and hard to enforce, though supporters of the ordinance say doing so would undermine protections for tenants.

The proposals highlight an ongoing debate over whether the city’s rent control policy – first approved by voters in 2020 during the early months of the COVID-19 pandemic – is effective now and just has a few rough spots to be worked out or whether it needs a complete overhaul.

“There are certainly challenges,” said Elliott Simpson, who chairs the city’s Rent Board. “Depending on who you ask, some people say they love it and some people are quite unhappy with it.”

NEW DATA TRACKS INCREASES

It’s still early to assess how well rent control is working.

The U.S. Census Bureau says the median rent in Portland is $1,305, according to the most recent data available from 2021 (compared with $1,191 nationally), while Zillow, a popular online real estate market, lists the median rent in Portland at $2,600. That’s far off from the $1,465 the Rent Board cited in new preliminary data for 2023, and it’s unclear how Zillow’s number was calculated.

The board’s first annual report last November found the average rent increase in Portland was 1.8% overall and 1.6% in rent-controlled units, but the data had significant limitations: The city doesn’t have rent data from earlier years, 31% of units did not register either because they were exempt or not in compliance, and the board excluded about 11% of rents because they were extremely high or low.

Preliminary data for this year’s report – a draft of which is expected to go to the Rent Board later this month – has some of the same caveats. But it shows the average rent increase was 4.9%, or $149, overall and 5.1%, or $151, in rent-controlled units.

About 30% of registrations were excluded from the analysis because they were outliers. Some were listed at $0, in most cases because the units were exempt or the landlords submitted incomplete or erroneous data.

About 2,000 of the 7,146 exempt units submitted rent data, even though they weren’t required to. That’s less than half, though Philip Mathieu, a Rent Board member who worked on the analysis, said he thinks it would be enough to draw some conclusions.

In general, units under rent control were more likely to increase rents, but by a smaller amount than exempt units, Mathieu said. Exempt units were less likely to increase rents, but when they did, it was by a larger amount.

The ordinance exempts owner-occupied apartment buildings with two to four units, accessory dwelling units, and housing provided by housing authorities, schools, religious institutions, and hospitals.

That means many exempt units are subsidized or nonprofit housing and likely have restrictions on rents, though the board hasn’t separated exempt units that way in their analysis.

It makes it hard to know how Portland’s rent control is working in comparison with exempt, free-market units, which would provide the most meaningful analysis, said Ethan Strimling, a former mayor and leading voice of the Maine chapter of the Democratic Socialists of America, which sponsored the 2020 citizen-initiated referendum that resulted in Portland implementing rent control for the first time.

“Those things were excluded for a reason: They already have rent control, just through a different system,” he said.

QUESTION A 

Landlords say they are pushing Question A in November because they’re struggling to keep up with costs like rising taxes and general maintenance. The referendum will ask voters if they want to exclude landlords with nine or fewer units from rent control.

It comes on the heels of a failed referendum in June that would have allowed landlords to reset rents with no limit whenever tenants voluntarily left. They remain limited to 5% increases for a unit changing hands.

Rent control lets landlords automatically increase rents by no more than 70% of the inflation rate each year – the city recently determined that’s 2% next year. And they can’t raise rents by more than 10% per year once additional increases – like those that get special approval from the Rent Board or the 5% increase that’s allowed when a unit voluntarily turns over – are taken into account.

After a vote last November, landlords also are no longer entitled to automatic adjustments because of property tax increases.

“Mom-and-pop landlords … who have a few properties, these are the folks we should be bolstering and holding up as a community to operate our rental units – and right now we have a set of policies in place that’s telling them, ‘Sorry, we don’t want you anymore,'” said Chris Korzen, a landlord with six units, including the one he lives in, who gathered signatures for the referendum.

“We’re going to wind up, over the long term, with housing stock that starts to deteriorate because there’s no financial incentive to keep properties up,” Korzen said.

He said the new proposal is based on South Portland’s rent stabilization ordinance, which excludes landlords with fewer than 16 units.

“We thought that might seem a little high for Portland. Nine is just a handful of units – a couple of multifamily buildings, and you’re within the limit. Anything more than that, and you’re a bigger landlord,” Korzen said. “It seemed like a good number to start with.”

The DSA opposes Question A.

“It’s not about the landlords,” Strimling said. “It’s about the tenants and how many will no longer be protected by rent control, which means those landlords can raise the rent … 20%, 30%, 50%. They can do whatever they want, and that’s what’s terrifying to people.”

Portland has 17,986 long-term rental units and 844 short-term rentals, according to June data from the city.

Zachary Lenhert, the city’s licensing and housing safety manager, said his office doesn’t know how many people could be impacted by Question A. “I wouldn’t venture to guess a percentage, but based on my experience, there are more small landlords than I think are in the discussion,” he said.

The DSA has estimated about 4,330 long-term units, housing about 9,180 people, would no longer be subject to rent control if Question A were to pass. “That’s a big part of the population,” Strimling said.

The group’s estimate doesn’t take into account that there would be no exemptions for spouses or partners who collectively own more than nine units, or for those who rent out more than nine units under multiple business addresses.

The city’s rental data doesn’t include such affiliates and partnerships, Korzen said, so sorting that out could prove to be difficult.

“The point isn’t how many people will be affected, it’s that the people who are adversely affected by rent control – small landlords – deserve some kind of relief from this,” Korzen said. “The intent of this amendment is to provide that relief.”

PROPOSED STAFF CHANGES

Lenhert said he worked with the city’s corporation counsel last spring to come up with a separate rent control proposal that is aimed at clarifying the ordinance and making it easier to enforce.

It was brought to the City Council in June but was indefinitely tabled after the DSA voiced concerns about both the contents and the process by which it came about – it didn’t appear before a council committee and there was no opportunity for public feedback before it went to the full council. (The council would have heard public comment before taking action.)

The proposal was viewed as “more controversial than we anticipated,” Lenhert said. “We go to every Rent Board meeting and saw them struggle through a lot of these issues, and we’re in it administering it. That’s where a lot of these things come from.”

He said the City Council process became rushed to make the November ballot.

Mayor Kate Snyder described the proposal as “a starting place for ideas that need to be worked more deeply within the council’s public process,” and said that if the council does take it up, she would want to see that public engagement take place.

For now, any changes have to be approved by voters, since ordinances passed by referendum can’t be changed by the council alone for five years.

“I think there are concerns with the current rent control ordinance because people keep trying to change it through the voter process,” Snyder said. “I think if it was working perfectly and everyone was content with it and it was a good compromise, we wouldn’t be seeing so much play out at the ballot.”

The staff proposal contains several changes, including a provision that the Rent Board can approve rent increases of more than 10% at a time – an exception to the current rules that require landlords to “bank” or save approved rent increases above 10% for use in future years.

Lenhert said the board has come across situations where landlords are stuck with such low rents that it would take multiple years for them to get to a fair rate of return. “We don’t believe this will be a common approval, but for these extreme cases,” he said.

Simpson, the Rent Board chair, said the board has run into those kinds of cases. One woman, he said, was renting an apartment at low rent to refugees to help them out, but then was unable to raise the rent to a more typical amount.

“Should the Rent Board have the authority to acknowledge there are people who do that sort of thing and now they want to try and rent it out at a normal rate, and how do you deal with that?” he said. “Having that flexibility could be helpful in certain situations.”

At the same time, Simpson said, “You don’t want a situation where people could come up with any story … to try to get that additional increase.”

City staff also want to eliminate a two-tier late registration fee for landlords, put a 60-day statute of limitations on complaints, and eliminate the Rent Board’s role as a mediator of landlord-tenant disputes. They also want to exempt short-term rentals from rent control.

The tiered late fees are new. Voters last November approved escalating the fees from a flat $10 per unit to $50 per unit for those who don’t register by Jan. 15 and $200 per unit for those who don’t register by Feb. 15.

Lenhert said landlords were upset because the change took effect in the middle of the registration process – renewal notices are sent in early November – and they felt the fees were excessive. The housing safety office also didn’t have much time between January and February to process registrations and send out new notices, he said.

Strimling said the fees are intended to strengthen compliance.

“The entire law is dependent on that registration,” he said.

The city always has the option of taking landlords who don’t comply to court, Lenhert said, and a judge could issue penalties of up to $2,500 per day for violations, though that’s rare. So far this year, the city has issued six summonses to landlords who have failed to register their units for multiple years, but the cases were all resolved before a trial.

Meanwhile, tenants don’t always file complaints quickly. Some live in their apartments for a long time before doing so. Others have asked if they can file complaints after they move out.

The DSA says the ordinance is still young and many tenants don’t know their rights under it. Some may be afraid to complain out of fear of retaliation.

Lenhert said he thinks some kind of limit is needed.

“It becomes more and more difficult to administer and enforce the ordinance as it gets further out,” he said.

ROLE OF RENT BOARD QUESTIONED 

Much of the work of the Rent Board, whose members are volunteers, is weighing landlords’ applications for rent increases, but the ordinance also allows it to mediate disputes between landlords and tenants if both parties agree.

The board has only done this once, last year – when the Trelawny Tenants Union, in the building where Strimling lives, came to the board to complain about unfair rent increases by landlord Geoffrey Rice in late 2021.

In February, the board adopted a rule that it would not conduct further mediation until it creates specific procedures.

“Mediating a dispute between a landlord and a tenant, you’re dealing with someone’s living situation and it’s a very difficult and emotional thing,” Simpson said. “I think the question would be, is it appropriate for a volunteer member of the public to mediate such a dispute in such an emotional and high-pressure situation without any sort of mediation training?”

Lenhert said the board’s action prompted the staff’s wish to end its role as a mediator.

Strimling said the role of the board as mediator is intended to give tenants an accessible and affordable way to settle disputes with their landlords and asked why the city couldn’t do more to help.

“Why would the answer be, ‘Let’s strike this,’ as opposed to going to the City Council and saying, ‘We need more resources because the people have asked us to implement a mediation process?'” he said.

At the same time, the board has also struggled to fill seats – something Snyder said she would want to look at in any proposed changes. “We have people stepping off the board and vacancies,” Snyder said. “If the council were able to make changes right now, I’d like to look at what is it about the Rent Board that’s not working.”

The staff proposal could come back to the council’s Housing and Economic Development Committee in the spring, but nothing is scheduled. There’s also a chance it could change or become irrelevant with more citizen-initiated referendums next year.

Overall, Strimling said he believes the ordinance is working well for tenants, but the city needs to be more proactive in looking for landlord violations.

City officials have cited limited resources, though City Manager Danielle West included money in her budget this year to add a rent control coordinator, inspector, and an additional licensing assistant.

The coordinator will manage the Rent Board, field questions about rent control, help investigate complaints, and oversee the inspector.

“I’m crossing my fingers because we need the help,” Lenhert said about filling those new positions.

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