Portland City Council members heard testimony from landlords opposed to the proposed $60 per unit fee saying it is nothing but a “tax on renters” and “one more thing being dumped on the backs of landlords.”
The city has proposed the $60 per unit fee to fund the Rental Services Office.
Two landlords, Marc and Kathy Rogers, spoke against the proposed fee saying they own an apartment building at 19th and Hawthorn and provide an affordable housing alternative in that area.
Marc Rogers shared information about an email exchange he wanted to keep anonymous with another landlord who said, “I would likely email all my tenants and let them know that due to policies of city council, their rents would be going up by $25 a month.”
“It’s a very polarizing subject and I think it’s easy to look at landlords and demonize them as not caring and interested only in the bottom line,” Rogers said. Then in response to a council question he said, “I think that maybe the use of demonization was not the correct word to use. I think that the policies of council over the last couple of years have been very negative towards landlords.”
Commissioner Chloe Eudaly spoke up to say, “It’s not my intention to demonize landlords. Some of my best friends are landlords.” She also questioned why a landlord would raise rent $25 a month to cover a fee that is $60 a year.
Rogers said that any time the price of a commodity goes up “that’s typically passed on to the end user. If the price of diesel to deliver bread to Fred Meyers goes up, Fred Meyers is going to pass that along for a loaf of bread at their store. And that’s just typically the way businesses work.
“I think sometimes, in my opinion, landlords aren’t necessarily looked at as small businesses. We’re a small business. We’re really not any different than any other mechanic shop or coffee shop or restaurant. We’re small business people. In my opinion the attitude of this council in the last two years has been that we’re in some way not a small business. That we’re something different than that, and that we are not good people,” he said.
Eudaly responded that she was a small business owner of a bookstore for 22 years and said, “Granted, I had a bookstore and books come with a preprinted price on them. Unfortunately, rental units don’t.”
“I want landlords to recognize the fact that they are business owners. We hear from a lot of, especially small landlords, who feel like this is something they do on the side. It’s almost more of a hobby or a supplement. And, they feel some of the regulations are forcing them to professionalize in a way they’re not equipped to do. So I see you as a small business,” Eudaly said. In response to Roger’s friend who said he would raise rent $25 to cover the new fee she said it was “hard for me to take your friends’ comment seriously because that’s just not reasonable.”
Rogers gave some perspective to what is going on in Portland saying “we are commercial Realtors.” He said they deal in smaller properties such as duplexes and fourplexes.
More landlords putting their rentals up for sale
Rogers said two years ago you would be lucky to find a dozen duplexes on the market in close-in zip codes.
“I checked two days ago, there were 61 duplexes on the market” in close in zip codes he said.
“The feedback we get consistently is that the small mom and pops who own the duplexes don’t want to deal with the lower barrier of entry with security deposits, with amortization schedules, with rent control, and the sophistication level for them.
“They’ve decided to get out. So that takes inventory off the market and adds cost,” Rogers said.
Eudaly responded saying, “Well, I don’t think that we can draw a direct correlation between our regulations or policies and changes in the real estate market without adequate data.
“But I will say there’s a plus side to having more housing on the line. I don’t disagree with you at all. And that rental services office will actually help landlords navigate these little changes. So it kind of supports this item,” she said.
Why Not Make The Tenants Pay The Fee Since The Services Are For Them?
Kathy Rogers added to Marc’s comments saying, “This fee in and of itself may not seem like a huge deal, but I think as Mark alluded to, coming on the heels of everything else that’s been thrown at landlords over the last two years, it feels a lot like the straw that’s breaking the camel’s back.
“And I think a lot of small landlords feel like all of the costs and fees and complexity are being dumped on the landlord and not shared by the tenant,” she said
“If this is to support the rental services commission, which I’ve been in contact with and as far as I can tell about 90% of what they do supports tenants. Why are the tenants not paying the fee,” she asked.
“How about with every lease renewal? The tenant pays the $60 fee. Why is it 100 percent paid by landlords?
She said “all of this has come at us in the last two years, you know, with the mandatory renting relocation assistance, the elimination of no cause notice evictions, rent control, new tenant screening ordinances, which our attorney can’t even figure out and he’s a real estate attorney, plus the security deposit ordinance and the rental registration program. And now this,” she said.
“It’s very difficult to navigate and I will tell you that a lot of small landlords are afraid to rent out their properties. They’re afraid of being sued. They’re afraid of not following the rules. A lot of the single-family and duplexes that are being sold are now being purchased by owner occupants. Those are rental units that are be taken off of the market,” she said.
Hurting the people you are trying to protect
Kathy Rogers said, “We never used to raise our rents every year. We have two now every year on the anniversary, 100 percent of the time we raise our rents to the 100 percent maximum that we’re allowed to do because of the actions taken by the city council. And we never used to do that.
“So I just want you to think about everything you’re throwing at us may be hurting the people you’re trying to protect,” she said.
It’s a Portland thing to do
Marc Rogers also told the council “I’d like to share a story and it might take more than 27 seconds. But for the last 11 years I’ve had somebody living in my building on 19th and Hawthorne for free.
“We pay his utilities and we provide him with a cell phone. Probably $1,000 a month, maybe $12,000 a year. We don’t have a formal agreement. We don’t even have a handshake, but what we have done is he looks out for my interest and I look out for his and I think that’s the right thing to do.
“I think it’s a Portland thing to do and I think that’s what we’ve shown that we’re willing to do and have done for the last 11 years. So that’s really my closing and I would hope that you would reconsider this and maybe take more input,” Rogers told the council.
$60 per unit fee is “just too high”
Jill Warren, who described herself as a mom and pop landlord in Portland for the past 30 years, said she owns 34 units.
“So we will be paying $2,040 a year to support the program. I just think that’s too high, $60 per unit fee,” she said.
Then she added, “I appreciate the previous conversation about the demonization. I feel that some of the mandates that are being brought down by this body actually it hurts our industry.
“For example you don’t want us to factor in the criminal background for a tenant and that’s very dangerous. I just screened an applicant who had 17 pages of felony convictions, including felon in possession of a firearm, theft, burglary, possession of methamphetamine.
“I protect the safety of my tenants. My primary goal is their welfare and their safety. So that’s why I screen. It’s all about screening.
“Also the mandate to pick the first applicant that comes along. I mean that’s not a very intelligent to do that. That’s why we screen. I run a criminal check. I do a background search. I check your credit history and your previous and current landlord referrals. So I just throw that all in a pot, and I stir it up, and that’s how I determine their eligibility,” Warren said.
Eudaly then responded to Warren saying, “I can’t allow this forum to be used to spread misinformation about our policy. We are not requiring landlords to not consider a prior convictions. That’s a choice.
“And the first-come first-served as first come first to qualify. We’re not requiring landlords to literally rent their units to the first person that applies. So those are two false statements that you made. And I just want to ask everyone else who comes up here to try to avoid spreading misinformation.”
Portland’s proposed $60 per unit fee 20 times higher than Seattle’s fee
Michael Havlik, deputy executive director of Multifamily NW, told the council, “My association members are dismayed with the current rendition of the proposed rental registration fee. It is yet another layer of tax on housing adding cost to a market already in crisis.
“Not only is the amount proposed excessive at a $60 per unit fee, but offends common sense that the implementation of our registration system will cost millions of dollars each year.”
Havlik said in the past he worked for several property management firms and home forward as director of asset management. “I have a passion for housing affordability and rental services and I’ve spent my life dedicated to it all. I have 26 years of experience in property management including conventional multifamily housing, affordable tax credit, public housing, permanent supportive housing as well as special needs housing.”
He said the members of Multifamily NW “make up 40% of Oregon’s rental housing supply and as such we are the leaders in property management and development within the state.
He said for a comparable 200-unit property in Seattle the fee is $575 for $2.88 cents a unit compared to $12,000 for a comparable 200-unit property in Portland.
Ultimately a tax on renters
“In other words, the city of Portland’s rate will be over 20 times the amount of Seattle. We estimate that by year 10 of this fee scheme, the city of Portland will have collected $58 million that will do nothing to create more affordable housing,” Havlik said.
“It’s ultimately a tax on renters. Impacting those most who have lower incomes and do not have the good fortune of living in regulated affordable housing, which receives the special carve out with a housing supply shortage.
“What rational jurisdiction would meet out punitive disincentives to housing providers?
“The city of Portland is creating inequity across all rental housing providers by imposing a fee for the sole purpose of funding multiple duplicative programs already implemented or addressed by other better equipped agencies.
If you’re truly striving to provide solutions to the problem for the lack of affordable housing across the continuum of housing, then you would continue the path outlined by the legislature through house bill 2001 and 2003 which both work to create diverse, inclusive and vibrant housing opportunities throughout our city.
Additionally, the city should reassess its posture towards housing providers It has demonized over the last several years. These providers are a big piece of the solution and you should view our members as willing partners in the goal of making housing more affordable and accessible to all Portlanders.”
Director of Operations for Commerce Properties, Chris Nguyen, said the fee “will be harmful to Portland renters by reducing new development in low- to moderate-priced rental housing, putting upward pressure on housing cost, and reducing the quality of existing rental housing.
“Now this tax combined with additional state and local legislation introduced over the last few years makes it difficult for housing providers to provide affordable housing and it reduces the incentive to develop new units or keep existing units on the market,” Nguyen said.
Maintenance could suffer due to new fee
Nguyen said the proposed rental fee reduces funds available for maintenance.
“This tax for the company I work for will have a $27,000 annual impact. This fee could hire a part-time maintenance technician. Could allow us to replace 23 carpets. Allow us to put appliances in 16 new apartment homes.
“So this means that many housing providers will have to pay fees with funds that they would have normally used to improve or maintain existing housing.
Testimony in favor of the new fee
Several spoke in favor of the new fee, including Margot Black from Portland Tenants United, a registered lobby organization with the city of Portland who is also a member of the rental services commission.
“I’m here to testify today in support of rental registration fee with some minor reservations. But I’m going to bypass most of my testimony just to respond to a couple of the concerns that I’ve heard come before the council.
“Just so you know, fees are strictly regulated by the state and the landlords of Portland would not be able to explicitly pass this fee on in their lease as a fee. However, I just got a 90 day notice for $150 a month rent increase that will start this November. I’ll be paying $150 every single month. One of the reasons my landlord gave me for that was increased fees by city council,” Black said.
“Frankly as a tenant every time we hear about tenant protections or things that are going to help tenants costing us money and ultimately hurting us, when my rent can already go up by hundreds of dollars a month, I would much rather some of that money be going to the city to provide programs and services for renters than just going in my landlord’s pocket,” Black said.
Mayor said fee has long been a priority of his
Mayor Ted Wheeler introduced the discussion on the fee by saying, “I’m pleased to bring forward the rental registration fee, which is long been a commitment and a priority of mine to help support the office of rental services and establish a system to collect more accurate data of the rental market in Portland.
“In 2017 we set a rental registration requirement for all units in the city of Portland. In the first year of registration, we did not charge a fee. That was deliberate. We wanted to encourage voluntary compliance for landlords, but it’s been clear from the beginning that a fee would need to be established,” the mayor said.
“We asked the revenue division in the Portland Housing Bureau to return to us this year with the established fee. Since 2017 we’ve made consistent progress and increasing the city’s role in landlord tenant law and services, including establishing the rental services office, the Rental Services Commission, adopting local landlord, tenant law, increasing landlord tenant services and increasing training and education services.
“Portland is one of the only cities our size to not have a rental system in place and fees to cover the basic services. We’re behind the curve and this is an imperative first step to allowing us to have a more robust and streamlined support for renters in our community.
“This council has also made it clear the importance for data may data-driven policy making. This fee will support the maintenance of an expanded registration system. Something that I’ll be back in the fall bump to ask for support of this council for funding for the procurement of the expanded system so that we have data not just on the number of units and their location, but accessibility, general unit characteristics and other relevant market data. The recommended fee is in response to the budget note. We included in our adopted budget this fiscal year and it’s reasonable when compared to other cities in the region and across the country,” Wheeler said in his opening statement.