Multifamily NW and Landlords File Suit to Stop Portland’s New FAIR Rules, But Judge Denies Request For Immediate Relief

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Multifamily NW and Portland landlords have filed suit in federal court to stop Portland’s new Fair Access In Renting (FAIR) rules from taking effect, but lost the first round as the judge has denied a temporary restraining order, according to a release.

So the new rules will go into effect in March because the judge has denied the request for a temporary injunction to halt the rules saying the landlords and organization waited too long to file because the rules were passed in 2019.

U.S. District Judge Michael Simon said the delay in filing “implies a lack of urgency or a lack of irreparable harm,” according to Oregonlive. Simon said he didn’t believe U.S. District Court was the appropriate venue to sort out the constitutionality of city policies.

“I think at some point we’re all going to be better off getting decisions on state law questions from the state appellate courts,” the judge said.

The suit was filed by landlords Janet Newcomb, Jerry Mason, and Metro Multifamily Housing Association dba Multifamily NW, against the City of Portland.

“We are disappointed that the court declined to grant temporary relief to housing providers. However, we are looking forward to continuing the next steps of this case and getting relief from this unworkable ordinance,” Deborah Imse, executive director of Multifamily NW. “This request was the first step in our lawsuit against the city. Our legal fight will continue over the next six months to a year, with the potential for a more expedited process. We will be sure to share more information on these legal proceedings as they are available,” she said in a statement.

The suit says the landlords and Multifamily NW “are suing the City of Portland because it has passed laws that make management of rental housing so costly, burdensome, and risky that plaintiffs will have to either raise rents – to cover the additional costs and risks – or sell their rentals.

“Plaintiffs are also suing the city because the new laws violate their civil rights of free speech and due process. Additionally, plaintiffs are already regulated by federal and state law, which preempts the city’s conflicting new law. Plaintiffs are concerned that the city’s additional layer of unreasonable,  unconstitutional governmental regulations will drive out landlords, which will result in reducing the supply of rental units and increasing rents in Portland,” the suit says.

Portland Fair Access In Renting ordinances provide a ‘choose-your-own-adventure’ scenario

“Without providing enough direction, the FAIR ordinance treats the serious processes of tenant screening and security deposits as a kind of choose-your-own adventure,” said Deborah Imse, executive director of Multifamily NW, in the release.

“This is unacceptable, as rental housing and finding a home is not a game to Portlanders. Portlanders deserve laws that are well-thought-out, that give enough clarity for renters to understand their rights,  and enough direction for housing providers to be able to follow them,” she said.

The FAIR ordinance consists of two ordinances “drastically changing housing-provider and tenant law in Portland,” according to the release.

“One changes the way housing providers post vacancy notices and how they process and evaluate applications; and one changes the way housing providers handle security deposits. The screening ordinance does not allow landlords who use the ‘low-barrier’ screening process from denying applicants with poor criminal history, credit history or rental history.

“The second ordinance creates new rules so stringent it discourages the use of security deposits, instead leaving tenants and housing providers to resolve disputes through the court,” the release says.

Lawsuit says the Portland Fair Access in Renting ordinances violate Oregon and U.S. constitutions in 4 ways:

  • First, the ordinances violate free-speech protections because they prohibit plaintiffs from speaking to applicants during a 72-hour blackout period. The ordinances also force plaintiffs to follow a certain script when advertising and send city-written notices to applicants and tenants.
  • Second, because the ordinances are overly vague and fail to inform plaintiffs how to comply with all the new requirements, the ordinances violate the Oregon Constitution and the due-process clause of the United States Constitution.
  • Third, the ordinances violate the due process clause because they impose arbitrary regulations that have no substantial relation to public health, safety, or welfare.
  • Fourth, the Ordinances conflict with the Oregon Residential Landlord Tenant Act, ORS Chapter 90, and are thus preempted by state law.

According to the lawsuit, Newcomb is a resident of Nevada and owns and operates 19 rental units in Portland. Newcomb owns and personally manages these units. Mason is an Oregon resident and member of Westland Partners LLC, an Oregon limited liability company that owns and manages 62 rental units in Portland.

Multifamily NW letter to members over Portland fair access in renting ordinances

Multifamily NW members own and manage more than 30,000 rental units within the city of Portland,  and these members are subject to the ordinances.

In a letter to members, the association said, “Multifamily NW took a stand against Portland’s failed housing policies. As of February 20, 2020, we have filed a lawsuit to stop and repeal the FAIR ordinance with the United States District Court, for the District of Oregon, Portland Division.

“As many of you know, Portland City Council passed the FAIR ordinance last June after a hostile and broken policy-development process facilitated by the Rental Services Commission. The ordinance is set to take effect on March 1. The chief proponent of the ordinance, Commissioner Chloe Eudaly, would later make the statement, ‘We know it will take time for tenants to understand and for the industry to adjust. We know some fine-tuning will be necessary. But we also know that research and data have laid a solid foundation for the decisions we made.’

“Economic data and industry research were not a part of that solid foundation. Representatives of the rental-housing-provider community, including Multifamily NW, could play only a symbolic role in the development of the FAIR ordinance. Despite being regularly-attending members of the Rental Services Commission and in good standing, our collaboration on this major policy initiative was consistently rejected.

“At the time of adoption, Mayor Ted Wheeler and the Portland City Council had committed to fixing the glaring errors in the ordinance during the administrative rulemaking process before the law was to be implemented. It’s now clear that commitment will not be honored, and Portland housing providers will be forced to comply with a broken law.

“Since June, Multifamily NW’s members and staff have worked around the clock to make sure our housing-provider members are prepared to meet the sweeping administrative demands created by the FAIR ordinance. The Multifamily NW’s Forms Committee has volunteered dozens of hours of their personal time to collaborate with multifamily staff and legal counsel to craft the additional forms needed to comply with the FAIR ordinance.

“With the Rental Services Commission providing only a slow drip of inconsistent and outright perplexing information pertaining to the legal compliance requirements of the ordinance, it became clear that the administrative rulemaking process was not going to fix this ordinance. Further action is required to protect Portland’s housing providers and renters from the clearly disastrous impacts of the FAIR ordinance.

“We want to thank all our members who have worked so diligently throughout this process. Thank you for hours spent trying to guide the Rental Services Commission away from bad housing policy, speaking up at Portland City Council’s public hearings in opposition to the FAIR ordinance in front of a hostile crowd of activists, and helping guide our legal actions against the city.

“We look forward to a positive outcome for our members in this fight and for the future of rental housing in Portland. Stay tuned for more updates as they become available,” the association said in the letter.

Resources:

Get and read the full lawsuit here.

Portland’s new rental screening, security deposit rules are unconstitutional, landlords claim

Multifamily NW Files Suit to Hold City of Portland Accountable for Unlawful, Vague Housing Policy

Portland’s New F.A.I.R. Housing Ordinance

Portland City Council Approves Controversial Tenant Screening Ordinance 3-1

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