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

By Ron Garcia

The City Council of Portland is now slated to pass its “Fair Access in Renting” (FAIR.) Act to become law on March 1, 2020. However, Portland landlords should instead understand this new ordinance to read as: “Forcibly Accepting Increased Risk”.

This new statute restricts and governs:

1. How tenant screening must be conducted, as well as how vacancies must be advertised and filled, and
2. How much landlords can collect for tenant security deposits and how those funds must be allocated towards damages upon termination, as well as new mandates on handling termination notices (including 72-hour late notifications).

The requirements in this ordinance will substantially change most industry-wide accepted practices for advertisements, screening criteria, rental and management policies, termination procedures and for the final accounting resolutions on all residential income properties in the city of Portland. The goals of this ordinance are to lower the barrier of entry to housing-burdened populations and to restrict the amount of money for which a tenant would otherwise be liable, in order to pay for damages incurred to the unit.  There is no attempt at parity between a landlord’s and a tenant’s rights within this act. There is no adjustments for any size or price of rental units. The penalty provisions of any violation in the statute include “actual damages” sought by the tenant – a provision that allows for an open-ended interpretation of potentially huge and cascading claims.

Commissioner Chloe Eudaly has been pursuing this law for nearly two years. Mayor Ted Wheeler’s Residential Services Commission (RESC) supported its progress and provided a forum for it to develop within the Portland Housing Bureau. It should be noted that the RESC is made up of 14 commissioners, only five of which are “landlord representatives. Of those five seats, two commissioners resigned in 2018 because their perspectives were summarily dismissed by the board (I was one of those members). In 2019, three more of the landlord commissioners resigned for the same reason. The result is that the Portland City Council’s housing policies are being created by stakeholders that are radically against landlord rights and whose agenda is to impose new social policies that require private citizens to fund public-housing policies. The law is cumbersome, confusing, and purposely constructed to penalize landlords for not following the very detailed procedures it introduces.

The Fair Access In Renting ordinance joins with the Portland Relocation Ordinance and the Oregon State rent-control law (HB608), each serving to limit the amount of rent increases and to prevent owners from terminating tenancies. With these new rules, the Fair Access In Renting ordinance is designed to regulate the selection of tenants and minimize the costs to repair damages, the burden of liability on Portland rental property owners has skyrocketed. And as a result, this new law fundamentally changes the basic relationship between landlords and tenants by assuming that without a host of new policies, all tenants are subject to exploitation.

The just-adopted rules of the FAIR ordinance can now be found on the city of Portland’s website. Ironically, while it is slated to become law in just weeks, a massive amount of training still needs to be conducted to sort out all of the complexities. Experts all agree that this could take months to bring all industry professionals up to date, and will certainly add to the confusion and difficulties in compliance. Cynical as it sounds, the city has been making this law up as they go, and they have added in many caveats and nuances for an array of issues that have created a tangled mess of red tape.

Provisions for refunding interest incurred on tenant security deposits (which already exist in state law) are now parsed out in a new and imposing accounting scheme. Forcing landlords to do in-home final inspections within five days of sending out a late notice for non-payment for rent is not only onerous and time-consuming, it’s also intrusive and insulting to any tenant who has ever gotten just five days behind on a rent payment. Requiring landlords to itemize and place a cost valuation on every fixture, appliance, equipment and personal property in line with a city-approved depreciation schedule, and requiring a signed mutual agreement between the tenant and landlord prior to possession, is cumbersome and arbitrary (and substantially more onerous for larger single family homes than, say a one-bedroom apartment). It also raises anticipated disputes, i.e. what if the tenant doesn’t sign the form and yet is still required (by the law) to be allowed to rent the property?

Fair Access In Renting conflicts

There are many other conflicts inherent in this ordinance. For example, carpet cleaning (as authorized and approved by state law to be a tenant expense) now must be limited to “discrete impacted areas” and not for other areas of the dwelling unit. Tell me – what does that actually mean and how will it play out in every single move-out? Requiring the rental agreement to have the name, address and phone number of the actual bank branch holding the deposit seems excessive. Which Citibank do you go to?

The increased amount of administrative oversight regulated in this ordinance is excessive. As a long-time professional property manager, I have long promoted the claim that everyone deserves affordable and safe housing. Tenant relations is an integral part of my business and our company works tirelessly to address the needs, concerns, fairness and habitability issues that rise up daily in managing rental housing. Yet even on our best days, with great tenants, we can be subject to questions, suspicions or accusations, etc. when things don’t go as well as someone likes. Creating overreaching laws that do little for the majority of people they serve and which create intimidating conflict unnecessarily just does not seem like good public policy.

At the end of the day, however, when new laws are enacted, our job is to understand them and work diligently on their compliance. The sheer volume of change and the additional requirements and restrictions inherent in this law will be challenging and it will add considerable time allocations for documentation and “risk management.” I certainly believe professional property managers will handle the process and create new best practices to adapt. However, I also believe prices to manage rental units will need to go up in order to accommodate these mandates, further burdening the rental-property owners who are shouldering the weight. Will we now start seeing every owner raise every rent to its maximum rate every year in order to recover their costs? Time will tell.

For the Property Management industry, I submit we should read this new ordinance as the City of Portland promoting “Frustrating Administrative Inflationary Rate-hikes”.

About the author:

Ron Garcia is the Past President of the Rental Housing Alliance Oregon and is currently a candidate for the Oregon State House of Representative, District 37. His website it www.GoGarcia.org

Portland City Council Approves Controversial Tenant Screening Ordinance 3-1