Last Wednesday, I attended the Portland City Council Housing Committee’s discussion on proposed new regulations regarding rent control, notification to tenants of rent increases and discrimination against tenants who receive subsidized housing vouchers.
One thing that I thought was interesting was the general feeling that all is dark and gloomy in our city. How quickly we forget the boarded-up storefronts along Commercial Street, the lack of restaurants on Congress Street and the auctioning of waterfront condominiums. We should all – residents, politicians, businesses and landlords – take a minute to congratulate ourselves on creating a city where so many people want to come live, work and play.
This is not to ignore the challenges this success brings with it, which was the impetus for the creation of a City Council committee focusing on housing. But while most of the council seems open to common-sense regulation that will address the actual problems related to housing in Portland, Mayor Ethan Strimling’s proposed Portland Rental Housing Security Ordinance seems designed for political gain over practical solutions.
I own 23 residential apartments in Portland scattered among five buildings. Our rents are hundreds of dollars below market rate. Our apartments are clean, safe and secure. In more than two decades we have never had a reported robbery, rodent issue or fire. Several months ago I sent the mayor a copy of my rent rolls at his request, but I never heard anything back. Perhaps an undermarket rent roll did not fit his political agenda.
This will be my 24th year as a landlord. My tenants are good, hardworking blue- and white-collar professionals, retirees and students. I have three tenants who receive public assistance, though they were required to pass our rental application process.
The mayor would like to restrict and, in some cases, eliminate my ability to run a credit check as a way of determining eligibility. In 24 years, each time I have not followed my own process, we have regretted it: trashed apartments, unsanctioned pets, domestic abuse and, last year, a heroin overdose.
If we are no longer allowed to use credit checks to choose tenants from the pool of applicants, we will either decide to sell or to raise rents to cover the potential costs of damages from bad tenants. Understand one thing: The people we won’t rent to in today’s good market are the same people we would not have rented to in yesterday’s high-vacancy market.
The other aspect of the mayor’s proposal is rent control. Aside from the fact that landlords are already dealing with high property taxes, the new rainwater tax and the safety tax, the housing stock in Portland is old and requires major capital investments – investments that typically must be depreciated over 39½ years.
We should also keep in mind that the cost of many of these improvements, such as boilers, heat pumps, rubber roofing and replacement windows, is the same as and sometimes more than the cost of improvements in much larger metropolitan areas where the rents are higher.
If rent control is implemented, the first thing we will do is raise our rents by hundreds of dollars per apartment so that we are at market rates as a starting point. The City Council report itself pointed out numerous arguments against rent control. These included tighter vacancy rates, as people are afraid to give up their apartments, and a slowdown in the construction of new housing.
And, as we have seen in cities like New York and San Francisco, market rents often increase drastically because of the shrinking vacancy rate as fewer tenants move. The result is that rent control often benefits those who do not need the financial benefit of rent control.
Finally, it is important to remember that Portland’s current housing issues are recent and, with hundreds of new units under construction, may be short-lived. It was also just a few years ago that vacancy rates were so high that landlords were offering a free month’s rent. Some were even losing their buildings to foreclosure.
In fact, according to U.S. Census statistics cited by the website Department of Numbers, as recently as 2014, rent in Portland as a percentage of median household income was trending down and remained lower than the national average.
If the city wishes to force small landlords who offer below-market rents and good workforce housing out of the business, then Mayor Strimling’s proposal should accomplish just that.
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