Rents have increased for residents in apartments in Redbank Village in South Portland. Gregory Rec photo/Press Herald

South Portland’s City Council continues its debate on how to cap rent increases before its eviction moratorium expires this fall.

“This was initially spurred on by some concerns over rents at Redbank that were double-digit (percent) increases,” said City Manager Scott Morelli. “There were a lot of concerns at that time that some of those increases could lead folks to not being able to continue their residency there, and in this market where they might go, and it’d be the streets or their car or some other location.”

Redbank Village Apartments were purchased by California-based company JRK Holdings in November 2021 for $143 million. In May, tenants reported that they were being faced with rent increases of as much as $598 in the traditionally low-to-moderate-income development.

The city’s eviction moratorium, issued in June and set to expire Nov. 27, puts a 10% cap on rent increases. On Tuesday, councilors discussed whether the cap should stay in place and, if so, at what percentage. One option that gained some traction is based on an Oregon statute that has a 7% cap plus a consumer price index adjustment.

Councilors agreed they would like to explore the economic impact of hard caps like the 10% ceiling now in effect, as well as consumer price index adjustments and those that take property taxes into account.

The city requires landlords to provide at least 75 days notice prior to rent increases, which JRK Holdings had done, but some Redbank tenants claimed they were coerced into signing within days, with the threat of even higher rent increases.

Councilors also supported a staff recommendation to increase the advance notice of an increase to 90 days and a provision to give tenants a minimum of 30 days to sign the renewal to combat the ultimatums given to Redbank tenants.

Local landlords, residents and councilors pointed to the city’s recently completed Housing Needs Assessment, which has illustrated that South Portland has a shortage of housing “across the board.”

“We’re just, on the gross scale of things, not producing enough housing units and policies have not been supportive of housing production,” said Planning Director Milan Nevajda. “In that kind of an environment, and the extremity of the environment, our consultants were very clear that they wouldn’t recommend anything that would warp the market further.”

The housing study calls for increasing the city’s housing stock by nearly 3,000 units by 2030 in order to meet expected demand.

“As the planning director said, we have a supply-side problem,” said Donna Larson Kane, chairperson of the city’s economic development committee. “Let’s deal with supply, let’s look at our regulations.”

Since the eviction moratorium came before the council in May, local landlords have voiced their fears of how a rent cap will impact them. The moratorium exempts landlords who own 10 or fewer units, and many have called to increase that number.

“It seems that the Redbank situation has caused the city to assume that all landlords have increased rents excessively,” said Donald Ladd, a resident who owns a four-unit apartment building. “I have very, very good tenants. I’m a good landlord and I think the majority of landlords in the city are good landlords, and you haven’t heard from my tenants about going up in rent.”

Councilors say they have heard landlords’ concerns and continued Tuesday to emphasize the legitimacy of their arguments.

“I’m very much concerned for those people living in South Portland who this is their retirement,” said Councilor Misha Pride. “They saved a little nest egg and they eventually bought the neighboring three-unit, and that’s what they’re using as their sole source of income, and now prices are going up but social security isn’t going up.”

Landlords and local organizations and city committees urged collaboration, citing the Housing Needs Assessment as an example.

“The housing report was worked with actual stakeholders that can tackle the problem of housing affordability in South Portland,” said Eamonn Dundon, director of advocacy at the Portland Regional Chamber. “That includes housing providers, advocates, representatives of marginalized groups, relevant city committees, landlords and developers. This represents how policies should be crafted.”

A third workshop on rent stabilization is scheduled for Sept. 27.