2018 Legislative Session FINAL Report

What a strange session….in the months leading up to it people, policymakers and the press
opined about too much being done in a short session. Policy changes from “cap and trade” to
paid medical leave to a constitutional change making health care a right, were of a magnitude
that vetting and perfecting in 35 days was called unreasonable, irresponsible, and improper.
It turned out to be impossible.

But some less grandiose and not quite as controversial policy changes of note did make it
through the process that ended up being just 27 days long.
SB 1541 reinvigorates Cleaner Air Oregon (which did not receive funding in 2017) by directing
the Environmental Quality Commission to develop rules to reduce the public health risks of air
toxics emissions and require reductions from specific industrial and commercial air
contamination sources if emissions have been found to have exceeded specific benchmarks for
lifetime cancer and other health risks. The Commission is allowed to establish fees applicable to
certain air contamination sources to cover direct and indirect costs and to establish a pilot
program within Multnomah County to evaluate cumulative health risks from toxic air emissions
from multiple contamination sources. With bipartisan sponsors and organizations on all sides of
the issue mum, the bill is evidence that “a good compromise is when both parties are
dissatisfied.”

Significant but not highly controversial housing changes succeeded with support from both
parties. HB 4006 provides $1.73 million to Oregon communities experiencing the highest levels
of rent burden to hold public meetings and to start to identify next steps to reduce rent burdens.
HB 4007 allows individual to create a first-­time homebuyer savings account to pay for eligible
costs to purchase a single-­family residence and allows subtraction from federal taxable income.
HB 4010 establishes a Task Force on Addressing Racial Disparities in Home Ownership that
will compile data, identify barriers, investigate mortgage practices, and recommend solutions to
close the gap in homeownership. Finally HJR 201 provides a new tool for local governments to
address affordable housing needs by allowing them to use certain bonded indebtedness to
finance capital costs of affordable housing. You will be voting on this change to the Oregon
Constitution in November.

Democrats were successful at disconnecting Oregon from part of the federal tax code. The
federal Tax Cuts and Jobs Act includes a provision allowing specified pass through entities a
deduction generally equal to twenty percent of qualified business income. Oregon had provided
a tax break to these entities in 2013 and the State’s biennial budget was developed without this
additional new deduction for some businesses in mind. By disconnecting from this provision,
Oregon protects the state’s budget. Qualifying Oregon businesses will still be able to claim the
deduction on federal taxes.

With all the talk nationally about “Net Neutrality,” the legislature did what they could on the
subject. HB 4155 prohibits public bodies from contracting with broadband internet access
service providers that engage in paid prioritization, blocks lawful content or applications, or
disadvantages lawful internet content. Also of note, the budget reconciliation bill included
funding to improve rural access to broadband.

Mental health services were a funding priority with expansion of the Oregon Psychiatric Access
Line, increased mental health residential reimbursement rates, and almost $1 million to place
mental health therapists in schools. Additionally, the legislature put $2 million toward a strategic
plan to address the opioid crisis in the state.

Both parties agreed on some small PERS changes by addressing the Public Employee
Retirement System Unfunded Actuarial Liability. Changes do not impact PERS member defined
pension or defined contribution benefits, but do provide a new source of financing for member
pension benefits. Legislation established an Employer Incentive Fund to be used for a 25%
match program to assist public employers in developing plans to improve funded status and
manage employer contribution rate changes. The fund is capitalized with an estimated $25
million in one-­time funding. The legislature also established a School Districts Unfunded Liability
Fund. The PERS Board is planning to create a pooled side account for school districts and
proportionately distribute it among all school districts as an offset to employer contribution rates.
The fund is capitalized with an estimated $115 million in one-­time funding and additional
revenue that may become available for the fund include excess revenues from: debt collection,
capital gains, estate taxes, and interest on unclaimed property.

The Governor’s big plays were successful gun control and efficient state government legislation.
HB 4145 changes prohibition from possession from those with restraining orders obtained by an
“intimate partner” to those with restraining orders obtained by a “family or household member.”
SB 1565 addresses how agencies spend up to $8 billion to contract services by creating two
pilot programs -­ one to test “reverse auctions” and one to test a 30% weighting requirement for
price in procurements.

The Ways & Means Committee grappled with many needs for the omnibus bill that spent $93
million more and set $200 million aside in the State’s rainy day fund. These additional funds
were anticipated after the last revenue forecast, and included these allocation: $30 million to
health and human service program potential shortfalls, almost $28 million to cover the cost of
the 2017 forest fires season, $15.7 million for infrastructure supporting foster children, $6.4
million for some local projects not funded in 2017, $5.2 million for winter homeless shelters, $3.3
million to cover the costs of the January special election, and $1.4 million to create a Carbon
Policy Office whose employees will help flesh out a “cap and trade” plan with a new interim
committee chaired by Speaker Kotek and President Courtney.

My take away from session came on the last day as legislators who are retiring offered remarks
to their colleagues with floor speeches. Every one of them noted the brilliance and productivity
of the session when the House was split 30-­30 and Democrats and Republicans had equal
control, divided responsibilities, shared burdens and jointly celebrated success. As we move
into 2019 with a longer session and more capacity for issues, arguments, stalemates and
divides, it would be good to remember their words and move Oregon and her citizens onward.

Rental Housing Alliance Oregon Issues 2018

Passed Bills

HB 4006                                             Rent Burden Survey                                   Effective Date: On Passage

As amended, HB 4006 requires cities with populations greater than 10,000, with more than 25
percent of renter households experiencing severe rent burden, to complete a survey related to
affordability of housing and hold at least one public meeting regarding severe rent burden. A
household is severely rent burdened if the household spends more than 50 percent of the
household income on gross rent for housing. In collaboration with DLCD, OHCS is required to
develop the survey for these cities to provide information related to the affordability of housing
including actions related to land use and any intended actions to reduce rent burdens for
severely rent burdened households. Additionally, the measure requires cities to annually (no
later than February 1) report on the total number of housing units permitted and produced.
The measure also requires that DLCD and the Housing OHCS take actions to help cities identify
and report, on actions that will be taken by those cities to reduce rent burdens, and to report the
number of housing units of various categories permitted and produced in a calendar year.
HB 4006 also requires Oregon communities experiencing the highest levels of rent burden to
hold public meetings and start to identify next steps to reduce rent burdens. The bill includes
$1.73 million in funding for local jurisdictions around the state to take their next housing planning
step – like a housing needs analysis, zoning code update, or a housing plan specific to the
needs of the community.

 

HB 4007                                             Home Buyer Savings Account                     Effective Date: May 2018

Allows individuals to create a first-­time home buyer savings account within a financial institution
to pay or reimburse eligible costs to purchase a single-­family residence. The bill also allows a
subtraction from federal taxable income, equal to funds contributed to the account holder’s first-­
time home buyer savings account, up to $5,000 per year for an individual filing as single and
$10,000 per year for joint filers.

HB 4007 also increases the document recording fee by $40 for certain real property documents,
which is currently $20. Document recording is a duty of county clerks required under Oregon
law for certain real property records including but not limited to deeds, mortgages and contracts
affecting the title for real property. Currently, the document recording fee generates an
estimated $15 million per year in support of three separate housing programs, with 25 percent
of total funds collected dedicated to assisting veterans. The measure increases of the document
recording fee to $60, will result in an additional $30.5 million in revenue in the 2017-­19 biennium
and $61 million in the 2019-­21 biennium. Pursuant to statute, 10 percent of revenue is
dedicated to the Emergency Housing Assistance Program;; 14 percent is dedicated to the Home
Ownership Assistance Program;; and 76 percent is dedicated to the General Housing Account
program, all of which are administered by the Housing and Community Services Department.
This fee increase represents a significant increase in permanent, ongoing revenue for
programs.

HB 4010                                            Racial Disparities in Housing                       Effective Date: On Passage

Establishes a Task Force on Addressing Racial Disparities in Home Ownership. The goal is to
compile data, identify barriers, investigate mortgage practices, and recommend solutions to
close the gap in homeownership rates between communities of color and white families. The bill
requires the task force to report to the Legislature by September 15, 2019. The task force
sunsets December 31, 2019.

HB 4031                                           Accessory Dwelling Unit Provision              Effective Date: On Passage

Underlying bill authorizes guest ranches to be established in areas of eastern Oregon that are
zoned for exclusive farm use, subject to state and county approval or siting standards. BUT a
technical fix to a 2017 bill that was originally in HB 4034 (which did not pass) was amended into
this bill. Pertinent provision clarifies that the requirement that certain local governments allow
accessory dwelling units in areas zoned for detached single-­family dwellings is applicable only
within urban growth boundaries.

HJR 201 Municipal Corporation Binding – Constitutional Change – Vote 11/2018
Refers to the people, for their approval or rejection at the next regular general election, a
constitutional amendment authorizing local governments to issue bonds to finance affordable
housing projects.

Article XI, section 9, of the Oregon Constitution provides a general rule that a local government
may not “…raise money for, or loan its credit to, or in aid of” a private company. The provision
was originally adopted in 1859 and amended in 1917 and has been the subject of little litigation
in recent history. Given the role the private sector plays in many affordable housing projects,
some bond counsel have been unable to provide potential lenders with an unqualified opinion
that the Oregon Constitution authorizes the issuance of affordable housing bonds.
HJR 201 refers to the voters, for their approval or rejection at the next regular election, an
amendment to the Oregon Constitution that exempts certain affordable housing-­related bonds
from the prohibitions in Article XI, section 9, if certain conditions are met. First, the bonds must
be payable from ad valorem taxes that are not otherwise subject to certain constitutional
limitations. Second, the election must be held in May or November or have 50 percent of
registered voters cast a ballot. Third, the local government must conduct audits of and publicly
report on the expenditure of proceeds from the bonds. Finally, HJR 201 limits the principal
amount of the local government’s indebtedness that may be outstanding for affordable housing
projects to one-­half of one percent of the real market value of all property in the jurisdiction.

SB 1551                                        Breach of Security                                                Effective Date: May 2018

Oregon enacted the Consumer Identity Theft Protection Act in 2007. Under the law, consumers
must be given notice when a data breach of their personal information occurs;; if more than 250
consumers are affected, notice must also be given to the Attorney General. The statutes also
require personal information be safeguarded by those who own, maintain, or possess such
information. Consumers have the right to protect their information by requesting the consumer
reporting agencies freeze access to their consumer report. Under Oregon statutes, consumer
reporting agencies are limited to charging no more than $10 for placing or removing a security
freeze. Victims of identity theft may not be charged a fee.

According to the Identity Theft Resource Center, there were 1,579 separate data breaches in
2017, with nearly 180 million individual records exposed. One breach reported in 2017 exposed
the names, social security numbers, dates of birth, and, in some cases, driver license numbers
of 143 million Americans, with 209,000 individuals having their credit card numbers stolen. In
response to that breach, a work group was formed to begin revising and updating Oregon’s
Consumer Identity Theft Protection Act.

SB 1551 is the product of that work group. It provides free-­of-­charge placement, removal, and
temporary lifts of credit account freezes. If an entity suffers a data breach, the notice of that
breach must be given to the consumer in the most expeditious manner but within 45 days.

Additionally, if the entity that suffers a breach provides free credit monitoring or mitigation
services to consumers, the entity may not condition acceptance of the free offer on the
consumer providing a credit or debit card number. If the entity wishes to offer other services, it
must be offered separately and distinctly from the free service. The measure also strengthens
the safeguards to protect the security, confidentiality, and integrity of personal information.

Funding of Note…

• $60 million more in ongoing funding every biennium for homeless services andprevention, developing and preserving affordable housing, and providinghomeownership opportunities for low to moderate income families.• $5.2 million for emergency winter housing and shelter.• $2.0 million for communities around the state to study their housing needs and developplans to address the housing crisis locally (HB 4006).

Failed Bills of Note

HB 4085

Attempted to require courts to award attorney fees, costs and necessary disbursements to
tenants prevailing in action arising under rental agreement or landlord-­tenant law. Authorized
court to award attorney fees, costs and necessary disbursements to landlord prevailing in action
arising under rental agreement or landlord-­tenant law. Required court to award attorney fees,
costs and necessary disbursements to landlord prevailing in action arising under rental
agreement or landlord-­tenant law if court determines tenant had no reasonable basis for
asserting claim or appealing judgment. Authorizes court to award attorney fees, costs and
necessary disbursements to prevailing party in action arising under rental agreement or
landlord-­tenant law but not between landlord and tenant.

Objections to bill included taking away judicial discretion, increased litigation. Proponents used
this chart to show where recovery is allowed by tenants and/or landlords in different states:
https://olis.leg.state.or.us/liz/2018R1/Downloads/CommitteeMeetingDocument/145552
An informational hearing was held on the bill, but the issue itself will be held over until 2019.

HB 4154                          Subcontractor Wages

Sought to require general contractors to cover unpaid wages, benefit payments and other
contributions due to employees of subcontractors at any tier if the general contractor has not
paid the subcontractor in full and there is a valid claim. Authorized Bureau of Labor and
Industries (BOLI) to enforce wage claims against contractors as if they were the subcontractor
that failed to compensate the employee.

HB 4145 actually passed the House 31-­26 (mostly along party lines) but never received a
hearing in the Senate (mostly due to lack of time).

The issue for landlord/property managers became apparent during conversations in the House.
If you had someone building/remodeling/repairing who did not pay employees, subcontractors,
suppliers, you may have to. Another example, if your landscape contractor did not pay his
employees, you could be responsible.

HB 4160                          Paid Family & Medical Leave

Created family and medical leave insurance program to provide employee who is eligible for
coverage with portion of wages while employee is on family medical leave or military leave.
Requires employer and employee contributions to fund program. Required all employers and
eligible employees to contribute to the Family and Medical Leave Insurance Fund.

HJR 203                          Right to Health Care

Proposes amendment to Oregon Constitution establishing obligation of state to ensure every
resident of state access to effective, medically appropriate and affordable health care.

Other Failed Bills

HB 4001 House Cap and Trade
HB 4034 Accessory Dwelling Unit – Placed in HB 4031
HB 4108 Single-­Family Affordable Housing Tax Credit
SB 1507 Senate Cap and Trade