With the passage of Senate Bill 608, Oregon will become the first state in the country to have statewide rent control. Many property owners are incredulous. Their reactions are loud and clear and indignant: “How could this happen?!” “We need to stop this!” “If this is in, I’m out!”
The purpose of this article is to explain A) What the bill is, B) How it came about, and C) Why Rental Housing Alliance Oregon did not support it or oppose it.
What the bill is: Briefly, SB 608:
- Caps rent increases at 7% per year + CPI (which currently totals to just over 10%)
- Restricts no-cause terminations to the first year of occupancy
- Requires all fixed term leases be converted to month to month tenancies upon end dates unless new lease signed
- Adopts an annual “3 strikes you’re out” system to terminate leases at end dates for “just cause”, with 90-day notice
- Defines “Landlord Exceptions” to terminate tenancies due to sale / renovation / demolition / family move-ins of unit
- Establishes a relocation fee equal to 1 month’s rent for Tenants displaced by a Landlord Exception
- Relieves small Landlords (with 1-4 units) from paying relocation fees
- Exempts Owner-occupied tenancies (roommates) and Owner-occupied duplexes
- Provides Tenant defense against action for possession with 3 months’ rent plus actual damages for violations when Tenant brings action within 1 year
- Is defined as Emergency Legislation thus immediately enacted upon receiving the Governor’s signature
How SB 608 came about:
The process to enact legislation generally entails a bill suggested through a legislator, drafted by legislative counsel and published with legislative sponsors. This allows for committee hearings, work sessions, amendments and public debate. If a committee approves the bill, it usually goes next to the House or Senate floor for a vote and then the whole process starts over again in the next chamber. However, many bills never make it to the floor, some are changed beyond recognition, while others simply glide through the formalities of the process unscathed and adopted as law.
Occasionally a bill seems to be doing fine until it is finally and abruptly stopped in its tracks by a single vote. In February 2017 HB 2004 was the housing bill that endured the legislative process, was hotly debated, looked like it would pass yet was ultimately defeated due to the efforts of a single senator, Rod Monroe. This was a stunning defeat for Tenant advocates and for the legislators heavily invested in it (including Speaker of the House Tina Kotek). While Landlords celebrated, Tenant advocates regrouped.
Meanwhile in Portland, newly elected Commissioner Chloe Eudaly was able to pass a temporary emergency Rent Stabilization Measure. The city was sued, arguing the ordinance was a violation of the statewide preemption to non-constitutional rent control. The court nevertheless sided with Portland and the lawsuit then progressed (stalled?) to the appellate level. Mayor Wheeler double-downed in 2017, eliminating small Owner exemptions to the measure and signed it into permanent statute. Additionally, the City Council has since decided to pursue Landlord registration, revise screening criteria and challenge accepted practices for security deposits.
In 2018, Landlord groups rallied with a new organization called More Housing Now, attempting to unite their voices in a single effort to affect housing policies. The plan failed to take root as conflicts over what form of “single messaging” surfaced, pitting the issues of No Cause Terminations, Rent Control and Relocation Assistance against each other: RHA Oregon (with a heavy Portland membership) became active in challenging Relocation Assistance; ORHA, headquartered in Eugene, has predominantly defended the use of No Cause Terminations; Multi-Family NW has remained laser-focused on stopping rent control.
Trying to stop everything at once has put all Landlords in a defensive posture and the media attention has not been sympathetic.
It’s worth noting here that preparation and positioning for law making and rule changes does not begin when the bell rings and the Legislative Session commences. Early in 2018 officials were converging to discuss what the “next housing bill” would look like. RHA Oregon and others participated in a variety of meetings on housing issues throughout the year. In September (prior to the elections) a sample proposal surfaced that revealed just how much the Tenant groups were pushing for. Here is what surfaced:
- Rent control at CPI only (no additional index)
- Relocation fees matching Portland’s formula
- Lift all local preemptions (meaning local ordinances could go further)
- “Vacancy control” meaning –
- No ability to re-set rents on vacancy and
- No option to terminate any rental except for For Cause (which itself was suggested as too Landlord friendly and subject to being modified)
Of course, many 2018 election campaigns rallied around housing as a platform issue; not only as races with Democrats v Republicans, but also lining up more liberal Democrat candidates against their more centrist incumbents. Because of his stand in 2016, Sen. Monroe was defeated in the primary by Democrat Shemia Fagan (who is now the current chair of the Senate Housing Committee). Three term Republican Rep. Julie Parrish (formally on the Human Services and Housing Committee) lost her seat to newcomer Democrat Rachel Prusak, who used homelessness and no-cause evictions as her rallying campaign message. There are other examples as well, including the governor’s race with the re-election of Democrat Kate Brown over her Republican challenger Knute Buehler. And not to be overlooked, Democrat Val Hoyle was elected to Labor Commissioner, a job that oversees B.O.L.I. (the state bureau that presides over all Fair Housing discrimination disputes).
The result? Oregon has become one of six states (California, Illinois, Rhode Island, Delaware and Hawaii) to have a Democratic Super-Majority that can pass the laws of their choice (barring a veto from their own party’s leader). And Oregon is decidedly not Landlord friendly.
Why Rental Housing Alliance Oregon testified as Neutral on SB 608:
SB 608 did not get introduced in the House of Representatives as HB 2004 had in the last session, and it was not written by any of the individuals on the Human Services and Housing Committee. Interestingly, while it was written by the Speaker of the House, Tina Kotek, it was co-sponsored by Senate Majority Leader, Ginny Burdick and introduced as a Senate bill. And even though Shemia Fagan chairs the Senate Housing Committee, she can claim no responsibility for its content.
Five Landlord-friendly amendments were submitted to the committee. All of them were summarily declined. After passing in the Senate it will proceed to the House. There will be Tenant-friendly amendments proposed, and they too will likely be denied. And while Landlords are fuming mad over SB 608, note that Tenant’s rights groups and advocates (including the Community Alliance of Tenants, Portland Tenants United, Oregon Legal Aid Society and others) have all lined up to voice their objections that the bill “does not go far enough”.
Rental Housing Alliance Oregon has recognized the fact that there was a spirit of “pre-negotiation” to the bill. The fact is, there are not enough votes in either chamber to champion a Landlord friendly challenge and there are many votes in the House that are willing to go much further to benefit Tenants.
We are confident that with the current power of politics behind the measure, it will pass as written.
As written, it provides Landlords with some “relief” by maintaining no cause terminations for the first year. It allows for a rent-cap equal to over 10% (adjusted by the current CPI index). It gives landlords the ability to re-set rents upon vacancies and it creates a new “tool” to terminate leases after 3 violations in a year. It defines Landlord-based exceptions to terminate with a “reasonable” one-month’s rent as relocation fee and exempts small Landlords from paying it entirely. It also maintains the state’s preemption over local jurisdictions for more severe attempts and rent control ordinances.
Although Rental Housing Alliance Oregon does not support the overall premise of the bill, for the reasons stated here, we cannot object to it either. If there is a lot of opposition, there will be more amending – none of which will benefit Landlords. So, we have formally adopted a neutral position on SB 608 “as written”. Should it be modified in any way, RHAO will review this position.
Board of Directors