PROPERTY TAX HIKE, HB 3349, VOTED OUT OF COMMITTEE

Tuesday March 26, 2019 1 

By Taxpayer Association of Oregon

OregonWatchdog.com

On Monday March 26th, the House Human Services & Housing Committee voted HB 3349 which is a $150 million tax on Oregon property owners out of Committee and to the Revenue Committee. HB 3349 removes home mortgage interest deductions based on income levels and also removes the deduction for all secondary homes.

Here is our statement on the bill:

No on HB 3349 on $150 million property tax:

It is unconstitutional, creates poverty & increases rent

1. Illegal property taxes increase

HB 3349 raises $150 million in new property taxes while bypassing the 60% vote rule for all taxes. This is unconstitutional and against the will of voters.

2. Hitting people at a very vulnerable financial weak point

HB 3349 raises taxes by eliminating and reducing the home mortgage interest deduction for certain higher income earners for both their home and/or second homes. People have made the biggest financial decision of their lives based around the historic home mortgage interest deduction. HB 3349 will soak homeowners with higher taxes. Homeowners have built their jobs, income streams and their retirement plans based on how it aligns with this longstanding promise of this deduction.

3. Raising taxes on people who are already over-taxed.

Oregon homeowners already pay higher property taxes than the average state. They also pay higher state taxes overall (gas, income, business…) than the average state. Raising taxes on people who already paying more creates more poverty and less economic mobility.

4. Makes the homeless and housing crisis worse.

Oregon’s affordability housing crisis is a result of (1) Oregon’s unique urban growth boundary as a regulatory chokehold that artificially inflates home prices (2) Higher than average property taxes and (3) high home development charges and housing regulations not found in other states. Increasing property taxes on an already over-inflated system will make the housing crisis worse — not better.

5. Increases rent.

Raising taxes by thousands of dollars on homeowners who rent within their existing home or their second home is guaranteed to increase rents.

6. The first step to raising taxes on all homeowners.

HB 3349 is the first step to destroying the home mortgage interest entirely and on all income levels, which has been proposed before. Raising taxes on over-taxed people is never a lasting solution to anything but rather perpetuating and feeding the problem of out-of-control spending and fiscal mismanagement which makes the problems worse and more difficult to solve.

— Call your lawmaker toll-free to oppose this measure. 1-800-332-2313 or write 900 Court St. NE, Salem Oregon 97301

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Senate Bill 608 was signed into law on Thursday, February 28, 2019.

Click the link below for the full text of the new law.

SB608 Governor Signs SENATOR LAURIE MONNES ANDERSON Statement.pdf

Oregon House Republicans, dated February 26, 2019

Democrats overcome bipartisan opposition to impose first-in-the-nation rent control, 35-25. Three Democrats joined with Republicans recognizing supply is necessary to alleviating a housing shortage. #orpol #orleg #novacancy

Oregon House Democrats, dated February 26, 2019

By Elliot Njus | The Oregonian/OregonLive

A proposal for statewide rent control is headed for a vote on the Oregon House floor, its final obstacle before it goes to a supportive governor for her signature.

The House Committee On Human Services and Housing voted along party lines to advance Senate Bill 608, a priority for leaders of the Democratic majority in both chambers of the Legislature.

Republican members of the committee proposed several changes to the legislation, including removal of an emergency clause that moves up the bill’s effective date and a proposal to allow cities to opt in to the policy. Democratic members of the committee rejected those proposals, sending to to the floor as-is.

The bill would cap annual rent increases to 7 percent plus inflation throughout the state. Annual increases in the Consumer Price Index, a measure of inflation, for Western states has ranged from just under 1 percent to 3.6 percent over the past five years.

The rent increase restrictions would exempt new construction for 15 years, and landlords would be free to raise rent without any cap if renters leave of their own accord. Subsidized rent would also be exempt.

The bill also would require most landlords to cite a cause, such as failure to pay rent or other lease violation, when evicting renters after the first year of tenancy.

Some “landlord-based” for-cause evictions would be allowed, including the landlord moving in or a major renovation. In those cases, landlords would have to provide 90 days’ notice and pay one month’s rent to the tenant, though landlords with four or fewer units would be exempt from the payment.

The bill wouldn’t lift the state ban on cities implementing their own, more restrictive rent control policies.

With the bill’s expected passage, Oregon would become the first state to enact a statewide rent control program. In other states with rent control policies, cities enact and administer local programs.

-- Elliot Njus

enjus@oregonian.com; 503-294-5034; @enjus

Visit subscription.oregonlive.com/newsletters to get Oregonian/OregonLive journalism delivered to your email inbox.

SENATE MAJORITY OFFICE

Oregon State Legislature, State Capitol, Salem, OR

NEWS RELEASE

February 4, 2019

CONTACT: Rick Osborn 503-986-1074

Rick.osborn@oregonlegislature.gov

Rent stabilization bill advances to Senate floor SB 608: Healthy and thriving families need safe and stable housing

SALEM – A bill that would stabilize out-of-control rent hikes for residential properties across the state is advancing to the Oregon Senate for a vote.

Senate Bill 608 – which passed out of the Senate Committee on Housing today with a “do pass” recommendation – would eliminate the potential for many “no cause” evictions on residential tenancies. It also would cap annual rental increases.

The bill would provide certainty for Oregon’s renters by ensuring they won’t face enormous and unforeseen rent increases or be kicked out of their homes. Safe and stable housing is a central requirement for healthy families to thrive and for children to excel in school. Sen. Shemia Fagan, D-Portland, chairs the Senate Housing Committee and is a leader on the issue of housing.

“Last December, I met an 83-year-old renter who was afraid to ask maintenance to fix her lights for fear of eviction or a rent spike,” Fagan said. “She had lived in the dark for 3 months by the time I met her. SB 608 protects her and hundreds of thousands of Oregonians who deserve safe and stable rental housing.”

The bill prohibits landlords from terminating month-to-month tenancies without cause after one year of occupancy. Tenants would be entitled to advanced written notice, ranging from 30 to 90 days, if they are going to be evicted. The bill also would cap annual rent increases to 7 percent – plus the consumer price index – over the existing year’s rents. Landlords who fail to

comply with those provisions would pay three months’ rent, plus actual damages, to the tenants affected by the eviction or rent increase.

Numerous Oregonians from various parts of the state provided oral or written testimony on the legislation. The bill now will go to the full Senate for a vote.

“Today, working hard is no guarantee that you will be able to put a roof over your head – let alone a healthy and stable one,” Habitat for Humanity of Oregon Executive Director Shannon Vilhauer said in written testimony. “We believe Oregon is better than that. Every Oregonian should be able to find a decent and affordable place to live. Diligent renters deserve the opportunity to plant roots in their local communities. Every child benefits when classrooms stabilize.”

Press release link:       Rent stabilization bill advances to Senate floor

Rent control, eviction protection bill advances in Oregon Senate

By Elliot Njus | The Oregonian/OregonLive

The Oregon Senate’s Housing Committee advanced a bill that would enact a statewide rent control policy and restrict evictions, sending it to the full Senate for a vote.

Lawmakers heard nearly four hours of testimony from renters and landlords as Senate Bill 608 had its first hearing in the Senate’s Housing Committee. It’s poised to cruise through the Legislature, with support from leaders of the Democratic majority in both the House and Senate.

Their proposal attempts to sidestep longstanding criticism of the polarizing policy, but it's also drawn some misgivings from rent control supporters.

Two landlord groups, the Rental Housing Alliance Oregon and the Oregon Rental Housing Association, are both remaining neutral, with their leaders saying the bill is palatable, if not appealing.

That’s a relatively friendly position for their constituency – both statewide advocacy groups geared toward small landlords.

“There’s a lot here for landlords to dislike,” said Jim Straub, the legislative director for the Oregon Rental Housing Association. “But I’d also like to recognize it for what it isn’t: an industry killer. As written, I do not believe it will be catastrophic to our livelihood.”

The larger Multifamily NW, whose Portland-area membership includes larger landlords and property management companies, opposes the bill, as did many landlords who testified on their own behalf. They argued it would hurt business and discourage investment, resulting in substandard housing.

They pointed to a large body of academic research that’s found rent control policies in other states have resulted in a reduced housing supply and higher rents.

“At best, Senate Bill 608 will have no effect,” said Deborah Imse, the executive director of Multifamily NW, “but at worst it will make housing less affordable in the long run.”

Renters and tenants’ rights activists largely argued the bill would help protect against eye-popping rent increases that have frequently grabbed headlines across the state.

“It doesn’t solve the entire problem,” said Katrina Holland, the executive director of the Community Alliance of Tenants. “It certainly does take a giant leap forward by giving a measure of predictability for hundreds of thousands of renters in hundreds of cities across the state.”

Senate Republicans on Monday released statements in opposition to the proposal.

The bill would cap annual rent increases to 7 percent plus inflation throughout the state — a rate that’s much higher than most municipal rent control policies in other states. In many California communities with rent control, for example, affected apartments see their rents climb only by the rate of inflation, or a fraction of it, each year. (Annual increases in the Consumer Price Index, a measure of inflation, for western states has ranged from just under 1 percent to 3.6 percent over the past five years.)

The rent increase restrictions would exempt new construction for 15 years, and landlords would be free to raise rent without any cap if a renter left of their own accord. Subsidized rent would also be exempt.

The bill also would require most landlords to cite a cause, such as failure to pay rent or other lease violation, when evicting renters after the first year of tenancy.

Some “landlord-based” for-cause evictions would be allowed, including the landlord moving in or a major renovation. In those cases, landlords would have to provide 90 days’ notice and pay one month’s rent to the tenant, though landlords with four or fewer units would be exempt from the payment.

The bill would not lift the state ban on cities implementing their own, more restrictive rent control policies.

Sen. Fred Girod, R-Stayton, the ranking Republican on the Senate Housing Committee, said Senate Democrats flatly rejected a suite of amendments, including the removal of an emergency clause. With the clause, the bill would take effect when it’s signed by the governor; if passed without it, the bill would take effect next year. Girod abruptly left the hearing after it became clear the amendments would not pass.

Sen. Tim Knopp, R-Bend, the only Republican remaining after Girod left, cast the lone “no” vote.

“We’re making policy that ultimately going to be counterproductive to hat all the people who testified said they actually want,” Knopp said.

Sen. Shemia Fagan, D-Portland, who chairs the housing committee, said she shared concerns from people who testified it doesn’t go far enough.

“I wish this bill would do more, and I would be willing to go further,” she said.

-- Elliot Njus

enjus@oregonian.com; 503-294-5034; @enjus

Visit subscription.oregonlive.com/newsletters to get Oregonian/OregonLive journalism delivered to your email inbox.

Oregon lawmakers propose unorthodox approach to rent control

By Elliot Njus | The Oregonian/OregonLive

Oregon appears poised to impose statewide rent controls, a national first, and place new restrictions on evictions.

It’s the second time rent control has been teed up as a major decision for the Legislature. This time, however, Democratic leaders in the Oregon House and Senate have united around a single proposal, and there’s little sign members of the majority party will defect to oppose it.

Yet rent control remains controversial. A large body of academic research says strict rent control reduces the supply of rentals, pushing rents higher in the long run. Only four states have cities with rent control, and most states prohibit it.

And the approach proposed in Oregon is unorthodox, not only in its statewide approach but also in its generous allowance for rent increases. That’s served to broaden its support but also has drawn misgivings from some renters and tenants’ rights activists.

Senate Bill 608 would limit annual rent increases to 7 percent plus inflation throughout the state. It also would require most landlords to cite a cause, such as failure to pay rent or other lease violation, when evicting renters after the first year of tenancy.

The rent increase restrictions would exempt new construction for 15 years and landlords would be free to raise rent without any cap if a renter left of their own accord. Subsidized rent would also be exempt.

In the high-cost Portland metro area and given 2018’s rate of inflation, that mean an increase of more than 10 percent — about $138 a month for a tenant renting a typical two-bedroom apartment renting at $1,330 a month.

That cap is far higher than is typical in cities that have rent control. In many California communities with rent control, affected apartments see their rents climb only by the rate of inflation, or a fraction of it, each year. (Annual increases in the Consumer Price Index, a measure of inflation, for western states has ranged from just under 1 percent to 3.6 percent over the past five years.)

House Speaker Tina Kotek had in 2017 proposed to eliminate no-cause evictions and lift the state’s 1985 ban on rent control, allowing cities to create their own rent control policies. That effort failed in the Senate after passing in the House.

“We need to make progress here,” Kotek said in an interview, “so we needed to have a bill that could get support in the Senate.”

Lawmakers settled on allowable increases of 7 percent plus inflation because, she said, it would be “fair and responsible” to both tenants and landlords while tamping down on the most eye-popping increases. Cases where rents rose by hundreds of dollars — in some cases doubling overnight — have been reported across the state.

“We want predictability and stability for tenants,” Kotek said. “We don’t want to see the kinds of spikes that we’ve seen that have caused so much disruptions in people’s lives.”

It’s also intended to provide stability while limiting the impact on the supply of rental homes, Kotek said.

Economic research has shown that rent control reduces investment in housing.

Most recently, a 2018 Stanford University study of San Francisco rent control found that it reduced displacement of existing tenants and particularly those who were members of racial minorities.

But at the same time, it reduced the housing supply through landlords converting rental apartments to condos or redeveloping the property. That likely resulted in higher rents in the long run across the city, with the brunt borne by new and relocating residents.

Lawmakers in Oregon, where the Legislature banned rent control in 1985, are proposing a version that gives landlords more latitude to raise rents. That, Kotek said, would prevent double-digit rent hikes seen in some properties in recent years without stifling development.

“I think that the traditional criticisms just don’t apply here,” Kotek said.

But it’s drawn ire from some renters and activists who say it’s too little to provide real protection and could instead normalize huge increases. And it maintains a state ban on cities implementing their own rent control policies that could go farther.

“I think it does more to protect landlords from strong tenant protection than to protect tenants from landlords,” said Margot Black, a Portland tenant organizer.

The Oregon Housing Alliance, a coalition of housing-related nonprofits and governments, endorsed the measure. Alison McIntosh, a spokeswoman for the group, said it’s important to advance a politically viable measure that would provide stability for tenants.

“We know the Legislature needs to act,” McIntosh said. “Tenants all across Oregon are still seeing rent increases and no-cause evictions, particularly in more rural communities.”

Oregon’s proposal closely resembles one put forward by the Terner Center for Housing Innovation at the University of California at Berkley as an alternative to an expansion of that state’s rent control.

In the runup to a vote over whether to repeal California’s restrictions on rent control — a vote that failed — the center proposed an “anti-gouging” cap on rent increase of 5 percent plus inflation. It was modeled on state laws that prohibit price gouging during declared states of emergency.

“The goal was to provide a high-level baseline protection against really egregious rent increases that are really just designed to get the tenant out,” said David Garcia, the center’s policy director.

It’s a fair criticism, Garcia said, that that baseline protection still permits rent increases that might be unaffordable in some cases.

But in California, he noted, municipalities have the freedom to further restrict rents, and 15 do.

With California’s restrictions -- which allow rents to reset upon vacancy and exempt single-family houses and units built after 1995 -- rent controls have demonstrably reduced displacement, even as they pushed rents higher overall, Garcia said.

Research is only beginning to capture that nuance, Garcia said.

“There are some tradeoffs when you talk about any kind of rent control,” he said. “Rent control can mean a lot of different things.”

-- Elliot Njus

enjus@oregonian.com; 503-294-5034; @enjus

Visit subscription.oregonlive.com/newsletters to get Oregonian/OregonLive journalism delivered to your email inbox.

Development restrictions make housing expensive, but lawmakers blame landlords instead.

152 Comments

By 

Mark Hemingway

Wall Street Journal  Opinion

Oregon is poised to become the first state to enact statewide rent control. The Democrat-controlled state Senate is considering a bill to cap rent increases at 7 points above the annual increase in the consumer price index. Currently, that works out to about 10% a year. The bill also includes tenant protections, such as prohibiting no-cause evictions for anyone who has lived in a property for more than a year. Democratic Gov. Kate Brown supports the bill and says she’ll sign it.

For a state that prides itself on openness to creative policy solutions—mostly progressive ones—Oregon has an appropriate state motto: Alis volat propriis, or “She flies with her own wings.” But with statewide rent control, Oregon’s political leadership might be venturing a little too close to the sun. Virtually every mainstream economist, from Paul Krugman to Thomas Sowell, has condemned rent control as bad policy. Oregon’s problem isn’t rising rents. It’s the lack of affordable housing boosting prices.

“We have a lot of people that perhaps had moved here 15 years ago when rent prices were significantly less,” says Jim Straub, a developer and landlord in Eugene who is legislative director for the Oregon Rental Housing Association. “All of a sudden they see the market forces pushing up the rent prices.” They responded by supporting rent control.

Average annual rent increases in Portland, the state’s most populous city, hit 9% in 2016—the second highest of any housing market in the country, after Seattle. Since then, things have improved. Zillow reported earlier this month that rents in Portland fell 1.3% in 2018. The city’s construction of 15,000 new apartments since 2015 contributed to the decline.

Still, the state remains resistant to new development. Oregon adopted widely hailed “smart growth” policies in the 1970s, imposing “urban growth boundaries” around cities to prevent sprawl. The boundaries are supposed to include enough land to allow for years of additional growth, but local governments have been needlessly restrictive. This has artificially inflated the price of land within the boundaries. In 2010 consultant Wendell Cox surveyed the Portland urban growth boundary’s effect on property values. Land just outside the boundary was worth $16,000 an acre, versus $180,000 an acre for land “virtually across the street.”

On top of all this, Oregon has a red-tape problem that skews developer incentives. “Systems and development charges and permit fees for even a 500-square-foot unit in the city of Eugene right now are close to about $20,000 per unit,” says real-estate agent James St. Clair. “There’s no incentive to build small affordable units. Everyone’s building more-expensive luxury units so they can get a better profit margin.” Mr. St. Clair says he has been speaking out against rent control and other Oregon housing policies because the lack of affordable housing has contributed to acute homelessness in Eugene and Portland.

Rather than addressing the lack of housing supply, legislators have seized on rent control. Feisty left-wing groups like Portland Tenants United dominate grass-roots politics in Oregon. Over the past few years, the group’s divisive founder, Lewis & Clark College mathematics professor Margot Black, has become a political force.

PTU has organized rent strikes and picket lines against landlords seeking rent increases and pushed the Legislature to adopt drastic rent controls. “Homegrown Oregonians tend to be white and racist,” she said during a 2017 television interview. “I think the faster they can get out of the landlord business, the better.”

The PTU imploded last year in parodic fashion. Ms. Black was forced to step down as a leader of the group for allowing, among other things, a PTU organizer to sing “This Land Is Our Land” over the objection of the group’s Native American racial-equity trainer. While that might seem absurd, PTU’s persistent agitation is largely responsible for making rent control a dominant issue in Portland politics. After veteran East Portland state Sen. Rod Monroe voted against rent control legislation in 2017, he faced a Democratic primary challenge from state Rep. Shemia Fagan. She made housing the centerpiece of her campaign and defeated him in the primary by nearly 40 points.

For now, the proposed law’s 10% rent cap and various carve-outs—it exempts properties built in the past 15 years—don’t have Oregon’s developers and landlords panicking. The Oregon Rental Housing Association remains neutral on the bill, and Mr. Straub says state legislators have reassured him they won’t let rent-control restrictions put landlords out of business. But Mr. Straub, a third-generation landlord, remains worried statewide rent control will become a one-way ratchet once it is established.

“I’m an active builder, developer, and investor, and for the first time ever, I went to my family and my wife and I said I think we ought to think about selling everything. We don’t do that bad in the stock market, the housing market’s great, and we ought sell out and reinvest,” he says. “We decided not to do that. But for the first time ever I had those conversations.”

Mr. Hemingway, a writer in Alexandria, Va., is originally from Oregon.