Oregon Is Just the Beginning

Posted by Content Director on May 14, 2019 4:36:18 PM

Like many property owners, I was shocked when Oregon became the first in the nation to pass statewide rent control. Overnight, housing providers throughout the state had to deal with a new set of restrictions on when and how much they can raise rents, as well as major new limits on no-fault evictions.

Affordability is a real problem, not just in Oregon but in many desirable areas throughout the country. But, as economists have shown over and over again, blanket rent control is not the answer—more housing is.

Rent control not only means fewer opportunities for development, it could also mean an end to putting a smart utility billing program like Livable in place throughout your portfolio. In rent-controlled markets, owners can generally only institute a bill-back program unit-by-unit on turnover. That means rent control not only keeps housing costs high, it also disincentives tenant conservation. Yet these negative outcomes have not stopped the idea of rent control from spreading. Read on to learn more.

 

What Just Happened in Oregon and What It Could Mean

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On February 28, Oregon Governor Kate Brown signed into law a new ordinance that immediately created rental restrictions throughout the state. Bill SB 608 went from committee to law in under one month, according to Oregon’s Statesman Journal, despite concerns from industry leaders that it would only make housing issues worse. “At best, SB 608 will have no effect, but at worst, it will make housing less affordable in the long run,” Multifamily NW Executive Director Deborah Imse told the paper.

Still, legislators steamrolled ahead and now SB 608 is the law of the land throughout Oregon. Among the new restrictions, rent increases are now only allowed annually and capped at 7 percent, plus the yearly change in CPI. (In 2019, that effectively allows for a 10.3 percent increase.)

The legislation also largely did away with no-fault evictions, other than in certain specific cases like owner or relative move in. All rental units, including single-family homes, are subject to the rent cap, but property owners who live on the property with no more than two units can still perform a no-cause eviction. Properties built in the last 15 years are completely exempt.

With such a sweeping change passed in such a short period of time, pundits have already begun pointing out how the Oregon passage could bolster rent control efforts in other areas. Shortly after Oregon’s bill passed, Illinois and New York introduced similar bills and Colorado is considering lifting its statewide ban on the practice.

In California, voters recently had the opportunity to effectively bring rent control to municipalities around the state by repealing Costa-Hawkins but voted against doing so by a wide margin. Yet that hasn’t stopped legislators from bringing the idea to the forefront yet again. Assembly Bill 1482, introduced by David Chu of San Francisco shortly after the Oregon ordinance passed, would cap annual increases in areas that do not currently have rent control in place. (Right now, that increase is set at the CPI, but that could change as the legislation progresses.) Furthermore, AB 36 by Richard Bloom of Santa Monica, would change state law to allow rent control on units ten years or older. Currently, under Costa-Hawkins, properties built after 1995 are exempt from state and local rent control ordinances.

Smart Saver Tip of the Month

Insulating water pipes is a quick and inexpensive way to lower water-heating costs. The easy upgrade reduces heat loss and allows you to lower your buildings’ water temperature setting by two to four degrees. Plus, since water doesn’t take as long to heat up, less of this precious resource is wasted waiting for faucets and showers to get to the appropriate temperature.

On smaller buildings, this is a definite DIY job that should take less than a day to complete. Check out the U.S. Department of Energy’s website for a comprehensive shopping list and step-by-step instructions.

 

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