What Are They Thinking-Increase Property Taxes and Impliment Rent Control

Oregon now has a newly elected governor and a new super majority legislature.  They are getting ready to move and begin implementing policies that, from their perspective, will help solve major funding issues and directly address housing problems associated with reduced affordable housing and increasing homelessness.

One of the Oregon legislature’s ideas to generate more revenue is to introduce legislation to increase taxes.  Among twenty seven of these bills there are nine that propose an increase in property taxes (SJR1, SJR2, HJR1, HJR2, HJR3, HJR4, HJR11, HB2104, HB2157).

At the same time we have a governor and legislature that have a deep concern over affordable housing and believe we need to act now to avoid more people being homeless. They want to address finding affordable housing solutions for those who are currently homeless.  Their proposed solution is to introduce legislation to cap rent increases to 7% per year plus the annual change in the consumer price index.  The governor calls this rent stabilization but in reality it is another form of rent control.

Rent control has been around for years in places like New York and San Francisco.  It has done little to increase the availability of low cost housing and instead has lead to overall higher rents, lower quality rentals and lower inventory of affordable housing.  This could also guarantee annual rent increases to existing renters of approximately 10%.

The question is why does the legislature want to harm the very people they proclaim they are trying to help with legislation that does the very opposite in addressing the problem of affordable housing? Why is this type of legislation harmful?


               1. Most mom and pop landlords may have one or two rentals.

               2. Many do not increase the rent annually when they have good renters because they know good tenants will take care of the property and pay their rent on time and they want to retain them.

               3. Most mom and pop owners still have a mortgage, property taxes and insurance that they have to pay each year.  In addition they need to keep a cash reserve for needed repairs.  The cost of repairs can be very expensive if you have to hire them out. Many people can’t or won’t be able to afford to do more than the bare minimum required repairs if this legislation is enacted.

               4. Many people who would consider renting out their property are instead opting to sell rather than go through the added time, expense and effort with minimal return of renting in the economic environment this legislation would create.  This is particularly true in the Portland area where many potential investors are opting to sell rather than turn their homes into available rental units. Instead they are selling their rentals and purchasing property in other cities and states or investing the proceeds into more profitable investments.


               1. With rent stabilization (control) tenants and potential tenants would have less inventory to choose from.

              2.  Tenants could count on annual rent increases at the maximum allowed limit.

               3.  Tenants could count on lower quality rentals because owners would only do the minimal amount of repairs needed because of increased taxes and vendor costs.

               4.  Tenants wouldn’t move because where they are living would be cheaper than moving to a new rental unit where rent would be significantly higher.  Rent will be higher in marketed properties because of restricted supply and owners needing sufficient income to offset the limited rent increases allowed by law from current tenants.

               4.  The homeless population would increase because of overall reduced affordable housing associated with reduced supply of available rental units and higher rents.

We see these situations in cities such as San Francisco and New York where rent control has been implemented. If affordable housing is the goal then perhaps the legislature could consider positive tax incentives instead of heavy handed regulation.  How about tax breaks for owners who would rent out their properties at a lower rent? It would also help to streamline the permit process to shorten the time frame and lower the cost of building new properties.  How about encouraging people with larger homes to rent out a room to an elderly person who can’t afford to rent a regular apartment through tax rebates or other positive financial incentives?  Elderly homelessness is a growing issue that isn’t going to be addressed by the City of Portland’s or the state capitol’s current solutions and legislation.

Ultimately the government solutions need to go beyond single issues like housing and address the bigger problems of broken families, drug addiction and living wage jobs.  Addressing mental health issues and social/community issues are a much larger problem that need long term workable solutions yet lack appeal at the city council or state legislature level because they don’t produce immediate results.  Constructively addressing these larger longer term issues will help reduce or possibly eliminate many of our current housing and other social/community problems in the long run. The current solutions proposed by state and local government are band-aids that only cover the real problems and will make matters worse, not better.

A Better Solution

Several bills are currently being considered in Salem that would temporarily enhance the rights of tenants, add an unreasonable burden on landlords, and potentially have the unintended effect of lowering the availability and quality of affordable housing. 

Oregon state legislature has introduced several bills attempting to address the issue of lack of affordable and available housing:

HB 2001, 2003 and 2004 would remove the prohibition on rent control for cities, counties and the state.  HB2004 would also prohibit landlords from terminating month-to-month tenancies without cause except under certain circumstances with 90 days written notice and payment of relocation expenses.  It would also require fixed term leases to convert to month-to-month tenancies unless tenant agrees otherwise.

HB 2240 prohibits landlords to terminate a month-to-month tenancy without cause except under certain circumstances or if the landlord provides the tenant with relocation assistance equal to three months’ rent.  It also permits the tenant to renew the rental agreement if the landlord did not invoke exception or terminate for cause.

These bills address issues that were first considered by the City of Portland regarding increasing rents and limited affordable housing options.  The city was restricted in what it could do because of state laws the prohibit rent control.  Now legislators have introduced these bills in Salem to eliminate restrictions on rent control to address the Portland metro housing “crisis” in an effort that would provide a short-term fix with a long term detrimental impact on the very people they are trying to help.

The long-term impact will be lower quality housing, guaranteed annual rent increases (yes, many landlords do not raise rent every year especially if they have good tenants they want to keep), and a reduction in available affordable housing as owners choose to sell rather than deal with the owner restrictions.

Remember that owners/landlords usually have mortgages, taxes and insurance they must pay on a monthly or annual basis.  Secondly, they need to have funds in reserve to do maintenance and repairs.  Costs of repairs continue to climb and can cost hundreds to thousands of dollars.  If owners must set aside three months’ worth of rent, they are going to defer repairs and upgrades to the property.  Thirdly the cost of repairs and time lost between the time a tenant moves out and another tenant moves in has to be taken into account.  In addition, if there is an eviction or other legal action that takes place the landlord needs to consider the thousands of dollars he or she will need to pay even if the landlord wins. This, of course, is in addition to the lost rent while the eviction is taking place.  With all this taken into consideration, in many cases the owner’s profit margin is very thin.

True, rents are higher because of supply and demand.  It is also true that tenants need to come up with several thousand dollars to be able to pay first month’s rent and security deposits.  Housing supply is tight and affordable housing is disappearing as rents climb higher.  There is a better way than the solutions proposed by the above state house bills.  Unfortunately, the better way will take some hard work, time, commitment, and delayed gratification.

First, we need to realize each person from the landlord to the tenant has value (not just monetarily) as a person or persons.  Secondly, we all have needs and desires that need to be addressed.  Each side needs to be heard and pertinent issues addressed.  This requires a progressive, holistic, attentive, considerate mindset.  Progressive in the sense of valuing the needs and desires of both sides.  Holistic in thinking beyond the immediate issues and solutions and considering long term possibilities and solutions.  Attentive in truly paying attention to what each side has to say and engaging in dialogue that seeks and values clarity and understanding.  Considerate in working to understand the other side’s perspective and coming up with solutions that are a win/win for all.

Unfortunately, human nature tends to prevail as is currently seen in the City of Portland and in Salem.  Selective hearing, political agendas, and an eye toward future elections predominate.  It would be nice to see our elected representatives get down in the trenches and do the hard work to craft policies that benefit both sides and promote human flourishing.

How could this be done?

1.      Tax incentives for tenants and owners and builders. 

2.      Zoning/permit changes that would encourage low income housing development. 

3.      Jobs that would provide middle income wages and a ladder for personal income growth. 

4.      Targeted education for people whose jobs are or will be phased out and/or eliminated with changes in technology and the minimum wage increase.

5.      Development of neighborhood communities with a focus on accountability and help for one another that would foster a sense of care, concern and “ownership”. 

Oregon is not the only state dealing with this issue.  An article on Bloomberg outlines the problems and some potential solutions. https://www.bloomberg.com/news/articles/2017-03-23/renters-now-rule-half-of-u-s-cities

This is not easy.  Anything worthwhile takes effort, commitment and work.  We can do it, but it takes the right kind of leadership and commitment as well as those who are willing to do the hard work to bring it to fruition.