March 24, 2023
Dear Gov. Kotek,
On behalf of Oregon’s rental housing industry and the millions of Oregon families that rely on a stable rental market, thank you for your vision and leadership in addressing our state’s dire housing crisis. The strength of Oregon’s economy and the health of Oregon families are completely dependent on our ability to provide housing that is safe and affordable. As you have indicated, the answer to housing instability is a complex and many-faceted one, which will take bipartisanship and creative public-private partnerships to make progress on.
As partners in keeping Oregonians housed, we engaged in your work to pass HB 2001, which is an unprecedented effort to immediately and strategically invest in housing stability around the state. While all stakeholders compromised on various priorities in that legislation, we certainly appreciate the urgency with which you have met this crisis so far, and that you continue to seek our engagement in these policies.
This year, housing providers have facilitated the ability of renters to run childcare businesses in their units (SB 599) and, despite our initial concerns to changes in the nonpayment eviction process, we understand that additional time for some Oregonians is necessary (HB 2001). We have advocated for streamlined resettlement policies for refugees (SB 935), and last year supported a new mandate for air conditioning units in rentals (SB 1536). In addition to our work with all housing advocates, we continue to support new investments in permanent, robust rent assistance programs (HB 5019).
Time and again, our organizations encourage housing policies that balance necessary investments and ensure Oregonians have access to the housing they need. We stand ready to work with you and all our elected representatives to continue to address housing instability. In that spirit, we feel compelled to raise serious and significant concerns with Senate Bill 611.
SB 611 Disincentivizes Existing and New Housing Development
This bill represents an enormous barrier to your stated (and laudable) goal of building 36,000 new units of housing each year. Simply put, further regulations on how and when housing providers can increase rents while ignoring the real expenses that drive rent increases, are well intended policies that do not achieve their stated goals.
Oregon is already in a startling housing deficit – and, we already have a rent control law on the books. Our state is underbuilt by roughly 111,000 units just to meet existing demand.1 Building projections in today’s economic environment are flat through 2027 and permit times for multifamily developments are averaging more than 400 days in the Portland-metro area, where the need remains the most urgent.2
The provision within SB 608, which established Oregon’s current rent control law, that exempted new construction for 15 years was designed to incentivize construction. Ratcheting that down to just three years runs counter to reasonable economic logic and will undoubtedly lead to continued underproduction across the state by throwing future and existing investments into unpredictable regulatory territory.
Layering on another unnecessarily tight new restriction on rents will only exacerbate the housing crisis by forcing investors and developers to do business in states that are more serious about relieving the pressure on the rental market. SB 611 is a huge step in the wrong direction that will lead us further away from our housing goals.
SB 611 Completely Ignores Economic Realities
Rent prices are influenced by many factors outside a housing providers’ control. Yet, the Legislature is laser focused on capping rents and disregarding the real costs associated with any potential rent increase. Record inflation is impacting business owners and housing providers as much as it impacts renters; not to mention rising utility costs, insurance rates, prices of goods and services, payroll increases, and mounting local tax burdens that have vaulted Portland to the top of the list of highest taxed jurisdictions in the country (behind only New York City).3
If housing providers do not see any relief in the costs associated with providing housing, many – especially smaller owners – will certainly be forced to sell. This is especially true considering the provision in SB 611 to triple the relocation payment owed to a renter. Portland provides a cautionary tale: After mandatory relocation assistance and other strict rent regulations were enacted by the city council in 2017, the city saw a 14% decrease in the availability of single-family rentals.4
Increasing our supply of rental housing also means preserving the existing stock. The Legislature must not continue to make it more expensive to own and operate desperately needed housing.
SB 611 Places Burden Completely on Housing Providers
Finally, Oregon’s rent control law is only four years old. For three of those years, housing providers were subject to pandemic-era restrictions around eviction for nonpayment of rent that has led to many hundreds of thousands of dollars in lost income – with the state’s plagued rent assistance program largely to blame. While the pandemic has receded by several metrics, housing providers and renters are still feeling the impacts.
SB 608 was a first-in-the-nation law at the time, and the state would be wise to give that policy more time to work as intended. While opposed to rent control for several reasons, our organizations are not advocating to dismantle the current law. However, if rent caps are lowered even further, that impacts the ability of housing providers to make needed investments in their units, upgrade services, pay employees more competitive wages, and can lead to a host of other problems as outlined previously.
There is no disagreement that low-income Oregonians need assistance right now. We applaud your efforts to raise the pay of hourly state employees, to increase childcare subsidies, and to make our state more affordable for working families. Those efforts – including your administration’s refreshing focus on housing production and new investments in a rent assistance program – will be minimized should SB 611 move forward.
Our organizations are fully committed to helping your administration solve the housing crisis and we look forward to working closely with legislative leadership throughout the rest of the session and beyond to make progress for our communities.
Commonwealth Real Estate Services
Manufactured Housing Communities of Oregon
National Apartment Association
National Association of Residential Property Managers – Greater Portland Chapter Oregon Business & Industry
Oregon Home Builders Association
Oregon Rental Housing Association
Oregon Park Owners Alliance
Oregon Rental Housing Alliance
Portland Business Alliance
Portland Metropolitan Association of REALTORS®
CC: Senate President Rob Wagner
Senate Majority Leader Kate Lieber
Senate Minority Leader Tim Knopp
House Speaker Dan Rayfield
House Majority Leader Julie Fahey
House Minority Leader Vikki Breese-Iverson