Amid Referendum Push, Fair Rent Portland Explains the Difference Between 'Rent Control' and 'Rent Stabilization'

Over the last five years, Portland rents have increased by 40 percent. Meanwhile, income has barely moved.

The Portland Press Herald reported on Fair Rent Portland earlier this week ["Portland citizens group seeks referendum on rent control, other tenant protections," by Randy Billings], blurring the distinction between the "rent control" and "rent stabilization." Fair Rent Portland says the latter more aptly describes their mission, which distinguishes it from failed measures (in New York City and elsewhere) to protect working class citizens that were abused by wealthy long-term tenants.

Among other meaningful distinctions, the group says their proposed referendum would not freeze rents, would not apply to owneroccupied duplexes and triplexes (like many on Munjoy Hill), and not prevent landlords from making a profit.

For some, the difference may be subtle. But it's hard to argue against some type of action. According to a statement from Fair Rent Portland, “(r)ent stabilization will allow renters to feel secure in their homes, begin to build up financial reserves, and make long-term economic plans. It will ensure that the children of renters can remain in a single district, that vulnerable citizens with mental or physical health conditions can heal without having to face eviction, and that local businesses will have the workforce that they need to grow.”

According to the group, "units covered by the rent stabilization part of the ordinance (only non-resident landlords of large properties), the rent will increase at the rate of inflation as set by the Consumer Price Index (CPI). For the past 5 years, the CPI has been between 0.5 percent and 2.5 percent. For a rent of $1000, that means that the landlord can increase the rent $5 to $25." Some progressive cities around the country— like Oakland, CA—have adopted a similar plan, fixing the amount landlords can raise rent to the CPI (except in cases of certain justifications). Fair Rent Portland says they searched the country for cities comparable to Portland with model rent stabilization ordinances, and have settled on West Hollywood, CA.

Why West Hollywood? Why, when there are condo units and other additional housing being built throughout the city, is there a movement toward an ordinance of rent stabilization?

The Phoenix interviewed Jack O'Brien, Portland resident and member of Fair Rent Portland, about the group's plans. Currently a volunteer group with a nine-member steering committee, Fair Rent Portland is interested in all levels of support from community members, "whether you have only one hour a year or one hour a week."

For more information on the group, including how to assist in getting the referendum on the ballot, Fair Rent Portland hosts a "launch party" for its proposed ordinance on Sunday, May 28, at Local Sprouts Cooperative, from 5-7 pm.


Phoenix: Can you explain the appeal of the West Hollywood rent stabilization ordinance over others you found?

Jack O'Brien: There are two main reasons the example of West Hollywood and the solutions it put in place resonate for Portland: First, it's a small city (about 35,000) with a high proportion of renters (about 70 percent) and so comparable to Portland in terms of what tools it can bring to bear in dealing with housing.

Second, it's run this program very successfully for 32 years, and been able to leverage the success in stabilizing its housing into other domains, like public health and eldercare, which seems very relevant to Portland.

Right now, Portland is experiencing rapid gentrification. While we tend to think of the gentrification part as being the component that changes the city most substantially, it's the rapidity that does a lot of the damage in terms of displacing residents from the city. Folks who might be able to afford a $100-per-month rent increase if staggered three years (by finding a little additional work or adding a new roommate, perhaps) are forced to move if it happens over a single year. The key goal of the West Hollywood model is to slowing the rate at which gentrification can occur, precisely to allow regular folks and the city government to adapt rather than just react. West Hollywood's experience suggests that in the long run, this leads to a more vital and diverse community and a more resilient economy than would result otherwise.

The West Hollywood model takes a nuanced approach to slowing gentrification: rather than directly intervening in the market and fixing prices, it instead operates by putting into place a number of different planks that have the effect of slowing the rate of rental increases and improving the bargaining power of tenants. This balances the market dynamics with the long-term needs of the city and its residents. While landlords might not have been enthusiastic about it at the start, there certainly was no collapse in the housing market, much less any of the other, more extreme projections put forth by some property managers and developers. In fact, since the community has retained so much vitality, it's seen as a particularly attractive market to work in.

We're hoping that by taking a similar approach—slowing gentrification, increasing renters' security, promoting development, particularly of affordable housing—will yield the same sort of benefits.

Is there a particular sticking point that you have found this to be a sticking point in getting policy enacted in Portland?

Author Peter Moskovitz (How to Kill a City) writes: "There's a parable told by famous urbanist Jane Jacobs that I believe could easily be applied to Portland: a family loves to picnic on a hillside—it has great views, it's quiet, it's filled with rustic charm. They love it so much they decide one day to build a house on top of it, only to realize once they live in the house that they can no longer see the hill, and that it's rustic charm is gone, thanks to their house." Which is exactly the situation Portland faces, except that we've seen many other hills despoiled before ours and so have the possibility to avoid that result.

A couple of years ago, the City Council, in response to the gentrification of the city, the upward movement on rents, and the increase of eviction of tenants at will across the city, established a Housing Committee to investigate possible solutions. Despite a lot of input from city residents—rent stabilization was a consistent and extremely popular recommendation made by regular folks—the committee appeared to listen largely to suggestions from large property developers and property managment firms. Even the fairly mild rental protections proposed by Mayor Strimling were dismissed more or less out of hand. Some councilors would regularly question if there even was a housing crisis. Needless to say, solutions that were going to make any substantial dent in the problem were not discussed.

Housing committee work aside, as gentrification has occurred, developers and property managements firms—those directly profiting from the process—have appeared to have increasing amounts of influence over both the city council and the planning board. Which is exactly the opposite how this is supposed to work: the council and the board should be operating on behalf of residents, not developers. This is not unexpected: a very small number of people are making a lot of money off everyone else's housing. As long as the boom goes on, they have the money and the time to make sure their perspective predominates (this is what has also happened in a lot of other gentrifying cities: those profiting reinvest that capital to ensure the boom goes on as long as it can, indifferent to the fact that at the end the city won't really be a city anymore.) This means that we've reached a point where the only effective check on rapid gentrification is a popular groundswell, which is why we're pushing a referendum.

Can you explain the material difference between rent control and rent stabilization?

This distinction is a pretty clear one: rent control fixes rents; rent stabilization slows the rate of rental increases.

Though it varies a bit in usage around the country, rent control usually refers to controls on the rent implemented to prevent price gouging. The standard example is in New York after World War I: the city directly intervenes in the markets and says 'this is the rental price for this unit.' Economists have long known that this causes all sorts of market asymmetries, which sometimes can be worse than the problem they were attempting to solve. Because of this few cities since have used strict rent control, preferring rent stabilization as achieving the same ends without many of the downsides.

Rent stabilization refers to programs where rental increases are controlled, usually indexed to inflation or capped at particular percentage per year, not the rent itself. Our version of rent stabilization—where landlords can set the rent as they'd like once a unit is vacated but have managed increases once a tenant is resident—allows for the most market flexibility while providing renters a great deal of additional protection. The experience in West Hollywood has been that, while a small number of units are occupied long-term, most turn over in about five years. This means rents can rise according to the market, just much more slowly than they would if renters had no protections.

As housing becomes a crisis situation across the country, rent stabilization is having quite a moment: it was passed last year in three cities in California: Richmond, Mountain View, and Santa Rosa.

"Fair Rent Portland Referendum Launch Party" | May 28, 5-7 pm | Local Sprouts Cooperative, 653 Congress St., Portland | fairrentportland.org


Nick Schroeder can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

[Ed: An earlier version of this report misstated the population of West Hollywood. It is 35,000, not 45,000.

 

Last modified onThursday, 25 May 2017 14:40