It's no secret that Portland is changing — and fast. Tons of development money is pouring in, and with it, a different class of people who can afford higher rents, a process that has accelerated the displacement of long-term residents and exacerbated the housing crunch in the city. On November 7, Portlanders will vote on Question 1, the ordinance proposed by the upstart citizens' group Fair Rent Portland, which aims to cap the rate of rental increases and provide more protections for tenants.
The vote will be important for the future of the city. But with both sides of the debate accusing each other of distorting facts, the average citizen is often left confused.
For starters, the arguments offered aren’t both rooted in the same premise — namely, that rents are rising in Portland at such a pace that it’s disproportionately affecting low and middle-income earners. Opponents of Question 1 don’t agree; they say rents haven’t increased in the past two years.
But they have. The fair market rental rate for a two-bedroom in Portland was $1,012 in 2014. Since then, it’s risen to $1,348. According to the online real estate database Zillow, rents have risen by 40 percent in the past five years.
A recent report from the National Low Income Housing Coalition titled Out of Reach found that a Mainer earning the average renter wage of $10.98 an hour would have to work 80 hours a week to afford a fair market rate two-bedroom apartment costing $939 a month (affordability is defined here as spending less than 30 percent of one's income on rent). And that’s just the average cost for the entire state. Portland itself is indeed more expensive to live in than ever before.
Those opposing rent stabilization, a group calling themselves Say No To Rent Control, has been rebuked by critics for indulging in fear-mongering, conflating rent stabilization with rent control and falsely claiming that the rent-stabilization ordinance would increase property taxes.
Members of Fair Rent Portland consider the signs and flyers their opposition has peppered all over town “manipulative and designed to frighten Portland voters.”
“The most obvious and dramatic aspect of the flyer is how it is almost a non-sequitur,” said Jack O’Brien, a member of Fair Rent Portland. “While there are many reasons that people have come out against rent stabilization, this one has almost no basis in the economic literature, empirical studies, or even what other opposition campaigns have come out with in the past.”
Who Doesn't Like Fair Rent?
Brit Vitalius, the president of the Southern Maine Landlords Association, speaking at a recent Say No To Rent Control Rally. Photo Courtesy of Say No To Rent Control.
Say No To Rent Control is a loosely organized coalition mostly comprised of landlords, real estate agents, contractors and developers. The group is promoted by the Southern Maine Landlords Association and Port Property, the single largest housing company in the city, and their address, 306 Congress Street, shares the same address for The Vitalius Group, one of the area's biggest real estate companies.
Naturally, their campaign has a big financial advantage. The Portland Press Herald reported that the Say No To Rent Control still has over $100,000 left in their campaign coffers, compared to $3,200 for Fair Rent Portland. As evidenced by the big turnout at a Say No To Rent Control rally last week at Lincoln Park, the group appears to be determined to squash this ordinance.
It’s worth noting that suspicions suggesting that the opposition's marketing is being run out of Washington D.C. are unfounded. Derek Lavallee, who manages public relations for the opposition campaign, does write as a columnist for the conservative-leaning D.C.-based website The Hill, but he’s lived and worked out of Portland since 2010. (He believes that Fair Rent Portland is the group responsible for disseminating flyers filled with falsehoods, but more on that later.)
Together, Lavallee and a coalition of landlords are pushing the narrative that Question 1 is a “poorly written ordinance” and throwing around a lot of money to convince you that a yes vote would be a disaster for Portland. In this piece, we’ll examine their biggest gripes.
What would Question 1 do?
Campaign signs for Fair Rent Portland.
If approved by voters, the ordinance would set up a special volunteer panel which would settle rent increase and eviction disputes in the city — one of the worries here is that the panel would automatically be biased toward tenants, regardless of the issue.
Article XII Sec. 6-250 of the proposed ordinance reads: “The city shall take reasonable steps, but is not required, to appoint to the Rent Board at least one (1) Landlord and at least four (4) tenants.”
Under the ordinance, the board would have the authority to approve or deny proposed rent increases, make rulings on appeals brought forth by tenants challenging evictions, and fine landlords if they don’t follow the provisions laid out in the ordinance.
In other words, it’s an effort to hold landlords more accountable and address the power imbalance between them and their tenants. What it's not is a group of citizens arbitrarily setting a cap on rental increases with no chance for discussion (like the Say No crowd warns). In fact, the ordinance ties the annual allowable rent increase to inflation, and if landlords have a property improvement that warrants a rent increase, they can appeal to the board.
But there remain valid concerns that the seven-person board would be ill-equipped to mediate the myriad of rental increase and eviction disputes amongst the 18,000 or so renters in Portland.
“The volunteer panel would replace eviction court and this is a completely unworkable proposal,” said Lavallee. “This would be an unreasonably expensive and time-consuming task, and the replacement of the court system with volunteers without any legal experience would be an injustice to both renters and landlords.”
The proposed ordinance would remain active for five years with a section of it stating that the Portland City Council "will determine to amend, renew, or terminate it 180 days prior to January 1, 2025." The opposition doesn’t appreciate this so-called “sunset clause,” and its potential to keep rent-stabilization on the books for seven years, five of which without a chance for a slight amendment.
Question 1 would also increase the city registration fee for new units up $30, from $35 to $65. However, this provision and the overall cap on allowable increase percentage wouldn't apply to landlords who own less than six units under the ordinance.
There are other concerns the Say No To Rent Control side has with the rent stabilization ordinance, but perhaps their biggest one is that under it landlords believe they’d lose the incentive to upgrade units and invest in new developments. They say this would “lead to a shortage of affordable housing.”
Overall, they believe that rent-stabilization would contribute to the problem it’s trying to ameliorate by pushing landlords to develop condos or use AirBnb to rent rooms to circumnavigate the regulations that cut into their profits. Using this logic, poor people looking for housing in a tight market would lose out the most.
“It’s really just not a well-written document,” said Dana Totman, the CEO of Avesta Housing, Portland's largest provider of affordable housing. “It will not have a positive effect, I think it will probably lead to many apartments being converted to condominiums or Airbnb just to avoid this whole thing. People will try to get out of the apartment business, and that’s not good for affordability.”
This argument is puzzling, especially coming from people who claim to care about gentrification in Portland, like Jonathan Culley, a housing developer and board member at Avesta Housing. Culley opposes Question 1 and appeared in a recent ad for the Say No campaign saying "rent control initiatives favor middle and upper-income professionals, they favor people with good educations, they favor people who are well connected, and they favor people with high credit scores, and these are not the people that need the help.
In other words, poor people need help and housing, but landlords make more money when they don't rent to them.
The Say No To Rent Control website cites a study called “Rent Control: Do Economists Agree?” that backs up the claim that rent-control policies hurt the people it intends to help the most. Written by Blair Jenkins in 2009, it concludes that 93 percent of economists in the American Economic Association consider rent-stabilization bad policy.
“There is a whole host of economic studies that show the negative impacts of rent control,” said Lavallee. “The primary problem with rent controls is that they create supply shortages — meaning less affordable housing.”
Referencing the study, copy on a Say No To Rent Control leaflet reads: “This means more competition for fewer housing units, resulting in a market that favors landlords instead of tenants. With a cap on rental costs, this means things like credit scores and work history will become even more important to property owners when approving tenants. It is more likely that higher-income earners will be favored based on their ability to afford rent.”
However, Fair Rent Portland takes issue with citing this study because it “systematically excludes almost all of the recent research on rent stabilization,” including all work from Canada and Europe, and the work of Edward Olson and Richard Arnott, the two leading economists who’ve studied it..
“She’s cherry-picking information and publishing it on a free-market think-tank page,” said O’Brien. “I would not call that a credible source.”
And even if 93 percent of economists "agree that rent-control is bad policy, it's useful here to consider the work of Arnott who argued in a 1997 paperthat critics of rent control often deride its oldest versions, instead of examining modern policies that have since been reformed. For example, like Fair Rent Portland’s proposal, many rent-stabilization policies across the U.S. exempt landlords from the cap on rental increases when dealing with new tenants (something called vacancy decontrol), or constructing new units. Arnott argues that rent control programmes should be evaluated on a case-by-case basis, rather than being opposed in general.
"Second-generation rent controls are typically mild and so can be expected to have only modest effects on the housing market,” reads a portion of Arnott’s study. “As a result, expert opinion on the effects of modern rent control policies has become increasingly agnostic.”
Loss of theoretical revenue
Jenkins herself recognizes that over 140 jurisdictions have implemented rent-control policies across the U.S. just since 2001, each one distinctly unique in definition and execution. The flyers choose to mention two cities as examples of rent control gone wrong: “from Berkeley, California, to New York City, the adoption of rent control in communities around the country has resulted in massive erosion of tax revenues.” It then warns voters ominously, “don’t let Portland be the next city on the list.”
But the interesting thing according to O’Brien is that the studies cited on the flyer only tenuously back up its claims.
The first citation on the flyer points to a thorough, glowing report from the City of Berkeley about their rent-stabilization program from 1978-1994, which was implemented to shield low-earning renters from the rising costs of land in the Bay Area. During that period, the average controlled rent in Berkeley was 35 to 40 percent below what it would have been without controls. Landlords did see a decrease in profits — down from 19 percent return on investment to 9 percent — but this had “little to if any effect” on building repair and maintenance expenditures.
“All of the disasters predicted by critics did not come to pass,” said O’Brien.
In fact, the study shows that the policy was successful in stabilizing communities, decreasing transience, slowing rent increases, and retaining more black, disabled, and elderly residents than neighboring cities.
“Overall the Bay Area suffered a staggering loss of more than half of its most affordable rental units due to rent increases. Berkeley held its loss of low-rent units to half the rate of the Bay Area and was far more successful than any of its neighbors in maintaining its stock of low-rent housing,” the study reads.
The claim the opposition makes about the erosion of tax revenues stems solely from page 132 of the study, a section on foregone revenue, which is calculated as what Berkeley would have made if its buildings had increased at the same rate as surrounding towns without a rent-stabilization policy. It reads that rent stabilization diminished increases in the resale value of multi-unit buildings in Berkeley and the value of buildings in outside the city increased at a higher rate.
Berkeley's tax base from multi-units did not shrink but grew more slowly than that of its neighbors. But since Berkeley did not collect this virtual revenue that they might otherwise have had, they might have had to increase property taxes. So essentially, there was no tax increase directly related to the stabilization policy.
“It’s not remotely like a property tax increase,” said O’Brien.
When asked directly whether the rent-stabilization ordinance would increase property taxes in Portland, Lavallee didn’t refer to a formal tax increase, instead saying: “Question 1 would cause the devaluation of rental properties, based on their limits revenue potential. When these properties drop in value, it would create a decrease in tax revenue. This would put pressure on other revenue sources like property taxes for homeowners to replace lost tax revenue from devalued rental properties.”
The last citation on the flyer — titled A Financial Analysis On Rent Regulations In New York City — says that a rent control initiative cost the city over 4 billion in taxable property values in the late 1980s. But it’s unclear if the study connects that loss directly to an increase in property taxes. “That study is even stranger,” says O’Brien.
First off, it’s incredibly hard to find.
“I’m an academic and I know how to search a library, but I could not find that book,” said O’Brien who searched every major university in New England and the Library of Congress. “I don’t think anyone actually read this book. I would be interested to see if they could produce a copy.”
The only copy readily available comes from Albany, New York, and is considered questionable by Fair Rent Portland because it was commissioned by landlords in New York to argue against rent regulations and is largely cited concerning the distribution of units in the city.
But the struggles of enacting rent-control in much bigger cities like New York and Berkeley might not serve as a good analog for Portland; each city has very different housing stocks, available space, income distributions, and demographics. Fair Rent Portland modeled their ordinance off of existing ones in the smaller cities of West Hollywood, CA and Takoma Park, MD.
According to a story in the Washington Post, in Takoma Park, one apartment building called the Hampshire Tower was granted exemption from their city’s rent stabilization policy under the condition that they’d renovate units and address over 100 code violations. What was the result? Sure, residents received upgraded apartments but they also got a 70 percent increase in rents — up from $1,098 a month to $1,600. This displaced dozens of lower-income residents, primarily first-generation immigrants.
But elsewhere in the city, where rent-control policies were enacted, the immediate housing crisis was relieved and long-term development and growth were supported; today Takoma is home to a “thriving middle class.”
Facts or feelings
With hugely well-funded interests backing the Say No To Rent Control campaign and these seemingly founded allegations of promulgating misinformation, it’s no surprise that Fair Rent Portland doesn’t consider this a fair fight. O’Brien considers the political tactics of their opponents as nothing new, saying that it fits right into how debates have been conducted in the U.S. for decades.
“The majority of people can agree on an issue, but what wealthy interests have learned since the '70s is that the only thing you have to do to stop a progressive policy is gin up enough fear and insecurity that people vote no out of a sort of pragmatic conservatism,” said O’Brien. “That’s a trick they’ve used over and over again, from climate change to labor laws to minimum wage.”
But the Say No To Rent Control crowd also accuses their opponents of distorting facts, with a page of their website dedicated to “fact checking” Fair Rent Portland’s flyers which they say are “riddled with false statements.” Of the seven allegedly debunked points, three seem to be onto something: Fair Rent Portland claims that their ordinance is as an “interim measure” (seven years is hardly an interim), that it “encourages construction of affordable housing” (there’s nothing in Question 1 about that), and that Portland “recently ranked #2 in the nation for rent increases (it technically did for one month in 2015, but the larger picture ranks Portland 2,750th out of 13,113 cities for rate of rent increases).
A lack of a shared set of facts and general confusion around an issue can lead to extreme polarization, when in fact, both sides might simultaneously voice truths: rent stabilization can protect tenants against arbitrary rent increases or evictions and impact housing quantity and quality. And when a political issue is objectively complex, it’s tempting to make it subjectively simple, encouraging voters to make a decision based on morals and personal philosophy.
In an interview with Pacific Standard, Joshua Mason, an economics professor at Roosevelt University alluded to this notion by saying that “the real goal of rent control is protecting the moral rights of occupancy," something that's not guaranteed in a free-market.
“Long-term tenants who contributed to this being a desirable place to live have a legitimate interest in staying in their apartments,” said Mason. “If we think that income diverse, stable neighborhoods, where people are not forced to move every few years, [are worth preserving] then we collectively have an interest in stabilizing the neighborhood.”
As is often the case with political debates revolving around intellectually dense topics like economics and public policy, it’s common practice to eschew statistics, distort studies to fit a narrative, shamelessly exploit fears, and instead call for people to squeeze themselves into just two morally subjective camps of people: those that believe housing is a product, and those that believe it’s a basic human right.
Which camp are you in?