The city of Portland was back in court Tuesday defending a four-year-old city rule that requires landlords pay renters’ moving fees if they significantly increase rent or issue an eviction notice without cause.
Since the City Council first passed the relocation ordinance in 2017, landlord groups have been pushing to overturn it. Within a week of its passage, two landlords sued the city, arguing that the ordinance violated a state law banning local rent control. Multnomah County Circuit Court dismissed that suit and the Oregon Court of Appeals upheld the lower court ruling last July.
The landlord group’s legal team is now asking the Oregon Supreme Court to invalidate the rule.
Portland’s relocation ordinance was one of the first major policy wins by former Commissioner Chloe Eudaly, who championed it as a way to protect tenants from excessive rent hikes and unjust evictions in the midst of an affordable housing crisis. The ordinance requires landlords who issue a rent increase of 10% or higher over a one-year period or issue a no-cause eviction to compensate renters. Fees range between $2,900 to $4,500, depending on the size of the home.
In a court hearing Tuesday, attorney John DiLorenzo, who brought the case on behalf of landlord trade group More Housing Now, argued the city rule amounts to a form of rent control that’s prohibited under state law.
While it is not the kind of official rent control policy seen in New York or San Francisco, DiLorenzo argued the rule disincentivizes rent increases — and, therefore, is barred by state statute.
“The big question is, ‘What falls within that scope?’ And we believe that ordinances that control the rent do,” DiLorenzo said. “The court of appeals got hung up on the difference between a noun and a verb.”
The Oregon Court of Appeals ruled last year that the ordinance was not a form of rent control, as it did not put a hard cap on the amount a landlord could charge a tenant.
“That it may have the effect of incentivizing landlords to keep rent increases below the 10-percent threshold does not make the ordinance a ‘rent control’ ordinance that is unambiguously preempted,” Judge Darleen Ortega wrote in the opinion.
The relocation ordinance passed unanimously when City Council approved it in 2017. In a brief submitted to the state Supreme Court, the landlords’ attorneys referenced comments made in support of the ordinance by both Eudaly and Mayor Ted Wheeler at the time.
According to the filing, Wheeler had called the ordinance a “tool we have to keep rent levels stable.”
Judges remarked on the comments during Tuesday’s hearing.
“It doesn’t seem unreasonable to me to say that is indirectly the means of controlling the rent,” asked Justice Thomas Balmer. “And certainly the City Council meeting suggests that’s the way they viewed it.”
Deputy city attorney Denis Vannier argued that it does not matter what council members said about the ordinance in the past — it’s how the ordinance functions that is important.
Portland is a “home-rule jurisdiction,” he said, meaning any rule that isn’t explicitly banned by state law falls to the city to decide on. This means the city is free to craft rules influencing the rent, he continued, as long as those rules do not place a cap on the amount a landlord can charge a tenant.
“On its face, the ordinance does not prevent a landlord from charging whatever amount they want as rent.”
The fate of the ordinance now lies with Oregon Supreme Court. It’s unclear when the court might issue a ruling.