32% Rent Increases? Oregon Bill Takes Aim At ‘Rent Control Loophole’

Black women in Oregon are threatened with eviction at double the rate white renters experience.

This dire statistic was voiced by Community Alliance of Tenants executive director Kim McCarty last week as she urged public and legislative support for tighter rent control, at a time when many Oregon tenants are preparing for the 14.6% rent increase allowed this year under Oregon law – and which will go into effect next month.

Kim McCarty“The gap between Black and white home ownership is 30%, which means that Black Oregonians are more likely to be renters, more likely to rent, (leading to) economic insecurity because of extreme rent hikes,” McCarty said, adding, “The government accountability office shows that just a hundred dollar rent increase in median rents in a community is tied to a 9% increase in homelessness.”

Stable Homes for Oregon Families, which comprises CAT and more than 30 advocacy organizations, is championing Senate Bill 611 to limit the amount landlords can charge in annual rent increases.

Tenants from all over the state testified in a press conference last Tuesday about the devastating effects of paying hundreds more a month for housing at a time when wage increases are slow to catch up with the rental market.

“This isn’t about living within your means or choosing a place you can afford,” said Sherwood resident Jessica Israel, who fears becoming one of the many Black Oregonians who must either relocate or contend with an eviction. 

“The truth is, we are being priced out and pushed out.”

Gaping Loophole

Supporters say SB 611 closes loopholes allowed through previous rent control legislation, like SB 608, which was passed in 2019.

Under SB 608, each September the Oregon Office of Economic Analysis sets a maximum rent increase percentage allowed for the following year. To do so, the department starts at 7% and adds the Consumer Price Index for All Urban Consumers, West Region -- numbers that are provided by the Bureau of Labor Statistics.

But that 7% baseline did not take into account high inflation, and it exempted buildings that were less than 15 years old. Senate Bill 611 would tighten regulations by lowering the baseline increase percentage to 3%, and capping rent increases at a maximum of 8% each year. Only buildings that are three years old or newer would be exempted, limiting a loophole that has allowed for runaway rent prices that have spread “high rent homelessness” to farther flung suburban and even rural areas.

That loophole allowed the SR Watt Company, which owns a portfolio of real estate holdings, to access Israel and her family with a sudden 32% rent increase at Cannery Row Apartments, which is a relatively new development. Analysts note that such practices more quickly drive up rent prices statewide.

“That’s $560 more per month, or almost $7,000 more per year, to renew our lease,” Israel said at the press conference and in testimony to the Oregon Senate Committee on Housing and Development on Monday. “If we don’t sign a new lease at the higher rate, the notice made it clear we may be forced to pay a month-to-month rent increase of 50%.

Israel said her husband was permanently disabled after serving as an essential worker during the pandemic, and that she suffers from non-Hodgkin’s lymphoma. She and her husband have a young child, and are uncertain about their options. 

“Although Sherwood is a small town on the cusp of suburban and rural, we are now being priced out of the area and pretty much out of the state as a whole,” Israel said.

Even half the increase Israel is experiencing can be devastating, McCarty explained.

“The annual increase this year of 14.6% in 2023 sent shockwaves throughout Oregon, even as many hoped that landlords would never be so cruel as to invoke them,” she said. “That hope has been quickly dashed as reports of extreme and predatory rent increases have been coming in from across the state – from hotline calls and statewide eviction data, we know that tenants across the state are in crisis.”

The situation has left Israel baffled.

“We would never think that it is ok for someone to instantaneously lose 32% or 50% of their income, so how can it be allowed as a rent increase?” she said.

Runaway Rent

It is a phenomenon not exclusive to multifamily properties catering to the young and upwardly mobile, and many such properties are located in areas that lack the kind of industry that would support sudden and dramatic increases in the cost of living. Such investment practices also target seniors and those residing in mobile home parks – populations more likely to be living on fixed incomes.

Judy BrunsJudy Bruns, who has resided at the Eugene Hotel retirement community in Eugene for five years, is one such resident.

“When I first moved here, the rent increase was 3%, and that was ongoing every year, and it was written in the material you were given when you moved in,” Bruns said.

After the recent sale of the Eugene Hotel, she saw those yearly increases jump to 14.6%.

“My rent went up $220,” she said. “I understand there are some people here who got rent increases in the $400 range.

"From my social security, with the rent and my personal bills, I have $2 left.”

Robbin McCain lives in a mobile home park in Brookings and shares Bruns’ concerns.

Robbin McCain“The home I own, but I pay rent on the land the home sits on,” McCain said. “I’m president of the park’s tenants association that we had to start three years ago because we were bought by a large corporation from Washington.”

She and other tenants are contending with a 14.6% rent increase due to go into effect next month.

“(The community is) 55 or over, income is fixed, and many of us in this park, with the fixed income, just can’t stretch it any farther,” McMain said. “For those of us who can stretch it this year, and afford it for this year because of the rise in social security, we will not be able to next year.”

Israel warned of the impact of unregulated rent: “This crisis affects all of us – families with children that will have to rent a single room just to have a roof over their head. Married couples who will lose their home and have to move in with family. Seniors who will be forced to live on the streets. Small businesses are also going to be affected because they won’t be able to hire local workers due to the high cost of living, which is going to require wages higher than they can afford to pay.”

Hedging Hedge Funds

McCarty said the previous bill neglected to take into account what she called “predatory rent increases.”

Put simply, tenants live in fear of exorbitant rent increases driven by hedge fund returns and out of step with actual wage increases or reasonable market rates. Since the 2008 recession, Wall Street speculators have bought up foreclosed residential properties at unprecedented rates, effectively positioning hedge funds as landlords. But because hedge funds have relatively short “lifespans” – often less than 10 years – investors expect quick and maximized profit, putting them at cross-purposes with affordable and even safe housing: Studies show these private equity landlords offer fewer services and delayed maintenance, while being more ruthless in raising rents, levying fines and evicting tenants.

The U.S. House Financial Services Committee reported findings that hedge fund investors tend to buy homes in predominantly Black neighborhoods, where a higher-than-average number of households were headed by single mothers.

U.S. Sen. Jeff Merkley introduced the End Hedge Fund Control of American Homes Act late last year to curb the practice by imposing federal tax penalties for large-volume home owners, like those that own Israel’s complex, Bruns’ retirement community and the park where McMain lives.

Stable Homes for Oregon Families emphasizes that the benefits of SB 611 would extend beyond vulnerable, and increasingly vulnerable, renters.

“SB 611 also is important to protect the taxpayer dollar,” McCarty said. “We strongly support increases in rent assistance funding this year, but we must ensure that taxpayers aren’t on the hook for rent-gouging by landlords. It’s also important to note that this is a rent-stabilization policy for current tenants.”

She added, “We praise the Oregon legislature and Gov. Kotek for taking quick action on the affordable housing and emergency response package. The urgency they are bringing to the issue is essential. And at the same time, as we build more housing, we must also ensure that when people are housed, extreme rent increases don’t create a revolving door of homelessness.”