Portland councilors have all but squashed a proposal to prohibit landlords from charging prospective tenants application fees that some say present a significant barrier to low-income people in need of housing.

The proposal would limit the amount of money a landlord can charge a prospective tenant to the first months’ rent and a security deposit, which can be up to two months’ rent. It would prohibit landlords from charging fees for checking a tenant’s criminal background, credit history and past evictions.

While advocates say the fees can add up to hundreds of dollars and present an obstacle for renters with limited incomes, opponents have argued that some small-scale landlords need to charge fees to cover the costs of screening prospective tenants by doing background and credit checks.

Councilor Jill Duson, who leads the Housing Committee, which reviewed the proposal for the first time on Wednesday, said her committee would move forward with a public hearing in April. But she also sent a strong signal that proposal would likely be defeated, since two of the three members serving on the committee opposed it.

“I hate to string people along,” said Duson, who disclosed that she is in the process of becoming a landlord. “I don’t think there would be strong momentum from our colleagues that they would want to see this.”

“The parties are welcome to have some folks come to that public hearing,” she continued. “If I’m reading the tea leaves correctly with this committee, it’s not likely there would be an item going forward to the council where you would have another public hearing.”

Councilors have faced pressure over the last several years to enact tenant-friendly policies, as affordable housing becomes increasingly scarce. The council has increased housing safety measures and extended notice on rent increases from 45 to 75 days, but has resisted more aggressive protections such as rent control and requiring landlords to accept tenants who pay rent with housing vouchers.

The proposed ban was the first policy recommendation of the Rental Housing Advisory Committee, which was formed in 2016 but had no members until last fall. If adopted, it would be the first prohibition on tenant screening fees in the state.

Duson said the city first heard concerns about application fees last year and asked the advisory committee to look into the issue. But she and City Councilor Kimberly Cook did not support local action to address the issue, since they both expect the Legislature to take up the issue next year.

Rep. Christopher Kessler, D-South Portland, submitted a bill for the current Legislative session, but Legislative Council, a bipartisan panel that screens bills during the short session, decided against taking it up.

“I just fundamentally don’t think it should be something we explore before the Legislature has a chance to weigh in,” Cook said. “I fully expect there will be bills next year.”

Only Councilor Pious Ali was interested in having city staff work on an alternative proposal that would have capped application fees.

Katherine McGovern, an attorney at Pine Tree Legal who represents low-income tenants and serves on the advisory committee, said Thursday she was disappointed that councilors didn’t give their proposal – crafted and debated over several meetings before being recommended by a 6-2 vote – more consideration.

“The Housing Committee’s disinterest in banning or limiting application fees was particularly disheartening given that they reached that conclusion before taking public comment,” said McGovern, who has said such fees are a significant obstacle for low-income tenants.

Mayor Kate Snyder attended the meeting, but did not weigh in. In an interview Thursday, Snyder said she agreed with committee’s approach to await state action and didn’t think quick disposal of the proposal would discourage the advisory committee in the future.

“I think they are going to continue to work together and inform each other,” Synder said.

Aaron Berger, who serves on the advisory committee, spoke in support of the ban while presenting it to councilors on Wednesday, saying that fees disproportionately affect low-income tenants and new Mainers, many of them asylum seekers who are unable to work. And there’s no way to know whether the landlord is actually conducting the background checks, he said.

General Assistance, a safety net program that provides vouchers for housing and other necessities, does not cover application fees. Aaron Geyer, the city’s social services director, said that limits housing options for low-income and recently homeless people.

“This has been an ongoing impediment for many years, especially as application fees have increased,” Geyer said this week.

Berger told councilors that the advisory committee considered other proposals, such as allowing tenants to provide current background and credit checks to landlords or simply capping tenant screening fees, but those proposals would be more difficult to enforce, and educate tenants and landlords about.

Berger said Thursday that he appreciates the committee scheduling a hearing and vote. But he pushed back against councilors who preferred state action over local action, since Portland’s housing market is so competitive, especially when it comes to affordable housing.

“I am concerned about Councilor Cook’s opinion that the city should not involve itself in tenant-landlord law, as that is one of the main charges of the Rental Housing Advisory Committee,” he said. “Maine is a right-to-home-rule state, and Portland’s rental market is uniquely competitive. The state law has little to say about rental fees, and Portland is well within its right to address it.”

For the better part of the last decade, Portland has been in the midst of a tight rental market that fueled a boom in luxury condominiums and market-rate apartments, further increasing the competition and costs for the remaining – and in some cases dwindling – supply of affordable housing. Rentals make up about 56 percent of the Portland’s total housing supply, according to the 2017 American Community Survey.

A survey conducted by the Southern Maine Landlord Association showed that many landlords do not charge application fees, according to material given to the housing committee. Those who do said they charge between $25 and $50 per tenant. Most said they screen one to four tenants before renting a unit, although a few said they screen an average of eight or nine.

Regan Sweeney, an attorney representing landlords, told the committee Wednesday that banning screening fees would likely hurt small-time landlords and result in an increase in rents. He said smaller landlords are already feeling the pinch of regulatory costs in the city, including stormwater and rental registration fees.

“Landlords are not suddenly going to stop running background and credit checks on tenants,” Sweeney said. “They’re going to continue to do that and they’re going to charge for it somehow. They’re going to put it into the rent – that’s the only place left for it to go.”

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