Portland is about to face two oppositional pressures on its housing market – from opposite ends of the pricing spectrum – thanks to the coming collision of a citywide revaluation and the recent passage of a rent control ordinance. The revaluation is recasting the value of properties up, leading to enormous jumps in property taxes in the parts of the city with the most rental properties.

Normally, this market revaluation would lead to a quite natural market response: Prices of all kinds of housing would go up. That would be difficult in a city (and a county, and a state) where affordable housing is already often challenging to find thanks to a booming real estate market, since it would probably lead to even higher rents. That would be challenging for tenants and landlords alike, especially coming after a rough year where it was already difficult for landlords to deal with troublesome tenants after emergency decrees protected them from eviction. While those decrees weren’t as sweeping as many proponents would have liked them to be (or as opponents imagined), they certainly shifted the burden on to landlords in a way that hadn’t been seen in this country on such a large scale – at least, not of late.

Enter rent control. Theoretically, rent control in Portland will protect tenants from greedy landlords eager to kick out lower-income tenants and raise rents, especially now that those troublesome eviction protections are gone. While that characterization might apply to a few large landlords, it doesn’t take into account small landlords who only own a couple of buildings – or even just one. Those landlords might not have raised their rent before over a property tax increase if it didn’t dramatically affect their bottom line. They don’t want to lose good tenants over raising their rents, after all: finding a new tenant can be a big hassle or expense, even if they leave the place immaculate.

Now, though, with rent control, it’s a different story. Property tax increases are one of the few allowable reasons to raise rents under the new ordinance, and that encourages landlords to take advantage of it when they can. This could well cause rents to raise prematurely, especially in light of the property revaluation.

Even if you believe affordable housing is a serious problem in Portland that desperately needs to be addressed, it’s pretty clear that rent control is not the best way to go about it. That’s not due to some flaw in the design of the program, but rather a fundamental feature of the program itself. Rent control, like any price control or increased government regulation, limits the ability of private individuals to make a profit from what they own, taking the value of their property from them. There are occasions when that may be justified in the name of public good, but higher rental rates aren’t one of those.

If government is concerned about the lack of affordable housing in their area, there’s one really simple solution: Build some. Now, that’s a massive undertaking that can take years of development, planning and permitting. Such a proposal will likely run into opposition from locals anywhere the city tries to build it – probably from the some of the very same people bemoaning the lack of affordable housing in the city. It’s relatively easy to complain about affordable housing in the abstract; it’s quite a different thing when the city proposes using your tax dollars to build affordable housing in your neighborhood. A slightly different way for the city to increase affordable housing would be to incentivize private developers to build it through tax breaks or grants, but that would run into many of the same problems as a project built by the city itself.

Another approach would be for Portland to hand out assistance directly to tenants themselves, rather than trying to limit rental rates. Like any  ongoing governmental assistance program, this might end up being more costly to administer than a one-time project or benefit, but it would still be a better option than simply imposing rent control. The immediate collision of the revaluation and rent control will discourage landlords from making repairs and improvements, as well as encouraging small landlords to get out of the business entirely by selling their buildings. In the long run, that could well hurt both the quality and quantity of the city’s rental units. By imposing rent control, Portland has probably created more problems than they’ve solved, hurting both individual property owners and the city (and state) as a whole.

Jim Fossel, a conservative activist from Gardiner, worked for Sen. Susan Collins. He can be contacted at:
[email protected]
Twitter: @jimfossel

Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

filed under: