South Portland council caps rent increases, passes eviction moratorium

SOUTH PORTLAND — The City Council unanimously approved a six-month emergency ordinance late Tuesday night that immediately imposed an eviction moratorium and a 10 percent cap on residential rent increases through November.

The council’s 6-0 vote just before midnight came hours after the new owners of Redbank Village Apartments informed city officials that they would enact a self-imposed rent cap in an effort to fend off the council’s proposed “harmful policies,” which initially included a rent freeze.

Redbank Village in South Portland Gregory Rec/Staff Photographer

In recent weeks, JRK Property Holdings of Los Angeles has raised Redbank rents as much as $598 per month and moved to evict tenants throughout the 500-unit complex. Some tenants receive rent subsidies through the South Portland Housing Authority and other agencies.

Redbank Village Management sent a letter to City Manager Scott Morelli on Tuesday afternoon, just before the council held an executive session with the city attorney to discuss the legal implications of a proposed eviction moratorium and rent freeze prior to the council meeting.

“Rather than institute those harmful policies, we propose instituting a self-imposed cap on renewal increases to no greater than 10 percent of the average in-place rents for the property,” the management company wrote on behalf of the ownership group.

“We will impose this cap immediately,” the letter said. “We hope this proposal addresses the concerns of the community and we look forward to continuing to be a positive member of the South Portland community.”

The letter said the cap would follow “sizable additional discounts” enacted last week for residents receiving housing assistance following discussions with the South Portland Housing Authority. The letter didn’t include dollar amounts for Redbank’s rents or the proposed cap.

“We have a bunch of questions,” said Assistant City Manager Josh Reny, including what the owners mean by 10 percent of the average. “The devil is in the details.”

Councilors and other residents called for emergency action to prevent Redbank tenants from becoming homeless in a hot real estate market and to keep other landlords from imposing similar increases as high as 35 percent.

Initially, the six-month eviction moratorium and rent freeze were proposed to help ensure tenants wouldn’t become homeless while city officials work on a rent stabilization ordinance that’s scheduled for a council workshop on June 14.

Rather than a rent freeze, municipal staff recommended a 10 percent cap on rent increases, similar to Portland and California, to limit chances of litigation, Morelli said.

“I think it’s wise to allow up to 10 percent increases,” said Councilor Misha Pride, especially given the current economic conditions that many landlords face.

The moratorium will block rent increases greater than 10 percent from going into effect from May 31 through the end of November. It doesn’t apply to tenants who agreed to rent increases that went into effect before April 1, said Sally Daggett, city attorney.

Tenants who agreed to rent increases that went into effect between April 1 and May 30 will be liable to pay the accrued rent increase at the end of the moratorium.

The moratorium and cap required a unanimous vote of six councilors to be enacted as an emergency measure. Otherwise, it would have required a second vote at an upcoming meeting and take effect 20 days later.

The cap and moratorium don’t apply to some rental situations, including landlords who own fewer than 11 units, tenants at will, nonprofit residential elder care facilities and retirement communities, school dormitories, homeowners who rent out part of their property and short-term rentals.

Several renters and other residents voiced support for rent stabilization efforts during the council’s Zoom meeting.

Krissy, a Redbank tenant, said the owners of her complex “don’t care about us. They just care about money, money, money.”

Sterling Kierstead said his rent at Redbank now will consume more than half of his annual income. “A 35 percent increase in rent is just unsustainable,” Kierstead said.

Donna Pooler, another Redbank resident, said her rent, without utilities, has increased from $1,100 to $1,800 in the last five years and is about to increase to $2,200. “It’s progressively gone up,” she said, but the owners have made few improvements to her property.

The council also heard from residents who opposed the eviction moratorium and rent freeze, as well as local landlords who described themselves as fair and considerate. They questioned whether the eviction moratorium and rent freeze would punish them and worsen the housing shortage.

“Redbank isn’t representative of most of South Portland’s landlords,” said Rose Greely. “I think there are better ways to deal with the housing shortage.”

Robert Smith warned of unnamed consequences for “messing with the free market” and suggested that people who can’t afford their rent should move somewhere else.

The letter from Redbank’s owners said they believe the proposed eviction moratorium and rent freeze “would hurt us and numerous other apartment owners in South Portland.”

They wrote that the current economic environment of increasing inflation and operating costs “has had a more profound effect on Redbank Village than any other single property in our portfolio. … We have seen our in-place labor costs increase by more than 50 percent since takeover and the price of basic projects, like the installation of much-needed sheds on the property, have increased by nearly 60 percent.”

“These increased operating costs make rent increases necessary for the business to survive,” they wrote. “Nevertheless, we are sensitive to the unique circumstances for our residents in South Portland and, as indicated in our discussions with both your office and the housing authority, we are committed to a solution that adequately addresses those circumstances.”

This fall, the owners “plan to embark on a $6 million capital project to repair and upgrade the property,” including a new clubhouse and fitness center, as well as landscaping upgrades, roof, deck and air-conditioning repairs, and other improvements.

“We know these changes will benefit the property and the community at large and we look forward to seeing those benefits realized,” they wrote.