Portland Landlord Could Pay More Than $100K To Relocate Tenants

More than 70 tenants evicted from a historic building in Northwest Portland could be among the first to receive relocation aid, which the City Council required in an emergency measure passed on Feb. 2.

The bill requires landlords to pay relocation aid up to $4,500 per unit if they evict tenants without cause, or raise rents more than 10 percent.

The Portland City Council said it made the measure effective immediately in order to help the residents of several large apartment buildings where hundreds of residents received notice of no-cause evictions or steep rent increases in January.

Landlords have 30 days to respond to the new legislation and either rescind their notices, pull the rent increase below the threshold, or pay the relocation costs.

“We’ll be looking at our budget, and trying to figure out how we’re going to come up with the funds to pay for the additional relocation costs,” said Eric Cress, founder of the company Urban Development Partners, best known as the company behind many of the new apartments on Division Street.

UDP is no-fault evicting all residents of a building known as the Fairmount, which occupies most of a city block in Northwest Portland.

Related: Portland Decides Landlords Must Pay For No-Cause Evictions, Effective Immediately

The building is two stories, with a wraparound porch and peeling red paint. Originally a hotel, the Fairmount is one of the few buildings that remains standing from the 1905 Lewis and Clark Exposition. The building has 80 units, 10 of which have fallen into disrepair and aren't occupied.

UDP bought the Fairmount building a year ago, intending to restore it. Cress said the roof needs to be replaced immediately, and the city has started fining UDP over the poor condition of the structure.

"We've had to stick the building together, and we've waited as long as we can to do the repairs," said Cress.

All its tenants received 120 days notice of a no-cause eviction last month.  

Before the new city ordinance passed, the company had voluntarily offered tenants smaller relocation payments, ranging from $600 to $1200, according to renters who spoke to OPB.

Cress said he understands how difficult it is for tenants to find new housing in Portland's tight market, particularly if they've been paying below-market rents.

"We're a Portland company. These are essentially our neighbors," he said.  "It's a difficult time."

Cress said UDP has all the permits it needs to begin renovating the property, and expects to spend between $100,000 and $150,000 on the more expensive relocation aid that the city requires.  

"We had volunteered to pay about half of that," he said.

"I felt pretty blind-sided by the no-cause eviction," said Morgan Reese, a county employee who's lived in the Fairmount for five years. "The assistance will make a huge difference."  

Reese knew the building needed repairs, but wasn't expecting those would require all the tenants to leave.

"The market is very tight and the lowest-priced units I've seen are still double our current rent, so my partner and I are having to seriously discuss how we're going to do it," she said.

The average one-bedroom in the Fairmount rents for well under $1,000 a month, significantly less than the $1,618 average rent for one-bedroom units in the neighborhood, according to the Portland Housing Bureau.

Larry Dessommes, a retired philosophy teacher, has also lived at the Fairmount for five years.

He describes the building as "a wooden tent" and points out insect damage in the wooden door frame of his unit. Dessommes said he wasn't too surprised by the eviction notice.

"We've known about it for a while. This building's pretty dilapidated," he said.  

Dessommes, 78, said he's hoping to move into a house with four or five friends. He described prices in the Portland rental market as "astronomical," particularly for someone like him living on a fixed income. But he said he has mixed feelings about the city's relocation aid ordinance.

"It'd be nice to receive that kind of money," he said. But Desommes also isn't sure it's fair for the property owner to have to pay.

“Generally, I’m opposed to governments forcing people to do stuff,” he said.

On Feb. 6, two landlords filed a lawsuit over the relocation aid bill. The suit is funded by the Defense Fund of Multifamily Northwest, a trade and lobby group for the state's apartment owners.

The suit argues that the council's ordinance violates a state prohibition on rent control.

“We see no difference between an ordinance that just flat out bans the practices versus one that permits them but requires a payment of a penalty that is that hefty,” says Attorney John DiLorenzo, who is arguing the case for Multifamily Northwest.

For his part, developer Cress said he believes it is fair for the city to ask landlords to pay some form of relocation aid, given how difficult it is for renters to find new housing in the current market.

He said UDP will include the cost of some form of relocation aid into its future renovation projects.

But Cress also worried that the city's emergency policy will create hardship for landlords, particularly smaller-scale landlords who need to make significant repairs to their property.

Cress would like to see a balanced approach where landlords and the city share in the cost of making more affordable housing available.

He said when his company first came to Portland 10 years ago, focused on building rental housing, city officials showed little enthusiasm for his projects and condominium construction dominated the market.

"There's been a 10-year process of not having a policy that promotes production of more rental housing," he said. "Now, we've got to dig ourselves out of this hole."

Cress also said the public has resisted design measures that increase density and help bring down the cost of new rentals.

"As Portlanders, we've spent way too much time talking about the size of buildings and how much parking they have," Cress said, "and have not really been compassionate about providing affordable housing for the members of the community."