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With rapidly rising rents pricing some middle-income earners out of Portland, advocates are calling on the city to restrict rent increases by private property owners.
And some South Portlanders also are calling for rent controls in that city.
If either community moves forward with such a policy, it would be the first in the state. The idea is quickly drawing criticism that rent control does more harm than good by discouraging landlords from improving their apartments and discouraging developers from building new ones.
But rent control is used by communities in other states, and it’s being discussed in more cities around the country as housing shortages drive up rents. And Maine, unlike some other states, has no law prohibiting municipal rent control.
Portland’s market-rate rent for a two-bedroom apartment, including utilities, has increased 40 percent in five years, according to state surveys and a market analysis by the Portland Press Herald/Maine Sunday Telegram. The newspapers published a series in November, “Welcome to Portland: No Vacancy,” which also found that renters’ incomes have fallen at the same time rents have risen.
A recent report noted that by 2030 there could be a 24 to 33 percent gap between the demand for work force housing and the supply.
The City Council has formed a five-member Housing Committee to find ways to encourage more housing development and keep the city affordable to middle-income families.
“We’ve heard from many tenants across the city who live in fear that, if they live in an affordable rental situation at the moment, that their landlord will join in and raise rents to an unaffordable level,” Tom MacMillan, a founder of the Portland Tenants Union, told the Housing Committee on Wednesday. “More housing will do nothing to negate this common occurrence.”
RENT CONTROL METHODS VARY
Katie McGovern, an attorney at Pine Tree Legal, which provides legal services to low-income people, says that rent control, coupled with a prohibition on no-cause evictions and meaningful code enforcement, could provide short-term relief to low-income renters.
“Affordable housing development is crucial, but rent control addresses the power imbalance between landlords and tenants in a hot market and provides relief to low- and moderate-income residents now,” said McGovern, who believes that rent increases should not exceed the rate of inflation in Portland.
A similar shortage of rental housing in South Portland has driven up rents there and prompted residents to call for rent control in that city. The South Portland City Council last month formed a task force to look at housing affordability.
Rent control can work in many different ways. Generally, it limits the amount and frequency of rent increases on existing tenants or certain housing units, while allowing landlords to apply for exemptions, based on either economic hardship or to pay for costly building upgrades. Some policies allow landlords to negotiate a market rate when a tenant leaves, while also limiting the circumstances under which a landlord can evict a tenant.
It is common for communities with rent control to also have a specially appointed panel to set rent control rules, mediate disputes and conduct hearings for landlords seeking an exemption. Some rent control policies only apply to certain types of units and are designed to prevent the elderly from being priced out of their homes.
Rent control policies are roundly rejected by groups such as the National Multifamily Housing Council, a national advocacy organization for apartment owners. The group, along with 10 other signatories, claims that rent control policies actually reduce the number and quality of housing units, and in some cases, like New York City, can benefit the rich more than the poor.
“That rent control is an ineffective and often counterproductive housing policy is no longer open to serious question,” reads the opening line of the council’s Web page on rent control.
Carleton Winslow, who owns and manages 20 housing units in Portland, also maintains that rent control would discourage landlords from improving their buildings and effectively deter developers from building more units at time when they are desperately needed. He says the housing market goes in cycles and that the housing shortage will eventually be resolved by the free market, provided key regulatory reforms are made.
Winslow, president of the Maine Apartment Owners and Managers Association and a board member on the Southern Maine Landlord Association, argues that the city should instead focus on re-examining its zoning rules and making the permitting and regulatory process faster and more predictable to real estate developers.
“Rent control to me is a very extreme step,” Winslow said. “The city is taking some of the right steps, but rent control is not a logical step. It will have more long-term impact in the negative than short-term impact in the positive.”
Portland resident Judd Hume said he was evicted from his West End apartment after his rent increased by $50 a month.
After falling on hard times, he had begun receiving housing vouchers from the city’s General Assistance program, which his landlord agreed to accept. Hume said he contributed what he could from his earnings working part time at $9 an hour at the Portland Public Library.
What he didn’t know is that his landlord was keeping a tally of the difference between GA (about $688) and the market rent, which was $750 before increasing to $800 a month in 2015. He said he gave his landlord $800 of his $1,000 tax return, but was told it wasn’t enough, so he was evicted.
“I believe he wanted me out so he could charge the $800 or whatever he could get after I left,” said Hume, 59, who now lives in a subsidized unit in Congress Square Plaza. “I had never been a problem tenant. There were a few times I fell behind, but I caught up.”
Grace Scale said she was effectively priced out of Portland after her three-unit building in Parkside was sold and the new owner told all of the tenants that their leases would not be renewed. Scale said she and her husband, who make a combined salary of $70,000, couldn’t afford the typical rent of $1,100. Before, they were paying $950, she said.
“It became really apparent that we couldn’t afford anything or that we were going to be spending a lot more than we had been spending,” said Scale, 26. “We felt the city was going in a direction where we didn’t know if we could grow with it.”
The couple moved to North Carolina, where they own a home, she said.
HOW IT WORKS IN OTHER STATES
According to the National Multifamily Housing Council, four states – New York, New Jersey, Maryland and California – and the District of Columbia have rent control. Thirty-five states have state laws that either pre-empt or prohibit municipal or county rent control ordinances, while 11 others, including Maine, allow local rent control ordinances but do not have any.
New Jersey currently has over 100 communities with rent control policies, including smaller communities such as Fort Lee. The town of about 35,400 residents has roughly 18,300 units of housing, 42 percent of which are rental units. Its rent control policy caps annual rent increases to 5 percent, but allows landlords to negotiate a market rent when a unit is vacated.
In Washington, D.C., rents can only increase 2 percent more than inflation, but not more than 10 percent for most tenants and not more than 5 percent for the elderly or disabled. Vacant units, meanwhile, can increase by 10 percent.
National housing expert Christopher Herbert, who serves as the managing director of the Joint Center for Housing Studies at Harvard University, said that rent control seems to be coming up far more often – mostly by tenant advocates – in cities experiencing a housing crunch and rapidly rising rents.
“Given what we’re seeing, there’s a lot of rental pressure in cities across the country,” said Herbert, who made a presentation to Portland’s new Housing Committee. “There’s more talk about the potential for control than there has been in recent years.”
City Councilor Jill Duson, who leads the city’s Housing Committee, did not respond to a request for comment about rent control. City Councilor Spencer Thibodeau, who also serves on the committee, said he is skeptical rent control can work here but is willing to explore the concept.
“We’re going to look at everything we can to address the affordability issues, but I am a bit cautious about using rent control,” Thibodeau said. “My concern about rent control doesn’t solve the underlying problem of supply. I think it actually hinders supplies.”