Summary of the Oregon Legislative changes made in 2019.
In this newsletter, I will be detailing legislative bills that were passed in the last (2019) session. This summary would not have been possible without the assistance of Cindy Robert, the lobbyist for the Rental Housing Alliance (RHA) and Nellie DeVries, the lobbyist for the Oregon Building Owners and Managers Association (BOMA), who were kind enough to share their session summaries with me.
This overview will not be addressing all the changes to the City of Portland’s ordinances regarding security deposits and tenant screening. The ordinances have been passed, but the implementation procedures have not been fully finalized by the Portland Housing Bureau.
Democrats in charge
How does one describe this very robust Oregon legislative session?
Republican senators walked out of the Senate, which triggered a quorum call, and for lack of a quorum, the Cap and Trade bill faltered. Not to say anything of the senators hiding out of state, so they could not be apprehended by Oregon state troopers.
Clearly, with a Democratic House, Senate, and Governor, bills were passed that would not have passed with a more balanced legislative group. It all started with rent control.
Oregon was the first state in the nation to pass a rent control bill, SB 608.
Rent Control – SB 608
Early in the session, Oregon became the first state in the nation with rent control.
SB 608, caps rent increases at 7% per year + consumer price index (published annually by the Oregon Department of Administrative Services on September 30th; currently 2.9%); restricts no-cause terminations to the first year of the tenant’s occupancy; and establishes a relocation fee equal to one month’s rent for tenants being displaced.
Note: Under the law, one may levy a 9.9% base rent increase and a separate increase for utilities. (Not so in the city of Portland, where the total of all increases, rent and utilities, may not exceed 10% without triggering Portland relocation assistance.)
SB 608 does provide landlords with some ‘relief’ by:
- Keeping the state’s preemption over local rent control regulations;
- creating a new ‘tool’ to terminate leases after three violations in a year; and
- defining landlord-based exemptions to terminate a tenancy (with the payment of a relocation fee equal to one month’s rent*) to:
- demolish or repurpose a dwelling within a reasonable time;
- renovate or repair premises that are or will be unsafe or unfit for occupancy within a reasonable time; and
- occupy the premises as a primary residence for self or immediate family.
* Owner-occupied units, owner-occupied duplexes and landlords with four or fewer rentals are exempt from paying relocation fees.
HB 2001 – Missing Middle Housing
Impact: This bill allows for more dense housing in cities around the state.
Oregon is growing and the legislature is listening. Under the leadership of House Speaker Tina Kotek, and in response to the housing crisis, HB 2001 was passed. In an innovative move, the State of Oregon paved the way for duplexes, triplexes, four-plexes, townhouses and cottage clusters (defined as middle housing) to be built in areas formerly reserved for single-family homes.
The bill was passed with a Senate vote of 17-9, 43-16 in the House, signed into law by the Governor and using an emergency clause, became effective immediately. It legalizes the development of duplexes on single-family lots, in cities of 10,000 – 25,000 inhabitants. In cities that are larger than 25,000 inhabitants, it permits the building of duplexes, triplexes, four-plexes, townhouses and cottage clusters. This law provides for the phased implementation of rules in June 2021 and 2022 to allow synchronization with the state’s land-use regulations.
HB 2003 – Regional Housing Inventory
Impact: Requires localities to study housing needs and develop strategies to increase housing supply.
Effective January 1, 2020, in addition to appropriating funds to the Housing & Community Services Department, HB 2003 requires:
the Housing and Community Services Department to develop a methodology to conduct a regional housing needs analysis;
- the City of Portland to estimate their housing stock every six years and cities outside Portland, with populations greater than 10,000 inhabitants, to estimate their housing need and capacity every eight years;
- local governments to:
- adopt a housing production strategy within one year;
- allow accessory dwelling units;
- allows affordable housing on land zoned for places of worship; and
- the Land Conservation and Development Commission (LCDC) to:
- seek an enforcement order against cities not implementing a housing production strategy; and
- develop or rezoning of public property for affordable housing.
HB – 2005 Paid Family & Medical Leave
Impact: This bill increases employee benefits which will increase costs for businesses and customers.
Oregon currently requires family medical leave for employers with 25 or more employees. Leave can be taken for a serious illness, care for a family member who is ill, or bonding with a new child. More than half of Oregon workers are eligible for unpaid family and medical leave benefits under the federal Family and Medical Leave Act of 1993 (FMLA) and the Oregon Family Leave Act (OFLA). Under HB 2005, an insurance program is created to provide employees with a portion of their wages while on family and medical leave or military family leave. Beginning January 1, 2022, benefit premiums begin to be collected and employees can begin to access paid leave January 1, 2023
- Premium responsibility split 40 employer / 60 employees.
- Employers with 25 or more employees pay (40% of 1% of payroll) and employees pay (60% of 1% of payroll).
- Employers with less than 25 employees don’t pay the “employer premium.”
- Caps weekly benefit amount at 120% of the state’s average weekly wage. It also establishes a minimum weekly benefit amount of five percent of the state’s average weekly wage (approximately $50).
- Allows the employee to use accrued paid leave (i.e., vacation leave, sick time) in addition to receiving paid family and medical leave insurance benefits to replace wages up to 100 percent.
- Employers with fewer than 25 employees may assign a returning employee to a different position with similar job duties, but with the same pay and benefits.
- Prohibits reassignment/termination claims by other employee claims while an employer is accommodating a returning employee.
If you are trying to figure out how this affects you, just consider that all property management companies with more than 25 employees will have to comply with this law effective January 1, 2022. They will be passing this cost through their clients.
HB 2006 – Housing & Community Services Department Grants
Impact: Corrects SB 608 and funds housing-related support services to low-income Oregonians.
The bill appropriates $3 million from the General Fund to the Housing and Community Services Department to support programs that help people to obtain and retain housing. Examples include tenant education programs, technology solutions that help low-income people find available housing, fair housing training for tenants and landlords, and assists victims of domestic violence and sexual assault with housing needs.
This bill also clarified that units owned by a landlord, but not used as a rental (i.e. private residence, vacation home, etc.) do not count toward the 4-unit threshold for exemption from the relocation assistance requirement.
HB 2056 – Housing Development & Guarantee Account
Impact: House Bill 2056 updates and expands current loan guarantee programs for affordable housing.
Loan guarantee programs, administered by Oregon Housing and Community Services (OHCS), currently help finance up to 25 percent of a loan for low-income housing. This expansion allows eligible organizations to participate in this program to purchase land for affordable housing development.
HB 2206 – Building Safety After Emergency Inspections
Impact: Creates certified building evaluators to help decide if buildings can be occupied after a natural disaster.
This bill directs the state fire marshal to develop and administer a program to evaluate the condition of buildings after a natural disaster a create a registry of certified building evaluators and approved trainers.
If there is a major flood or earthquake, a building may not be occupied until it has been inspected by a certified evaluator. This seems to apply to all buildings without exception. It will behoove building owners to sign contacts with these evaluators, in advance, to ensure prompt inspections after a natural disaster.
HB 2285 – Receiverships
Impact: HB 2285 provides a new process for a locality to request a general judgment in lieu of receivership.
Upon request, the bill directs the court to enter a general judgment for the estimated cost of abatement in lieu of appointing a receiver. Such judgment is given the priority position of a lien.
Additionally, HB 2285 allows a lien against the property, for outstanding amounts owed to a receiver. These liens have priority over all other liens, mortgages, and encumbrances.
HB 2530 – Military Veteran Services Notification
Impact: Requires residential landlords to notify veterans of special services available to them upon eviction or foreclosure.
Disclosures shall include contact information for county veterans’ service officer, community action agency or 2-1-1 referral service.
HB 3427 – Corporate Tax Increase
Impact: Increases taxes for companies with gross income over $1,000,000. CPA review is advised.
The Student Success Act includes a corporate tax increase of 0.57% for all income, generated in Oregon, above $1 million. (Some exemptions and reductions may apply.) The bill also reduces personal income tax rates for the lowest three tax brackets by 0.25 percent (certainly helpful if the bill ends up being referred to voters). With an upgraded revenue forecast, the bill is estimated to raise $1.3 billion per year for schools.
There are about 40,000 businesses that qualify to pay the new tax, according to information from the legislative revenue office. The Tax Foundation of Oregon has developed a calculator to help businesses with revenue over $1 million to determine the impact: https://files.taxfoundation.org/20190501152303/How-to-Calculate-Oregons-ProposedCorporate-Activity-Tax-Under-HB-3427-Flowchart1.pdf
Senate Bills that became Law:
SB 262 – Property Tax Exemption for Multi-Unit Housing
Impact: Benefits low-income housing providers and developers.
SB 262 extends the date localities may grant a property tax exemption to affordable multi-unit rental housing (excluding land) from 2022 to 2032. After the exemption expires, qualified properties go back to being taxed at the assessed value.
SB 278 – Rent Guarantee Program
Impact: Extends eligibility of program that helps low-income tenants qualify for rental housing.
Rent Well is a tenant education course that helps low-income individuals who have poor credit, past evictions, or criminal history and who are at risk of homelessness or currently homeless. Graduates receive a certificate giving their landlords access to the Rent Well Landlord Guarantee Fund, which may cover damages, unpaid rent or eviction costs.
SB 278 extends eligibility for the Rent Guarantee Program to individuals between 16 and 27 years of age who were wards of the juvenile court within the past ten years.
SB 484 – Applicant Screening Charges
Impact: Restricts a landlord’s ability to charge multiple screening fees.
It is common practice for applicants to pay a screening fee. These costs can add up quickly when applying for multiple apartments. This law limits a landlord to charging a single screening fee in a 60-day period for units owned or managed by the same landlord.
Additionally, the law provides that an applicant may not recover a screening charge if the tenant refuses an offer from the landlord to rent the dwelling unit.
SB 586 – Manufactured and Marina Community Updates
Impact: Significant clarifications and changes to laws that affect manufactured dwelling parks and marinas.
The law provides marina owners and occupants with some protections similar to those enjoyed by manufactured home parks including notification of a marina’s sale, provide financial due diligence information and a short tenant right-of-refusal period to purchase.
It also increases the park registration fees; establishes the Dispute Resolution Advisory Committee; requires mediation for certain landlord-tenant and tenant-tenant disputes; institutes a 10-month cure period home floatation issues; mandates reasonable notice before inspecting a hazardous tree; provides for a longer period before a landlord sells or disposes of floating home; modifies the process for tenants to cure separate and distinct lease violations; requires landlord to provide at least one method by which a tenant may cure a violation; and; amends the process for landlord to convert to a different utility billing method.
SB 970 – Marijuana Screening Criteria
SB 970, is primarily related to manufactured dwelling park statutes and ‘facility landlords’ and prohibits all residential landlords from considering minor marijuana convictions, possession of a medical marijuana card, or status as a medical marijuana patient when evaluating rental applications.
SB 420 – Marijuana Conviction Set-Aside
SB 420 allows a person to petition a court to set aside most convictions for possession, delivery, and manufacture of marijuana if such conduct, upon which conviction was based, is no longer crime. The process exempts applicants from filing fees, providing fingerprints and undergoing a background check, but the prosecuting attorney has the opportunity to contest. Approved petitions result in the court sealing records of set aside convictions to include the Department of Corrections and other relevant agencies.
SB 369 – Substantial Completion Statute of Limitations
Impact: Clarifies the definition of ‘date of acceptance’ from a contractor to a property owner.
SB 369 modifies the statute of limitations for action against an architect, landscape architect or engineer arising out of construction, alteration or repair of improvement to real property. In order to do so, the bill modifies definition of “substantial completion” to the earliest of: (A) the date when the customer accepts, in writing, the project as having reached that state of completion when it may be used or occupied for its intended purpose or, if there is no such written acceptance, the date of acceptance of the completed construction, alteration or repair of such improvement by the customer; (B) the date when a public body issues a certificate of occupancy for the improvement; or (C) the date when the owner uses or occupies the improvement for its intended purpose.
As you can see, there were a lot of legislative changes. On the other hand, there were many bills that did not pass. My goal with this article was to give visibility to the massive amount of change owners of real estate faced in this last legislative session. The biggest challenge for all of us will be to review these bills and change our policies to meet the new regulation.
Our company has been working on implementing these laws since the session ended and will continue to stay abreast of the changing legislative environment. Unfortunately, many of these changes will significantly increase the cost of owning and operating real estate.
 The three-county region expects to add 56%-74% more households by 2035. The City of Portland projects a household increase of 44%-57%. https://www.portlandonline.com/portlandplan/index.cfm?a=288097&c=52256
The three counties surrounding Portland are forecasted to experience the greatest growth over the next 10 years. https://www.oregon.gov/das/OEA/Documents/appendixc.pdf