Landlords go to federal court to block new evictions moratorium
Even before Gov. Kate Brown signs it, some landlords have sued in federal court to overturn Oregon's latest extension of a moratorium on residential evictions.
The lawsuit was filed Monday, Dec. 21 — barely hours after the Legislature passed House Bill 4401 — on behalf of Moe Farhoud, owner of Stark Firs Management of Portland, and other landlords. It names Brown, the state, Multnomah County and Portland as defendants in the action filed with U.S. District Court in Portland.
Brown had not yet received an enrolled bill, which is the final form of legislation, by Wednesday afternoon, Dec. 23.
The bill would extend the statewide moratorium on residential evictions for many tenants from Dec. 31 — that deadline prompted lawmakers to meet for a one-day special session — until June 30.
Qualifying tenants must sign declarations that their inability to pay rent is linked to the aftereffects of the coronavirus pandemic, such as loss of a job or income or increased expenses stemming from care of children or other dependents.
Landlords willing to forgo 20% of back rents can apply for payments for the other 80% from a state fund that starts at $150 million. The state legislation also allocates $50 million more for tenant aid. Both funds will be overseen by the state Department of Housing and Community Services.
Brown issued her first executive order on evictions April 1. The Legislature renewed it on June 26 for three more months and gave Brown the authority to extend it for another three months, which she did.
Multnomah County has a separate moratorium, which commissioners extended to July 2. Portland City Council adopted it by reference to cover those small areas of the city in Washington and Clackamas counties.
None of the measures forgives any back rents due.
The lawsuit seeks to invalidate all of those actions on grounds that they constitute an unconstitutional taking by government of private property without just compensation, and that they violate the constitutional guarantees of contracts.
A statement by John DiLorenzo, a Portland lawyer representing Farhoud and the other plaintiffs:
"We are sympathetic to all who have been impacted by this horrible disease and are not going to second guess whether the government's responses were necessary or appropriate. But there is no doubt that the state's choices and the choices of the city and county were the direct causes of the grave financial circumstances which renters and their housing providers are now experiencing."
The lawsuit asks a federal judge for one of two sweeping actions: Either declare as invalid all the relevant governor's executive orders, the county and city ordinances and the state laws, or order state lawmakers, county and city officials to come up with an alternative to the $200 million in state funds.
DiLorenzo said that according to Multifamily NW, a group of landlords he also represents, back rents owed amount to between $800 million and $900 million. Others put the figure far lower.
But based on recent data by the U.S. Census Bureau, the Oregon Office of Economic Analysis estimates that about one in five Oregon renters may face difficulties in paying rent by Jan. 1. That estimate is double the 10% at the end of October.
On behalf of Multifamily NW, DiLorenzo floated a proposal for landlords to take tax credits, which are subtracted directly from taxes owed, over five years to offset the lost rental income. It became the basis for a proposal by Sen. Betsy Johnson, D-Scappoose, but the Legislature has resisted creating new credits as it reviews selected existing credits every six years. The proposal was not taken up during the special session.
DiLorenzo, on behalf of landlords, filed a notice with the Oregon Department of Administrative Services back on Sept. 16 of a potential lawsuit based on the lack of just compensation for landlords. He specified a law that allows the governor to invoke emergency orders but also requires government compensation for private property taken. The governor's office, through a spokesman, declined comment back then.
The Oregon Supreme Court on June 12 upheld Brown's authority to issue executive orders related to the pandemic. The justices overturned a ruling by a Baker County judge nullifying all the orders and said the judge had erred in interpreting state law governing emergencies.
In a different lawsuit on Nov. 24, a federal judge rejected a request by the Oregon Restaurant and Lodging Association and the Restaurant Law Center to overturn Brown's orders on grounds that they singled out the restaurant industry for restrictions. At that point restaurants statewide were limited to takeout and delivery. New state restrictions, which allow some outdoor dining, took effect Dec. 3.
NOTE: Adds proposal for tax credit to be taken by landlords for rental income losses, but was not taken up by Oregon lawmakers at their special session Dec. 21.
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