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Portland says landlords can’t hoist rents until next year without board approval

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August. 6 – Portland landlords, many of whom are seeing higher property taxes due to the recent revaluation, are wrangling with the city over whether the unused rent control law will allow them to increase rents this year without first getting permission from the city’s rental board.

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A city attorney said final week that landlords cannot hoist rents to preserve up with inflation or hoist taxes until next year, even though landlords will pay higher taxes for the current half year. It also recommended that the newly created Board of Tenancies, tasked with awarding additional rent increases, handle these requests on a case-by-case basis, rather than offering a wide interpretation of the law.

The city’s position is drawing criticism from landlords and one of the authors of the Rent Control Act, who says the council could grant a blanket hoist to all landlords to aid offset the increased costs caused by the revaluation.

As a result of Portland’s first revaluation in 15 years, appraisal property values ​​on the peninsula have increased dramatically, including many multi-unit rental properties. Some owners see their tax bills double and will have to pay their unused assessments for the second half of the calendar year.

Randy Bollenbach owns and operates 59 condominiums in four buildings with her husband and other business partners. She’s read the ordinance, the city’s advice to landlords online and watched board meetings and owners’ associations, and she’s still confused about what she’s allowed to do.

“It’s really firm as a little operator trying to figure out these things – everything is unused,” Bollenbach said. “We’re not lawyers, so I’m still confused.”

Ann Torigrosa, the city’s involved attorney, told the Board of Rentals final week that the law states that the city will publish the percentage increase in inflation and property tax increases in September for the following year. This means that this year, landlords can only increase rent by up to 5 percent if the unit is delivered.

begin to interpretation

“The only eligible rent increases for 2021 are a unused tenant increase or an increase provided by the Tenancy Board,” she said.

Torregrossa acknowledged that the decree could be interpreted differently, but discouraged the council from offering its own interpretation outside of a particular application.

A city spokesperson said the city had received “several” requests for rent increases since the council completed acceptance forms in June. The Rental Management Board heard and approved the first rent increase request final week, and others are scheduled to grip their next meeting.

Jessica Grunden, the city’s director of communications, said the Office of Housing Safety has investigated nine formal complaints about illegal rent increases and received “abundant calls” from tenants requesting information.

“So far, the city has not had to issue any notifications of the violation,” she said. “We have notified the landlords of the provisions of the law and received voluntary compliance in each case, and some cases are still being pursued.”

Grunden said landlords can only be given a rent increase this year for property taxes if they can demonstrate they can no longer get a sincere rate of return. Otherwise, they will have to wait until next year.

Sam Sherry, the attorney representing the landlords, said in an interview on Wednesday that he has received calls from a few landlords about whether they will be allowed to hoist rents this year due to tax increases. Sherry said the law could be interpreted in many distinct ways, but declined to provide his interpretation or disclose his advice to landlords.

“Most of the landlords I spoke with will receive monthly rent increases that fall under the annual cap of 10 per cent set out in the Rent Control Act,” Sherry said.

Limited options

The Rent Control Ordinance requires landlords to provide 75 days’ notice of any rent increase, preventing any rent increase granted by the council until the end of the year. This alone limits how much landlords can recover.

However, securing a rent increase this year would leave landlords with more room to increase rents next year. Annual increments are set at 10 percent per year. The rent board can donate landlords increases in excess of this amount, but the increase must be applied in coming years and does not exceed 10 percent in any year.

Based on a sample of known rents in many apartment buildings, tenants may see relatively little increases in rent if landlords evenly distribute the tax increase from the revaluation among the housing units. Tenants who live in the areas with the greatest rise in values ​​— the East End and West End — will see higher impacts, but still less than the 10 percent cap in law.

For example, one West End apartment building faces an annual property tax increase of $2,667, or 35 percent. If that were split evenly among the four units, rents would increase by about $55.50 per month, or about 4 percent.

The effects were less than on the peninsula, where property values ​​did not rise as much as the peninsula.

Property taxes for an apartment building on Stevens Street increased only 3.5 percent, or $287 a year or about $23 a month. If that were split evenly between the three units, rents would increase by less than $8, or roughly 3 percent.

But these tax increases can create a burden on landlords, if they cannot spread the costs among their units, especially those with multiple buildings and low rents.

‘Chaos’

Brett Vitalius, president of the Southern Maine Property Owners Association, said the rent control law, accompanied by the reassessment, is a “mess.” He believes the city’s interpretation is biased toward the group behind the law, the Maine Democratic Socialists, at the expense of the owners.

The owners association sought to invalidate the law in court, arguing that it was unconstitutional and ambiguous. But this measure was upheld in the Supreme Court.

Vitalius estimated that its members saw average taxes increase by 50-70 percent, but others saw property taxes double. He said landlords feel “locked in,” because the city says they can’t increase rents this year without board approval, annual increases are set at 10 percent and they can only increase rents by 5 percent when the unit capsizes.

“The battered landlords, who call them, are the ones with low rents — $700 and $800 — and their taxes have doubled,” he said. “The irony is that landlords will never look at their tax bill and overpay their renters dollar for dollar. That’s just not how we think.”

Jack O’Brien, a Brunswick resident who helped write the People’s First Portland ordinance, the campaign run by the DSA, believes the Board of Rentals has the authority to award a blanket hoist to all landlords to aid with the revaluation this year. But he believes the city unnecessarily impedes the council’s authority by discouraging it from interpreting the decree and issuing rules.

With support blanket approach

“Instead of making it piecemeal, with each landlord figuring out how the law works in their favour, the Rental Board is tasked with making sure there is widespread enforcement across the city,” O’Brien said.

O’Brien noted that the decree allows the board of directors to award any additional hoist to allow the owner to receive a sincere rate of return. Although the decree only speaks of one landlord who must “correctly establish” the need for the increase, it is believed that the court’s latest opinion allows the board of directors to issue a rule that applies to all property owners, with a citywide reassessment being the justification for this the increase.

“No place requires each owner to file their own application in the sense of a hearing,” he said.

Some owners are rethinking their business strategy.

Over the former 13 years, Bollenbach said she has tried buying distressed buildings, improving units as they turn around and gradually increasing rents close to market rents — but they remain lower than that. She said her rents range from $600 a month for a studio on Oak Street to $1,200 for a two-bedroom apartment on Neal Street.

Before setting rents, Bollenbach said she and her husband would sometimes lower rents for seniors and low-income renters, and might purchase them turkeys around Thanksgiving. It was something they felt they could do, because when the unit was flipped, they could improve it and bring in a higher rent.

The Rent Control Act allows a landlord to only increase rents by 5 percent when they turn. Under no circumstances can rents increase by more than 10 per cent in one year. To recover any renovation costs — which she said could approach $20,000 to $30,000 per unit — they would need to file a exceptional application with the rental board.

Bollenbach is not sure how this process will go.

The first ruling issued by the rental board

Last week, the Board of Rentals heard and ruled on its first request for a rent increase from the landlord as a result of the capital improvement. The landlord has asked to increase the monthly rents for the unoccupied unit by about $26, or 3 percent, per month, so he can recoup the costs of installing carpet and padding over the next four years.

It took the board about 45 minutes to discuss the issue, including whether the owner should instead consider recovering his investment over five years, as recommended by the Internal Revenue Service, a move that would cut $5 of the monthly increase. They also discussed whether the increase would disappear following the investment was recovered – something they eventually decided to reject.

The board eventually approved the request to allow a hoist of $26 per month.

“My head was spinning at the end of that conversation,” Bollenbach said. “It is true that this is the first and they were concerned about setting a precedent, but I am not confident.”

Ironically, Bollenbach said, the rent control law is likely to shove landlords to be more combative with annual rent increases.

“We are not used to being combative about rents,” she said. “We will hoist rents (now) if we can. That will be our strategy – get it as much as conceivable.”

Correction: This story was updated on Friday, August 2nd. 6, 2021 to correct a mistake that misplaced the Southern Maine Homeowners Association lawsuit challenging Portland’s rent control law. The decree was upheld in the Supreme Court.

Referensi: www.yahoo.com

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