Oregon landlords filed a federal lawsuit late Monday seeking to strike down state and local eviction moratoriums, charging that the restrictions violate their constitutional rights.

The lawsuit was filed in U.S. District Court in Portland in the immediate aftermath of the Legislature’s approval of an extension of the statewide eviction moratorium.

Some landlords have not received rent payments since March, and large landlords have seen their revenues reduced. The latest state bill extends the ban on evictions until June 30, 2021.

John DiLorenzo, a Davis Wright Tremaine attorney who filed the lawsuit, said state leaders should deliver aid for landlords.

“What we really prefer is the alternative relief, and that is a proposal by the state as to how they’re going to compensate housing providers for serving as social service providers,” he said.

The property owners may be willing to consider dropping the lawsuit if lawmakers can loosen the purse strings for landlords, DiLorenzo said.

“We’ll look at it,” he said. “We’ll look at anything they’re willing to do.”

The lawsuit seeks to prohibit Gov. Kate Brown from enforcing the moratorium, and strike down the eviction ban as unconstitutional. It names Brown, Multnomah County and the city of Portland as defendants.

Brown, in a press conference on Tuesday, said stable housing is crucial during the COVID-19 crisis.

“No one should be turned out of their home or rental during a pandemic,” she said.

Eviction is a core issue for tenants’ rights activists, who have scored a string of political victories in recent years.

“We know the COVID-19 pandemic is only worsened by evictions at this time, and the stories we are hearing from tenants make it clear the financial struggles and harassment they are facing are not going to resolve themselves,” Kim McCarty, executive director of Community Alliance of Tenants, stated via email. “Right now, eviction is a public-health issue. This is another frivolous lawsuit from special interests that undermines the public good.”

Landlords are feeling more pain now than during the spring, said Greg Frick, a partner at HFO Investment Real Estate in Portland. He is not a party to the lawsuit.

“It’s getting progressively worse,” he said. “It depends on the project. Some property owners are 25-30 percent in arrears. We have others who are doing better.”

The lawsuit comes from individual landlords and is backed by the industry group More Housing Now.

One plaintiff, Moe Farhoud, owns about 1,200 rental units in Oregon, including in Portland and Multnomah County. His tenants owe more than $1 million in back rent, the lawsuit alleges.

Brown issued the first statewide eviction moratorium on March 22. A June bill extended and streamlined eviction moratoriums statewide after Multnomah County and Portland enacted their own bans.

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Legislation that would limit rent increases and protect tenants from eviction without cause has advanced through the Oregon Senate Housing Committee after hours of personal testimony from renters and advocates.

Senate Bill 608 is supported by Democratic leaders in the Legislature; sponsors include House Speaker Tina Kotek and Senate President Peter Courtney.

The bill would limit annual rent increases to 7 percent plus inflation. At current inflation rates of about 3 percent, rent increases would be held to about 10 percent per year.

The bill would also prohibit no-cause evictions after a tenant has been in place for 12 months.

The multifamily industry has taken different approaches to countering the bill. Jim Straub, legislative director of the Oregon Rental Housing Association, said the group is remaining neutral on the bill despite some qualms.

“I do not believe it will be catastrophic to our livelihood,” he said.

Other groups and some individual landlords have lodged their opposition. Some said they feared limits to no-cause evictions, which can be used to oust troublesome tenants without the time and expense of a for-cause eviction fight.

“In cases where tenants have repeated and continual issues, we must be able to remove them without a fight over why we want them removed,” Brian Kester, general manager of Eugene’s Bell Real Estate, stated in written testimony.

Dan Hayes, a Portland landlord, also urged a ‘no’ vote.

“Rent control does not work,” he said before the committee. “When you fix pricing, you have a tendency to fix pricing.”

The bill hearing Monday reflected the changed circumstances in Salem, where Democrats who were backed by tenant advocates have taken power. In symbolism few could miss, Sen. Shemia Fagan, D-Portland, led the hearing as chairwoman of the Senate Housing Committee. Fagan triumphed in the May 2018 primary over longtime Sen. Rod Monroe, a landlord who was considered a roadblock for tenant protection measures.

A stream of advocates for tenants said the bill would protect them from sudden rent increases that can lead to displacement and even homelessness. The bill “gives some measure of accountability and predictability,” said Katrina Holland, executive director of the Community Alliance of Tenants in Portland.

The bill would prevent sharp rent increases such as one of 113 percent given to one man, said Sybil Hebb, director of policy advocacy for the Oregon Law Center.

“These are very real examples and they are very real needs that we have that S.B. 608 will speak to,” she said.

The bill was passed out of committee in its first hearing via a 3-1 vote, with another member absent.

John DiLorenzo, a lobbyist representing the landlord group More Housing Now!, spoke in support of five amendments put forward by Sen. Fred Girod, R-Stayton.

“The bill as written is unworkable,” DiLorenzo said.

One proposed amendment would delete the emergency clause that would cause the bill to take effect immediately, replacing it with 91 days after the Legislature adjourns. Another would bar municipal governments from requiring landlords to pay eviction penalties, as Portland does in its relocation ordinance.

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As a growing movement of tenants’ rights advocates has won new protections for renters, Oregon’s landlords are caught in the middle.

The city of Portland has enacted an emergency ordinance requiring landlords to pay relocation costs to tenants whom they evict without cause or issue a steep rent increase that forces them to move.

Statewide legislation has moved forward too. A bill under consideration in Salem would limit landlords’ ability to evict tenants without cause statewide, and would also give local governments the ability to pass rent-control ordinances.

Landlords are fighting back with a lobbying blitz. For them, the awakening of the tenants’ rights movement can seem like an attack on their businesses. Landlords said they take pride in their properties and resent what they see as government meddling in the landlord-tenant relationship.

Institutional investors, primarily from outside the state, have made waves in recent years by buying rental properties in the Portland area. Yet many properties are still owned by mom-and-pop landlords or small family companies.

Dianne Cassidy owns two rental properties in Clackamas County: a 110-unit apartment building in Oregon City and a 75-unit property in Gladstone. She began working with her father in the family rental business in 1999 and took over majority ownership of the two properties in 2007. She said she uses a property management company to avoid any legal missteps, but frequently visits the properties herself.

Cassidy has experience in construction and said she enjoys improving the properties with small touches such as planting flowers. She said rent control, if it comes to Clackamas County, could push her out of the business.

“I can sell,” she said. “And who’s going to buy it? It’s not going to be somebody who puts in flowers or puts in just a little bit better roofing or fixes the potholes. With rent control, that’s what you get.”

Cassidy also is concerned that lenders will take a “dim view” of rent controls. Apartment properties are often purchased with the help of a 10-year mortgage, which typically ends in a balloon payment and refinancing.

Cassidy said she doesn’t need government regulations getting in the way of her property management decisions.

“These are our properties,” she said. “They are our business. And the government is taking away the control we have over our own business.”

Katrina Holland, executive director of the Community Alliance of Tenants, said some controversy with the new rules is to be expected. But, she noted, more than 150 other municipalities have enacted rent-control or rent-stabilization rules.

“This is a new conversation that we’re having as a state; this is a new conversation we’re having as a city,” she said. “People have varying opinions.”

Holland added that she’s seen no difference between institutional investors and local landlords in issuing no-cause evictions and rent increases.

“It’s all across the board,” she said. “The most heinous situations we’ve seen have come from small landlords.”

Many small-scale landlords got into the multifamily market to fund their retirements, reasoning that property will be there even if Social Security or private retirement accounts falter.

That was the case for Mark Bidwell, who sold a Texaco Express Lube business before buying a fourplex and then later, a 12-unit property in Salem. He now also owns a 27-unit apartment complex in Keizer.

Bidwell had long considered buying multifamily properties because his brother is a landlord in the South Puget Sound area of Washington. Bidwell manages the properties himself, including much of the needed maintenance. His wife still works and the couple has a child in college.

“I’m not really young enough to completely hang it up, but at the same time, I’m healthy and quite active,” Bidwell said. “I’m at the point where I want to have the time to go do things. I’m handy enough where I can do quite a bit of the maintenance as needed. I can do the management.”

Bidwell plans to step back from active management and enjoy his retirement in a few years. “When my wife is ready to retire from her position, we can turn this over to a property manager,” he said.

Bidwell said he’s been in touch with his state senator and representative to voice his concerns about House Bill 2004, which would impose relocation expenses for no-cause evictions and allow for local rent control. The House passed the bill on April 4; now it’s before the Senate Committee on Human Services.

No-cause evictions are valuable for getting rid of problem tenants who are posing safety or nuisance issues to other tenants, landlords said. Often, renters will decline to testify in court during the for-cause eviction process, fearing harassment or worse if they help a landlord evict a troubled tenant. Landlords shared tales of tenants who intimidated their fellow renters to deter them from lodging complaints.

Bidwell said rent control brings particular concerns. Late in the purchasing process for one property, he learned that the rent for one tenant, a single mother, was far below market rate. Bidwell said he didn’t want to escalate her rent too quickly, so they came to an agreement to increase the rent quarterly over a two-year period.

Landlords said they’re concerned that requirements to pay relocation costs will inhibit landlords from performing refurbishments that require evicting tenants. In Portland, landlords must pay tenants’ relocation fees of $2,900 to $4,500, depending on the sizes of units being vacated, when tenants are evicted without cause.

To upgrade a 100-unit complex, an owner may have to pay more than $300,000 to evict tenants. Property owners argue that will dissuade owners of older properties from renovating.

“They’re just going to continue to deteriorate,” Bidwell said.

The relocation rules will result in fewer building rehabilitations, said Sam Rodriguez, senior managing director of Mill Creek Residential Trust, a Dallas-based developer that has built prolifically in Portland.

“I don’t think it will dissuade people from developing new projects in Portland,” said Rodriguez last week during a panel discussion on development issues. “I do think it will dissuade people from developing value-add projects in Portland.

“Owners are going to squeeze their buildings for everything they’re worth and then board them up. So all of your beautiful historic buildings in the Alphabet District, they’re going to be boarded-up buildings in 10 years.”

Multifamily owners also say they’re seeing increased vacancies and softening rent increases, meaning rent control and relocation rules advocates could in effect be fighting the last war.

Cassidy said vacancies at her properties are staying unfilled longer.

“Since January, we’ve had a lot more vacancies and they’ve been harder to fill,” she said. “Right now, I’ve got about five, and the reason is that the market is working. There are more apartments now; there are more choices. The clientele can be pickier about the price and where they go.”

This is where regulators are falling behind, she said.

“They don’t anticipate or they don’t even acknowledge that the free market works,” she said.

Holland disputed that, saying the Community Alliance of Tenants’ hotline continues to be flooded with calls from renters facing evictions and rent increases.

“To simply wait for the market to build enough supply for there to be trickle-down to the middle market, it has consequences,” she said. “There is collateral damage.”

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