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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After failing to advance a rent control bill into law in 2017, Oregon Democrats are optimistic a favorable political landscape will change the result in Salem this session.

With strong majorities in both chambers, House and Senate leaders are moving aggressively on a host of policy priorities.

“I think it will be an activist session,” said John DiLorenzo, a lobbyist for More Housing Now, a trade group of large-scale apartment owners.

A bill co-sponsored by Senate Majority Leader Ginny Burdick, Sen. Laurie Monnes Anderson and House Speaker Tina Kotek would cap annual rent increases at 7 percent plus inflation, tied to the Consumer Price Index‘s West region. At current rates, that would limit rent hikes to about 10 percent annually.

“We want to prevent the kind of extreme rent increases we’ve seen throughout the state that lead to displacement and frequently, unfortunately, homelessness,” said Danny Moran, a spokesman for Kotek.

Senate Bill 608 would also protect tenants from eviction without cause, with some exceptions.

The stage was set for rent control by Shemia Fagan’s 2018 primary win over longtime incumbent Sen. Rod Monroe, a landlord who was widely viewed as a roadblock for tenant-protection measures. Fagan now serves as chairwoman of the Senate Housing Committee. She has indicated she intends to move quickly on SB 608.

Political groups are still studying the 2,000-plus bills that were posted to the Legislature’s website ahead of the session’s start on Tuesday. 1000 Friends of Oregon, a Portland nonprofit that runs the pro-housing group Portland For Everyone, has not taken a position on SB 608, Deputy Director Mary Kyle McCurdy said.

The bill would likely have little effect on large, institutional apartment owners, DiLorenzo said.

“If you’re a landlord who’s attentive to the market, you’re probably not going to be raising rents 10 percent,” he said.

Rents in Portland have stabilized after sharp increases in recent years. Average rents slipped 0.2 percent in January compared to a year earlier, according to Apartment List. Median rents for January were $1,120 for a one-bedroom apartment, and $1,320 for a two-bedroom. Statewide, rents fell 1.9 percent during the past year, according to Apartment List.

The rent control bill would most affect landlords who have been leasing their properties at well below market rates, DiLorenzo said, a situation he characterized as “no good deed goes unpunished.”

While some municipalities across the nation have some form of rent control, Oregon could be the first state to implement it. While setting a statewide cap, the bill would leave in place a statewide pre-emption on local rent control programs.

Economists have been broadly critical of rent control, saying such measures tend to depress housing production. Democrats said the bill would provide a level of stability, preventing only major rent spikes.

Other provisions of SB 608 include:

• extending protection from eviction to tenants who have been in place for 12 months or longer,
• limiting rent increases to one per year,
• allowing evictions after three documented violations of the rental agreement in a 12-month period, and
• allowing evictions with 90 days’ notice and payment of one month’s rent if the landlord has agreed to sell the property, if the landlord intends to demolish or convert the rental from residential use, if the landlord intends to undertake major repairs or renovations, if the landlord or a family member intends to occupy the property as a primary residence, or if the unit is unsafe or unfit for occupancy. Landlords with four or fewer units would be exempt from the requirement to pay one month’s rent.

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