PORTLAND, Ore. (KOIN) — Two Portland rental property owners have filed a lawsuit against the city’s new ordinance that requires landowners to pay moving costs for tenants that have their rents raised past a certain amount.

The ordinance was passed unanimously by the Portland City Council on February 2.

It requires landlords to pay moving costs to tenants within 2 weeks of receiving the landowner’s notice that rent is going up by 10% or more within a 12-month period.

Payment varies based on apartment size as seen below:

  • Studio apartment – $2,900
  • One-bedroom apartment – $3,300
  • 2-bedroom apartment – $4,200
  • 3-bedroom apartment (or larger) – $4,500

This was seen by some as a workaround to Oregon’s rent control ban. Under state law rent control ordinances are illegal.

Landlords had vowed to sue if the ordinance passed. Now, they’ve done just that.

The lawsuit was filed on Monday afternoon in Multnomah County Circuit Court on behalf of Phillip E. Owen and Michael Feves. Both claim the “Tenant Relocation Ordinance” violates Oregon statutes, the Oregon Constitution and the U.S. Constitution.

“Councilwoman Eudaly’s ordinance, which was written as a substitute for rent control, essentially is rent control,” said attorney John DiLorenzo, Jr. “We believe the city council has exceeded the city’s home rule authority in enacting this ordinance because it is preempted by provisions in ORS CH. 90. We also believe council members have not contemplated many negative consequences of this ordinance that will now, unfortunately, affect the community.”

The lawsuit claims Portland’s new ordinance violates state and federal law in at least 4 ways.

  1. It “controls the rent that may be charged for the rental of any dwelling unit,” which violates ORS 91.225.
  2. It conflicts with ORS 90.427 which “authorizes no-cause terminations of tenancies by imposing significant financial burdens on lessors who utilize the no-cause termination procedure.”
  3. The ordinance “expressly applies” to existing leases and therefore impairs contracts in violation of state and federal law.
  4. The ordinance constitutes undue oppression in violation of the Due Process Clause of the U.S. Constitution by placing heavy financial burdens on lessors.

The lawsuit also claims the “Tenant Relocation Ordinance” is “procedurally infirm” because the Portland City Council didn’t follow its own procedural rules in adopting the ordinance and improperly delegating authority to draft vague and ambiguous “conceptual amendments” to City Attorney Tracy Reeve.

On the ordinance, DiLorenzo concluded:

“Mr. Owen and Mr. Feves are longstanding and responsible investment property owners in Multnomah County, not large, out-of-state real estate investors. They and their responsible tenants will be immediately and adversely affected by this ordinance, which unfairly restricts their income-earning through penalizing relocation fees that unduly oppress property owners, particularly small operations such as theirs, while eliminating valuable tools used to protect their responsible tenants from bad behavior by others.”

Read the full lawsuit below: