Voters will have an opportunity next month to decide whether to provide free legal representation to any renters facing eviction in Multnomah County. Critics – many of whom argue it’s the financing mechanism, not the intent, that they object to – have mounted a pricey opposition that includes all members of the Portland City Council.
“We know that this is an effective housing stabilization tool,” Amy Ruiz, of the committee Building Our Future Together, said. “Where we’re concerned is that adding another funding mechanism is unnecessary with the funding that we already have, and this specific mechanism is a new local capital gains tax, and we’re specifically concerned that new tax is going to create more harm than good.”
Building Our Future Together’s platform is that while the measure relies on the IRS’s classification of capital gains – the profit from selling a financial asset like stocks, bonds, business or property – the measure fails to include the same exemptions the IRS does. The committee argues that the proposed 0.75% additional tax on net capital gains would be shouldered even by lower-income residents, while large corporations would not be asked to contribute anything.
“We think that this is an equitable way by targeting capital gains tax, which only 1 out of 5 people even pay – less than 20% of Oregonians pay capital gains tax,” Colleen Carroll, a researcher and volunteer with the Eviction Representation for All campaign, responded during a forum hosted by the League of Women Voters last week. “We wanted to target something that hasn’t already been recently taxed and that couldn’t be passed on to workers.”
There have been more than 16,700 eviction filings in the state in the past year, according to the data-gathering project Evicted in Oregon, run by the Eviction Defense & Diversion Evaluation team at Portland State University. In Multnomah County, 92% of the eviction filings are for alleged nonpayment of rent.
Currently, only 3% of tenants retain legal representation during eviction court hearings, versus about 80% of landlords and property owners. This means that tenants who are likely already experiencing hardship are thrown into a tight, unforgiving timeline to navigate the court system and research their options, all while their living situation is in peril.
“Without getting to court with legal representation, we don’t know how these evictions could be prevented, if they’re legal, and if tenants have counterclaims and defenses,” Carroll said.
But critics argue the cost of such a program would be out of control for two reasons: the proposed measure does not have any income-based eligibility requirements, and it does not include exemptions on the capital gains tax for anyone, including lower income residents.
According to the National Coalition for a Civil Right to Counsel, 15 cities and three states have implemented right to counsel measures for tenants in the past four years. Of those, six do not have eligibility requirements. More than half are financed by the city or state’s general fund and, as Ruiz pointed out, none depend on a capital gains tax, as Measure 26-238 is proposing. (The National Coalition for a Civil Right to Counsel has endorsed Measure 26-238.)
But Carroll pointed to a recent report by the Oregon Center for Public Policy that concluded capital gains are a major driver of financial inequality. A recent city analysis of the proposed tax supported Carroll's assertion that only a minority of county residents would have to pay the tax -- about 8%.
Carroll emphasized the OCPP report’s finding that the top 5% of Oregonians netted nearly 85% of all capital gains income in 2020.
This has not been enough to persuade Building Our Future Together’s highest donors, among them the National Association of Realtors ($250,000), Portland Metro Association of Realtors ($50,000), Portland Alliance PAC ($43,500) and Home Builders Association of Metropolitan Portland ($20,000). Notably, Mayor Ted Wheeler has contributed $500.
Building Our Future Together supporters include U.S. Rep. Earl Blumenauer, Oregon State Treasurer Tobias Read, Multnomah County Commissioners Lori Stegmann and Sharon Meieran, Metro Council President Lynn Peterson, IBEW Local 48, Oregon Business & Industry, Portland Business Alliance, Revitalize Portland Coalition and Tax Fairness Oregon.
The committee also lists among its supporters in opposing the measure some community-based organizations.
“Hacienda CDC is also urging people to vote no because they believe it will have a disproportionate impact on the Latino community that they work to provide affordable housing,” Ruiz said. “APANO just signed on with our coalition this week; they are also very concerned about the impact on limited-English communities that might get a notice about this tax and not know what to do and might get hit with those penalties and fines.
“Black Business Association of Oregon is very concerned that this would impact small business owners when they’re trying to create generational wealth in the Black community that have historically been excluded from those opportunities. And again, big corporations would not pay a dime.
"We think the impact is borne too much by hard-working families, seniors and small businesses.”
The top donors for Tenants Organizing Against Displacement are the Oregon Food Bank ($15,000) and the Democratic Socialists of America Inc. ($9,985).
Endorsers include the Community Alliance of Tenants, Urban League of Portland, the League of Women Voters, Unite Oregon, East County Rising Community Projects, Oregon Food Bank, SEIU Local 503, AFSCME Local 88, Rep. Khan Pham, Rep. Farrah Chaichi, Rep. Travis Nelson the Portland Chapter of the National Lawyers Guild and Oregon Physicians for Social Responsibility.
The city analysis of the proposed tax found that the administrative costs for the program could be more than $19 million in the first year, with ongoing costs potentially eating up half the tax revenue in following years. Carroll correctly pointed out that such projections are worst-case scenario, adding that even at their most extreme, those numbers fall far short of the overall administrative and societal costs of evictions to Multnomah County, which the campaign estimates to be in excess of $80 million.
Another argument against the measure? That it is unnecessary.
“The Supportive Housing Services Fund is just one of the sources of funding currently paying for programs like this,” Ruiz said, adding that measure supporters might argue “it’s not anywhere near the number of households that might find themselves in eviction court, but the legislature just closed that gap two weeks ago with a new requirement that landlords provide information on how to access those services when an eviction is served.”
But measure supporters argue a patchwork of potential resources can be difficult to navigate and further puts the onus on tenants already fighting an uphill battle.
“Our program moves the legal teams throughout the community in community based organizations where tenants already go because they need support,” Carroll said. “Having the legal teams housed in those organizations at the notice of termination stage, instead of waiting until the court filings happen, is one of the ways that we’re catching every tenant as early as possible and preventing these cases from getting to court in the first place.
"But if they do, that tenant knows that they can exercise their full rights and have access to all the diversion methods available.”
Carroll added that the measure would create a “sustained funding stream.”
Critics argue that such a massive overhaul is unnecessary.
“Meanwhile we do have these revenues already, and if they’re not fully delivering to every tenant that needs it, that is an easy adjustment that can be made administratively at the county and make sure those resources are getting where they need to go as quickly as possible,” Ruiz said.
Ballots for the May 16 special district election will be mailed on May 2.