S. Me. Landlord Ass'n v. City of Portland
| Decision Date | 02 July 2021 |
| Docket Number | Civil Action CV-21-40 |
| Parties | SOUTHERN MAINE LANDLORD ASSOCIATION, EDWARD L. PAYNE, B303, LLC, and SIMON NORWALK Plaintiffs, v. THE CITY OF PORTLAND, MAINE Defendant and PEOPLE FIRST PORTLAND, LLC, and FORESIDE TENANTS UNION, Intervenors |
| Court | Maine Superior Court |
Before the court is the Plaintiffs' Motion for Summary Judgment. For the following reasons, Plaintiffs' Motion is denied.
The following facts are taken from the parties Joint Stipulated Statement of Material Facts and the record in support.
On November 3, 2020, the voters of the City of Portland approved a citizen initiative referendum entitled "An Act to Protect Tenants." The referendum established a comprehensive City Ordinance regulating the circumstances in which a landlord may increase a tenant's rent ("Rent Control Ordinance" or "Ordinance"). The purpose of the Rent Control Ordinance "is to address increasing rental costs within the City of Portland; to promote neighborhood and community stability; to protect the City's tenant population; to limit arbitrary evictions; and to stabilize and make more predictable future rent increases[.]" Code of Ordinances § 6-230. The Ordinance also created a "Rent Control Board" and conferred upon it the authority to oversee various rent control matters. The Ordinance became effective on December 6, 2020. The Plaintiff landlords and landlord association have brought this lawsuit against the City of Portland seeking to invalidate the Ordinance in its entirety.
The Rent Control Ordinance applies to certain residential rental units within the City of Portland.[1] The Ordinance states that landlords may only increase the rent of a covered rental unit once per "rental year" and only if certain conditions have been met. Code of Ordinances § 6-234(b) The Ordinance also establishes a maximum rent increase allowed per rental year. Id. A "rental year" is a period of twelve consecutive months beginning on January 1, 2021, or the date in which a rental unit enters the housing market, whichever is earlier. Code of Ordinances § 6-232.
The Ordinance regulates rent increases by establishing a "base rent" for each unit. A unit's base rent equals the rent charged for the unit as of June 1, 2020. Code of Ordinances §§6-232, 6-233(a). The Ordinance then sets forth specific regulations regarding when a landlord may increase a unit's rent above the its base rent. Generally, the base rent for each rental unit must have been registered with the City by January 1, 2021. Code of Ordinances § 6-233(a).
An increase to a unit's base rent must be justified by specific criteria identified in the Ordinance, including: an "annual increase percentage" which corresponds to increases to the cost of living; increases in the City's property tax rate; the establishment of a new tenancy; a landlord's accrued "banked rent;" and any additional rent increase approved by the Rent Board. Code of Ordinances §§ 6-234(b)(1)(5). The "allowable increase percentage" is published yearly and is equal to 100% of the change in the Consumer Price Index for the Greater Boston Metro Area. Code of Ordinances § 6-232. Generally, a rent increase may not exceed the amount allowed under the allowable increase percentage unless one of the remaining criteria also applies. However, under no circumstance may a landlord increase rent more than 10% during a rental year. Code of Ordinances § 6-234(c). Any justifiable rent increase which falls above the 10% threshold is considered "banked rent" and can be used to justify a rent increase the following rental year. Id. The Ordinance further describes the circumstances under which a landlord may apply to the Rent Board for approval of a rent increase. The Ordinance states that "the Rent Board may approve additional rent increases properly demonstrated by the Landlord, attributable to: capital improvements costs, including financing costs; uninsured repair costs; increased housing service costs; and any additional increase, within the opinion of the Rent Board required to allow the Landlord to receive a fair rate of return." Code of Ordinances §§ 6-234(5)(a)-(d). The Ordinance does not further define what constitutes a "fair rate of return." The Ordinance also does not specify how quickly the Rent Board must act on a landlord's request to increase rent.
The Rent Board is comprised of seven members. Code of Ordinances § 6-250. The Ordinance requires that the City "take reasonable steps, but is not required, to appoint to the Rent Board ... no more than three landlords and at least three tenants." Id. The Rent Board has the authority to: hear, review, and approve or deny landlord applications for rent increases or an increase to a landlord's base rent; to hear, review, and grant or deny appeals from tenants regarding allegations of violations of Maine's implied warranty of habitability; and, among other things, settle disputes between landlords and tenants arising under the Ordinance. Code of Ordinances §§ 6-263(a)-(i).
The concurring vote of at least four members is required to authorize any action taken by the Rent Board. Code of Ordinances § 6-257.
Every final decision of the Rent Board must include written findings of fact which specify the reasons for its decision. Code of Ordinances § 6-260(b). AH minutes, transcripts, exhibits, papers, applications, and requests filed in any proceeding before the Rent Board must be included in the record of the Board's final decision. Code of Ordinances § 260(a). Final decisions of the Rent Board are subject to the same administrate appeal process as all other final municipal decisions under M.R. Civ. P. 80B. Code of Ordinances § 6-262.
The Ordinance also states that a landlord "shall not refuse to rent or impose terms of tenancy on any tenant who is a recipient of federal, state, or local public assistance[.]" Code of Ordinances § 6-237(b). Accordingly, Landlords may not refuse or deny a unit to any tenant "because of the tenant's source of income or because of the requirements of any program providing the source of income[.]" Code of Ordinances § 6-237(c). The Ordinance also prohibits a landlord from refusing to participate or comply with any federal, state, or local requirements of a tenant-based rental assistance program. Code of Ordinances § 6-237(d). This means that landlords may not: refuse to allow inspections of a dwelling by any entity administering a tenant-based rental program; refuse to make reasonable repairs necessary for a unit to meet the housing quality standards of a tenant-based rental program; refuse to complete the paperwork required under a rental assistance program; or, refuse to provide information required by any entity administering a source of income or tenant-based rental assistance program. Code of Ordinances §§ 6-237(d)(1)-(4).
The Ordinance also regulates the termination of at-will tenancies. Termination of an at-will tenancy requires that the landlord provide the at-will tenant with a minimum of 90-days' written notice. Code of Ordinances § 6-236(a). However, the Ordinance does not apply to the termination of at-will tenancies that are "for cause" under state law.[2] Code of Ordinances § 6-236(a)(1). The Ordinance's notice provision also does not apply to: short-term rentals with a term of fewer than 30 days; holdover tenancies; or where a landlord pays damages to the at-will tenant. Code of Ordinances § 6-236(a)(1)(a)-(d) A landlord who provides less than 59 days' notice must pay the tenant $1, 000 and a landlord who provides between 60 and 90 days' notice must pay $500. Code of Ordinances § 6-236(a)(1)(d).
A party is entitled to summary judgement when review of the party's statements of material facts and the record to which the statements refer, demonstrates that there is no genuine issue as to any material fact in dispute. Dyer v. Dep't of Tramp., 2008 ME 106, ¶ 14, 951 A.2d 821; M.R. Civ. P. 56(c). A contested fact is "material" if it could potentially affect the outcome of the case. Id. A "genuine issue" of material fact exists if the claimed fact would require a factfinder to "choose between competing versions of the truth." Id. (quotations omitted). The court reviews the evidence in the light most favorable to the non-moving party. Id. "When the plaintiff is the moving party on a motion for summary judgment, the plaintiff has the burden to demonstrate that each element of its claim is established without dispute as to material fact within the summary judgment record." North Star Capital Acquisition, LLC v. Victor, 2009 ME 129, 5 8, 984 A.2d 1278.
The Plaintiffs argue that the Ordinance is unlawful on its face and the entire Ordinance must be struck down. In particular, Plaintiffs argue that the Ordinance: violates due process; is preempted by state and federal law; is an unlawful exercise of the municipal citizen referendum; and has unlawful retroactive effect. Each argument is addressed separately.
The Plaintiffs present three arguments for why the Ordinance violates due process: unlawful delegation; vagueness; and, inadequate procedural protections. Although interrelated, these arguments present separate issues for this court to consider.
The Plaintiffs first argue that the Ordinance violates due process because it grants the Rent Board discretion to approve or deny a landlord's rent increase application without also providing adequate legislative standards to guide the Board's decision. The Plaintiffs further that the Board's authority to determine whether a landlord is receiving a "fair...
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