Tenant Advocates Seek a New Multnomah County Capital Gains Tax to Pay for Eviction-Fighting Lawyers. The PBA Pushes Back.

The proposal comes at a time when passing a new tax, even in tax-loving Multnomah County, might be a challenge.

The last week in March may have been a turning point in high-income Portlanders’ willingness to subsidize their less fortunate neighbors.

The latest example: Tenant advocates and the Portland region’s largest business organization are preparing for battle over a proposed new tax measure.

The “Eviction Representation for All” initiative, filed with Multnomah County on March 3 by tenants’ rights and social justice nonprofits, is aimed at the November ballot.

The measure proposes to levy a tax of 0.75% on capital gains—which, generally speaking, are profits investors earn on the sale of assets such as stocks, bonds or real estate—to fund a new program, which would contract with five non-profit law firms to provide free legal representation for tenants facing eviction. Proponents hope to raise $12 million to $15 million a year.

“We see this protection as crucial to keeping people housed,” says Donovan Scribes, a spokesman for the Community Alliance of Tenants, which supports the proposed tax. “Tenants are under the impression that by the time they receive a court summons, an eviction is inevitable, even when this is not the case.”

On March 28, the Portland Business Alliance filed a challenge to the ballot title and explanatory statement for the proposed measure. PBA lobbyist Jon Isaacs says the tax is a bad idea that would make a tough economic situation worse.

“The Portland region is already facing an affordability crisis driven primarily by the cost of housing and taxes,” Isaacs says.

Proponents say they were “disappointed but not surprised” by the PBA challenge. “Our ballot measure would help stabilize a volatile housing market through a tiny tax increase,” campaign spokeswoman Colleen Carroll says. “Workers struggling to make ends meet would have a fighting chance.”

Nobody disputes that housing instability is a problem in Portland, which has one of the nation’s lowest rental vacancy rates.

But the proposal comes at a time when passing a new tax, even in tax-loving Multnomah County, might be a challenge. In 2020, voters passed a bevy of new taxes: a Portland Public Schools bond, a new Multnomah County Library tax, a Portland Parks & Recreation levy, a Metro homeless services measure, and a county Preschool for All measure.

All that left high-income county residents paying one of the highest combined marginal tax rates in the country. And the ballot challenge by the PBA indicates that top executives at local companies may have lost their appetite for making concessions to progressives.

The brewing flap comes on the heels of an unrelated group, People for Portland, filing a different ballot measure March 25.

That measure would redirect money from the 2020 Metro homeless services tax, prescribing that 75% of the $250 million a year it raises in three counties be spent on homeless shelters—and requiring local governments to enforce anti-camping laws to get their cash.

That tax also falls on higher-income earners. So the effort by a business-backed advocacy group to wrest control of how the money is spent suggests Portland boardrooms are no longer willing to write blank checks.

Although business groups have often lost at the ballot box, they handily defeated a multibillion-dollar Metro transportation measure in 2020, and some observers think voter attitudes toward funding new services have shifted.

A variety of recent polls show voters are far crankier than they were two years ago.

“There’s a really a growl in the electorate against measures sponsored by folks who want to expand government activity,” says political analyst Len Bergstein. “If this eviction measure makes the ballot, it might be the vote that tests the local electorate’s appetite for tax measures.”

Backers of the eviction lawyers initiative, including the Portland chapter of the Democratic Socialists of America, hope to replicate programs they say have reduced evictions in New York, San Francisco and other cities.

They are working from a successful playbook. In 2020, the DSA successfully gathered signatures for what became Multnomah County’s Preschool for All measure. The bar for qualifying an initiative for the county ballot is 6% of county voters who cast ballots in the most recent election for governor. That comes out to 22,686 valid signatures, a fairly low threshold.

The campaign evaluated a number of options before landing on a capital gains tax. The standalone funding mechanism is harder to redirect to other uses than a general fund program.

Scribes, the spokesman for the Community Alliance of Tenants, says the measure could begin to level the playing field. “Right now, the system is designed in a way that creates barriers for tenants,” Scribes says. “The landlord is able to hire a lawyer and the renter is not.”

If the measure passes here, Scribes adds, advocates will seek to roll it out statewide.

Deborah Imse of Multifamily NW, which represents landlords, says her group doesn’t have a position on the proposal, but she’s not sure it’s the right solution. “We do know from court filings that most evictions in Portland and Multnomah County are due to nonpayment of rent,” Imse says. “A robust rental assistance program for people who need help would likely be more impactful in eviction avoidance.”

(There were 287 evictions filed in Multnomah County last month; 174 were for nonpayment.)

PBA hopes the idea never reaches voters. The group filed objections Monday in Multnomah County Circuit Court, saying “all portions of the ballot title are insufficient and unfair.”

It argues the ballot title and description of the measure do not capture the broad range of legal services the measure would provide.

Another PBA concern: The measure does not define “capital gains,” and the 0.75% tax rate “may be increased or decreased based on annual reports.”

That’s alarming to a group representing the CEOs of regional businesses—who could see their tax bills fluctuate depending on what bureaucrats say is needed.

A 2020 study by the accounting firm Ernst & Young found with all the new taxes passed that year, top income earners in Portland could pay a combined 14.6% in income taxes, a percentage point higher than San Francisco and nearly two points higher than New York.

The reactions of the three Multnomah County commissioners vying to become the next county chair suggest officials are well aware of concerns about the high tax rate and may prefer other mechanisms for helping tenants.

Commissioners Sharon Meieran, Jessica Vega Pederson and Lori Stegmann all expressed support for the concept of legal representation for tenants but object to the mechanism.

“Using this kind of tax measure to raise $15 million a year seems like using a sledgehammer to pound a nail,” Vega Pederson says. “This isn’t the right solution.”

Correction: This story originally said money from the tax would hire five lawyers. It should have said five non-profit law firms. WW regrets the error.