On Wednesday, June 16, 2021, Justice Marygay Kennedy heard oral arguments in Portland’s Maine Superior Court for a case that cuts to the heart of the new rent control law in Portland: the ability of people to regulate the rental market during an affordable housing crisis that has reached emergency proportions.
In November, 2020, People First Portland, a coalition led by Maine DSA, put forward five ballot initiatives, including Question D, which called for broadening tenant protections, including the creation of a Rent Board made up of tenants and landlords that could permit additional rent increases beyond the rate of inflation “when individual building circumstances warrant.” Question D passed with over 58% approval, a landslide in election terms, but the Southern Maine Landlord Association (SMLA) wasted no time in suing the City of Portland over the constitutionality of the ordinance to try to stop it from cutting into the profits of the landed class in an overheated rental market. The crux of their argument has to do with the powers and makeup of the Rental Board, which they say are so broad and biased towards tenants as to render the entire ordinance unconstitutional.
The counsel for the landlords opened the proceedings by calling attention to a section in the ordinance on the power of the Rent Board to approve additional rent increases to allow landlords to receive a “fair rate of return” if their profits were in danger of falling below the cost of keeping up a property. Plaintiffs claimed that a “fair rate of return” was too vague a term to be interpreted and acted upon, comparing it to another example from Maine case law having to do with the “conservation of natural beauty.” At issue in that case was how much conservation is enough conservation. Presumably, these landlords fear that turning over decisions about fair rates of return to a board made up of landlords and tenants might lead to too much fairness, and not enough returns.
Early on in the proceedings, Judge Kennedy interrupted to point out that a “fair rate of return” is a term of art in legal matters, hinting that she found the argument by the plaintiffs dubious. Ben Gaines, attorney for People First Portland, noted a number of precedents in Maine law where “fair rate of return” was applied with the support of the court, and he reminded the court that to consider an ordinance unconstitutional it must meet certain standards, which the plaintiffs were not meeting.
The landlords countered by saying the term “fair rate of return” is an accepted legal term of art only when a board is made up of experts. The Rent Board will not be made up of experts, but rather ordinary people, landlords and tenants, who the landlords say are not qualified to make such determinations.
Joe Talbot, the lawyer for the City of Portland also attacked the plaintiffs’ objection to the vagueness of “fair rate of return” by arguing that a precedent pointed to by the plaintiffs, Waterville Hotel Corp. v. Board of Zoning Appeals, was not analogous to the current ordinance. In the case of Waterville, the zoning board was found to lack practically any substantive standards, whereas this tenants’ rights ordinance offers other legally defensible standards, including “fair rate of return.”
The landlords’ second line of attack was against a perceived structural bias in the makeup of the Rent Board, favoring tenants over landlords, which they say rendered the ordinance unconstitutional. They cited a line in the ordinance directing the city to, “appoint to the Rent Board no more than three landlords and at least three tenants,” failing to include the entire language which clearly indicates the city may use its own discretion to determine the balance of landlord/tenant appointees.
When Judge Kennedy asked if this was fair, the lawyer for the city assured her that such language was suggestive, and that the city itself would decide the makeup of the board. As an example, he cited the current Rent Board, which is made up of three landlords, three tenants, and one homeowner.
Hearing no more requests for testimony, the judge adjourned and now sits with having heard all sides and having received their briefs. She announced with a slight chuckle that she will render her decision “soon.” Meanwhile, the precarious tenants of Portland await a fair outcome.
