2021 Oregon Legislative Forecast Is Hazy With A High Chance Of Storms

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Tonkon Torp LLP

The 2021 legislative session is underway, and it’s already shaping up to be one of the most dynamic in a string of dynamic sessions. Before I give you a rundown of the key bills I’m watching for the commercial real estate industry, I want to set the political and physical context in which this session will be taking place.

Oregon retains its rank as one of the most liberal states in the union. Democrats dominate in both chambers of our state house as well as in state offices and will drive a left leaning political agenda through the committee process. The November general election flipped a few moderate seats in both parties, and districts that are already politically concentrated may become even more polarized after this year’s redistricting. However, something to keep in mind is that while a 3/5 super majority gives Democrats the ability to unilaterally approve tax measures, they don’t hold a quorum majority to sweep in policy. As we saw in the last few sessions when Republicans walked out in protest and thwarted the process, bipartisanship has to be on the table.

Oregon transitioned to annual legislative sessions in November 2010. In even years, the body convenes for 35 days to focus on budget tweaks and a handful of carefully selected policy bills. In 2020, no ordinary short session year, we also held three additional special sessions to focus specifically on pandemic response, wildfire disaster relief, police accountability, and budget shortfalls. This year gives us 160 days, from January 19 to June 30, to work through an ambitious agenda in near total remote conditions. Representatives and senators are coming to Salem once a week to introduce bills with the required quorum of members, but otherwise the Capitol is closed and legislators will use remote channels for office visits and committee conversations. I don’t think we’re going to see any activity as far as voting on the House and Senate floor until April.

Topping the task list for this session is approving a two-year biennial budget. With diminishing income tax and reduced collections from the Oregon State Lottery due to COVID-19, budget issues will be tight and key writers on the Joint Committee on Ways and Means, already behind by weeks, remain uncertain of the revenue picture. Anticipated federal aid will help local and state governments shore up budgets, but it’s not a foregone conclusion and no one is making assumptions on what Oregon will get. There are multiple COVID-19 issues to address that will impact industry and the population at large, such as the pressing concern to get Oregonians vaccinated in a timely fashion. Another big issue for this session is wildfire recovery. ODOT is leading that effort and work has already begun on this daunting task. Two very partisan and political issues on deck are a once-in-a-decade redistricting based on the 2020 census results, and starting the campaign finance reform initiative that Oregon voters approved in the November general election.

As much as I appreciate the technology we have to make remote work possible, it’s also frankly making it harder to have a transparent and collaborative legislative session. Even if we were all at the Capitol working across the table from each other, navigating these big budget and partisan issues would be formidable. Now add in the 2,000+ bills already filed and another 1,000 predicted to come in and you’ll see why dynamic is my adjective of choice for this session.

When we separate out priority bills for the commercial real estate industry, we’ve already placed a dozen active bills on our watch list. Since the session is in early days, we are anticipating more bills and amendments to drop as it progresses.

  • HB’s 2275 and 2279 – Directs Department of Land Conservation and Development to study issues relating to land use and report
  • HB 2367 – Establishes Oregon Right to Rest Act. Makes violation unlawful practice enforceable by Commissioner of Bureau of Labor and Industries or by civil action
  • HB 2561 – Directs Department of Consumer and Business Services to study issues relating to commercial evictions and to report
  • HB 2677 – Repeals prohibition on local rent control
  • HB 2729 – Requires Housing and Community Services Department to pay to residential and nonresidential landlords certain uncollected rents due between 4/1/20 – 9/30/20
  • HB 2832 – Requires Washington County to approve property owner's petition for redesignation of rural reserves under certain circumstances
  • HB’s 2966, 2967 and 2968 – Prohibit termination of commercial tenancy for nonpayment
  • HB 2994 – Directs DCBS to study issues related to temporary protections for commercial real estate and to report

We will see another effort to disconnect Oregon from some of the Opportunity Zone provisions of the 2017 federal Tax Cuts and Jobs Act. With Tonkon Torp’s help, the CRE sector was successful in in defeating such measures in the 2019 and 2020 sessions, and we’re ready to tackle it again should it rear up again. Another anticipated bill, HB 2324, will seek to expand the definition of what should apply for purposes of prevailing wage rates beyond public works projects. The CRE sector has been fighting and defeating measures supported by labor interests over the past 20 years to expand prevailing wage rates into other contexts such as tax abatements in enterprise zones, so we’re tracking this closely. In 2021, the CRE sector can also look forward to addressing Oregon’s aging infrastructure. Budget writers are expecting some sort of federal package to come this year, and Oregon has debt capacity to start taking on public works projects related to bridges, roads, water, and sewer.

There is a good mix of issues that we will be defending and opposing this year, and I’m encouraged by the opportunities to build more support and increase the stability for Oregon’s CRE sector.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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