Apr. 2—A Portland landlord is suing the city in an effort to prevent public disclosure of detailed information about rents that must be shared under a new tenant protection ordinance.
Bayview Court LLC and Eastern Promenade Limited Liability Company, which own 102 units in Portland, filed the lawsuit Wednesday in Cumberland County Superior Court.
The suit seeks a declaratory judgement from the court that would prohibit public disclosure of the rents charged by the company, arguing that such information amounts to trade secrets that could be used by other landlords in a competitive rental market like Portland's.
"Public disclosure of the compilations by the city will irreparably harm the companies," the suit states. "It is appropriate for the court to enter an order to protect the ongoing secrecy and confidentiality of the compilations under and to protect the companies against irreparable harm. The public interest favors the protection of the companies' property interests in the secrecy and confidentiality of the compilations."
City Hall Communications Director Jessica Grondin declined to discuss the city's position, citing the pending lawsuit. She said in a written statement that the city is trying to comply both with the citizens initiative approved by voters and the state's Freedom of Access Act, which governs public records and the public's right to know.
"We want to make sure we're complying with the ordinance and FOAA," she said. "While it appears we have a disagreement over the interpretation, we will happily abide by whatever the court ruling is."
The detailed rental information in question stems from a successful citizens initiative last November that enacted rent control and other protections for tenants in Maine's largest city.
In addition to limiting most rent increases to the rate of inflation plus property tax increases, the ordinance increased the amount of information landlords must disclose to the city when registering their rental units each year. It requires landlords to disclose current rents, any rent increases over the previous year and reasons why, and the amount of security deposits, among other things.
It requires that the data be "anonymized" and says it "shall not include the names, or street and unit numbers of any reported units." The information is to be provided to the newly established Rent Board, which is charged with mediating disputes and granting rent increases that exceed inflation and property taxes increases.
The suit says that such information should only be used by city employees charged with administering the ordinance, not the general public.
"The companies' determination of rents reflects years of experience in judging the trends and directions in the rental market, financial analysis of what levels of investment (for instance, in infrastructure improvements and service levels) the market will support, how investments should be made and how they can be recovered, pricing analysis of inventory levels, and expert advice that the companies purchase from consultants," the suit states. "The companies' compilations derive significant economic value from not being generally known."
The manager of the management companies, Lloyd Lathrop III, could not be reached Friday.
The deadline for landlords to register their units was April 1.
Grondin said city officials were not able to say Friday how many landlords had registered their units or how many of those landlords met the requirements of the ordinance. She said staff in some cases are manually entering data received on paper forms into the computer, a process that could take months.
Meanwhile, the Rent Board, formally appointed on March 15, will hold its first meeting on April 28 and will meet ever fourth Wednesday of each month, Grondin said.
Brit Vitalius, president of the Southern Maine Landlord Association, said he was not aware of the lawsuit, but he was glad to learn that one had been filed. He said many landlords have reached out to him asking whether they were legally required to submit all of the information required under the new ordinance — something he has not been able to answer.
Vitalius said landlords are worried that disclosing rents would create tension among tenants and landlords. He said some landlords have kept rents low for long-term tenants for a variety of reasons and that information is not typically shared with new tenants, whose rents are set at market rates and are typically higher.
"Those rents (for long-term tenants) are not talked about or compared in the building," Vitalius said. "Each tenant has their own opportunity to have a private relationship with their landlord and make their own private arrangement and now it's going to be all on display for the world to see and that, I think, feels very uncomfortable for landlords and tenants."
The Southern Maine Landlord Association filed its own lawsuit on Jan. 28 against the city in an effort to block implementation of the ordinance, claiming that the ordinance is vague, conflicts with state and federal statutes, and is an improper use of the citizen initiative process. That case is still pending.
Similar concerns about public disclosure have been raised in other jurisdictions with rent control or rent stabilization, including in California.
Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles, said his association is suing Los Angeles and Beverly Hills over rules that require the disclosure of financial information of both landlords and tenants, including monthly rents, specific unit numbers, utility payments and onsite parking availability.
"The cities say they'll keep it confidential, but anybody who shows up with a Freedom of Information Act request can get at that data and it's completely unfair," Yukelson said. "It's a huge problem."
Sigmund Schutz, a First Amendment expert and attorney for the Press Herald/Maine Sunday Telegram, said he supports the city's position that the rental information is public information, saying that it's crucial for the public to know whether the city and landlords are in compliance and whether the ordinance is effective.
Claiming that rents are a trade secret doesn't pass the straight-faced test given that rents are advertised publicly, said Schutz, who planned to formally support the city's position in court on behalf of the newspaper.
"Landlords routinely disclose the rent that is being charged in connection to advertising these units," Schutz said. "It just doesn't seem like it's the equivalent to the formula of Coca Cola, which is information that would typically be classified as a trade secret."