Portland city councilors Monday night unanimously approved tougher requirements and higher fees for developers who want to build new hotels in Maine's largest city.
Under the new policy, developers must provide one unit of income-restricted rental housing for every 19 hotel rooms that are built in Portland, or pay a roughly $9,500 fee into the city's housing trust fund.
The changes to Portland's hotel inclusionary zoning have been about a year in the making. Last fall, city councilors agreed to a temporary moratorium on the development of new hotels. The moratorium was later extended earlier this spring.
City councilors said the pause would give them time to review inclusionary zoning rules passed in 2019, which require that developers provide one unit of income-restricted rental housing for every 28 hotel rooms that are built in Portland, or pay a roughly $4,800 fee.
Nate Cloutier with Hospitality Maine said the new policy could deter business development and investment in Portland.
"Stop making hotels an easy target," he said. "Every sector creates jobs and contributes to the local economy, and the hospitality and tourism industries have carried this state and city through some very tough years."
But city councilors said they believe more money should be funneled into a housing trust that helps pay for the construction of income-restricted apartments. Hotel developers have not built any affordable units in the last five years since the inclusionary zoning rules were passed. And some city councilors said the fees are not high enough to cover the true costs of housing construction.
"The reason that we're doing this is that we want to make sure people have a place to live," said councilor Kate Sykes. "Our labor market needs to have stable housing, and so this is going to help."
The hotel development moratorium will lift at the end of November.
Portland has 41 licensed hotels; five were built since the city approved inclusionary zoning rules in 2019. At least two more are under construction.
A study commissioned by the city assumes Portland hotels have an 80% occupancy rate year-round, but Cloutier pushed back on that estimate. He said he believes Portland hotels reach 80% from July through September but otherwise fall closer to the statewide occupancy rate, which averages 60% year-round.
