Portland is one step closer to regulating short-term rentals, a burgeoning sector of the sharing economy that helps people pay their rent but raises concerns for others who believe the practice is taking up much-needed housing units from the market and changing neighborhoods.

The City Council’s Housing Committee voted 3-0 to recommend regulations to the full council that would limit the number of short-term rentals and adopt registration fees designed to discourage people from buying up and converting apartment buildings.

Portland is among many communities grappling with short-term rentals, which has led some cities like New York to ban them, while others don’t regulate them at all.

While people on both sides of the debate may not have gotten everything they wanted, City Councilor Jill Duson, who leads the committee, said that regulations still need to be taken up by the full council.

“There’s another bite at the apple for folks who want to pursue minority opinions at the full council,” Duson said. “There’s still a shot at convincing the full council – the body of nine – to not permit short-term rentals.”

The new rules would cap short-term rentals in non-owner occupied homes, excluding the islands, to 300 units. And no individual, regardless of the ownership structure, would be able to register more than five short-term rentals in buildings in which they hold a financial interest.

They would prohibit short-term rentals in single-family homes, including condominiums, that are not the primary residence of the owners.

And no more than two people would be allowed to stay in each bedroom and only two people could use other areas, such as a living room, to sleep.

A small portion of the ordinance – adding short-term rentals to the city’s land-use code – would need to go before the Planning Board. But the regulations themselves only need council approval.

The city has struggled with how to regulate the rapid growth of properties rented online through companies like Airbnb, VRBO and HomeAway. Property owners offer visitors single rooms, apartments or entire homes for short-term rentals.

There are more than 650 active listings for places to stay in Portland on Airbnb alone, according to the company. Close to 200 of the rentals are likely rented out full-time, as a business investment, according to Tyler Norod, the city’s housing planner.

Short-term rentals are technically not allowed in Portland’s zoning rules, but the city suspended enforcement in August while the committee came up with regulations. The city originally promised swift action, but instead has been engaged in a contentious debate that has lasted months.

The City Council’s Housing Committee agreed on a regulatory framework at its last meeting, but delayed its recommendation until formal ordinance language was drafted.

Owners would have to register their short-term rentals with the city’s Housing Safety Office. The revenue would be used to pay for the cost of the short-term rental program. Once costs are covered, any additional revenue would go to the city’s Housing Trust Fund, which is used to fund affordable housing.

Through fees and other limits, the rules also seek to discourage people from buying buildings for the sole purpose of converting them into short-term rentals. For example, the registration fee for an owner occupied building would be $100 for the first unit, $250 for the second, $500 for the third, $1,000 for the fourth and $2,000 for the fifth.

Fees for non-owner occupied buildings are higher, with $200 for the first unit, $500 for the second, $1,000 for the third, $2,000 for the fourth and $4,000 for the fifth. These buildings also face additional caps in terms of the number of short-term rental units allowed in each building, with only one short-term rental allowed in two-unit buildings, two short-term rentals in three-to-five-unit buildings, four in six-to-nine-unit buildings and five in 10-or-more-unit buildings.

The escalating fees also would apply to units registered in different buildings by the same owner.

Norod expects that the 300-unit cap on non-owner occupied units would be large enough accommodate the existing inventory. However, the ordinance does allow for the city manager to institute a lottery, if necessary.

Unlike previous public hearings, which packed City Hall, only a dozen people attended Wednesday’s meeting. Those who spoke mostly had minor questions about the impact of the ordinance.

But Judith and Sam D’Amico, of Thomas Street, urged the committee to reconsider its support for allowing short-term rentals.

Judith D’Amico said she’s concerned about “a parade of strangers” passing her home as a result of the policy. She said one of her neighbors lives only 10 feet away, and she shares a wall with another. The city regulations would allow 12 strangers, if both took advantage of the ordinance, she said.

“To me this is outrageous,” she said.

But for Joel Hall, who lives in the West End, seeing strangers is part of city life. He offers a short-term rental to offset the rent for his mother-in-law.

“For what we’re doing with our short-term rental is simply subsidizing the rental property my wife’s mother lives in on the first floor, so her rent doesn’t have to be subsidized by the state of Maine.”

Randy Billings can be reached at 791-6346 or at:

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Twitter: @randybillings