Portland voters are being asked to pass a citizen referendum that would clamp down on short-term rentals by eliminating unhosted rentals, increasing registration fees and strengthening penalties with fines of $1,000 or more a day for ordinance violations.

Question E on the Portland ballot would eliminate short-term rentals in housing units not occupied by the owner. It would increase registration fees from $100 for the first unit to $1,000 for each mainland unit. It would also require city staff to impose fines for any violation that is not corrected within seven days. And the city could also prohibit scofflaws from operating a short-term rental in the city for up to a year.

The ordinance is one of five referenda placed on the Nov. 3 ballot by the Southern Maine Democratic Socialists of America.

Proponents say the measure is needed to ease pressure on the city’s housing stock by returning upward of 400 units back to the long-term rental market and ensure that scofflaws, including those who operate unregistered units, would be punished.

Opponents say that won’t necessarily happen. Some property owners may be forced to sell their multi-unit buildings or convert them to condominiums after losing needed income to make mortgage payments and recoup any costs for renovations they may have done.

Em Burnett, a spokesperson for People First Portland, the DSA’s political action committee, said the ordinance would more closely align Portland’s rules with those in other cities experiencing housing shortages, including South Portland and San Francisco, which prohibit unhosted, or nonowner-occupied, rentals.

“An Act to Restrict Short Term Rentals In Portland” would also strengthen enforcement. People operating unregistered short-term rentals would be subject to an initial fine of $1,000, plus an additional $1,500 for every day the rental remains unregistered. Other ordinance violations would come with a $1,000 a day fine.

“By having the City Council allowing 400 of these and having really relaxed enforcement, it means we have more than 400 likely because they’re not registered,” Burnett said.

Staff in the city’s planning and development office would receive and investigate any complaint filed by an individual or organization. A log of such complaints would need to be reported annually to the City Council. Any violation not corrected within seven days would be subject fines and the operator’s registration could be revoked for a 12-month period.

Short-term rental hosts, however, say that nonowner-occupied short-term rentals only account for a small fraction, about 1 percent, of the city’s overall housing stock and that prohibiting them would cause financial hardship for property owners who rely on that income to make mortgage payments and maintain their buildings.

Chris Korzen, the treasurer of the Portland Homeowners and Tenants Coalition, the PAC founded by the San Francisco-based Airbnb corporation, said the ordinance is not needed and would take away something “that’s really important for the city,” especially during the pandemic, when visitors are weary of staying in hotels. He criticized the potential fines as “extremely punitive” and higher than the fines associated with first- and second-time drunken-driving offenses, for which minimum fines range from $500 to $900.

Korzen, a Portland resident and short-term rental operator, said the city should stick with its existing rules, which cap unhosted rentals at 400.

“We already have regulations,” Korzen said. “We have already been through this twice before. The City Council debated it at length and figured out a way to make sure we didn’t become a city of just short-term rentals, while allowing them as well.”

On Tuesday, Portland Mayor Kate Snyder and the City Council, with the exception of Pious Ali, announced their opposition to all five of the DSA’s referenda, including Question E.

Through Sept. 30, opponents have raised and spent more money than the proponents.

People First Portland PAC had raised over $23,000 in support of its campaign to pass all five of its referenda. About two-thirds of that support, $15,000, has come from unions, while the bulk of individual donations came from people donating under $50. The campaign had a little more than $9,700 remaining for the final month of the campaign.

The Portland Homeowners and Tenants Association, which opposes Question E, has not raised any cash. But that hasn’t stopped them from spending heavily. The PAC lists over $67,400 in unpaid debts and obligations for polling, a focus group, digital ads and direct mail. The group has received over $6,100 in in-kind contributions from Airbnb. The PAC’s principal officer is a Brookline, Massachusetts, attorney, John Corrigan Jr. Willy Ritch, a Portland resident who operates a short-term rental, participated in an interview at the PAC’s request. Ritch is a former adviser and communication director for U.S. Rep. Chellie Pingree.

Building a Better Portland, a PAC opposed to this proposal and two other referenda, has received $262,885 in cash and in-kind support, including two polls costing about $39,000 each by the Chicago-based National Realtors Association. Of the PAC’s 97 cash donors, 39 businesses and individuals contributed $1,000 or more, including six businesses or organizations giving $10,000. The Maine Association of Realtors made a $25,000 donation. And the PAC has over $81,100 remaining.

If approved, the council would not be able to amend or repeal the ordinance for at least five years. Any changes during that period would have to be done through another referendum, which could be initiated by the council.

Portland began regulating short-term rentals in January 2018. Developed over a six-month period with input from proponents and opponents alike, the ordinance sought to limit nonowner-occupied short term rentals at 300. But those units were so loosely defined it was rendered practically meaningless.

The council tightened that definition in late 2018 and raised the cap on nonowner-occupied short-term rentals to 400 to include people who qualified – and made investments – under the old rules. Short-term rentals on the islands are not capped.

Portland currently has 805 registered short-term rentals. Of those, 113 are located on islands, but owners will need to pay $400 to register each unit.

Nonowner-occupied short-term rentals currently account for about half of the total short-term rentals registered with the city. The proposed ordinance would eliminate those units, as well as all tenant-occupied rentals, which currently total about 30 registered units.

Owner-occupied short-term rentals, which are not capped, currently account for 264, or roughly a third, of the short-term rentals in Portland.

The city currently hires a third party consultant to identify unregistered short-term rentals. Once identified, the city sends two warnings, before issuing a summons, which could eventually lead to a fine, a city spokesperson said. But city officials could not say how many unregistered short-term rentals are believed to be operating in the city, or any other information about enforcement, including the number of warnings or summonses issued.

So far, Portland has collected $22,900 in fines against non-complaint short-term rental hosts, according to a city attorney.

Stephanie Hogan said short-term rental income has allowed her and her husband to move back to Portland and raise their two kids here. The couple bought a three-unit building on Munjoy Hill last year, where they rent one of those units as a nonowner-occupied short-term rental. That allows them to pay the mortgage and maintain their property, she said.

“We understood that if we could buy that type of building with a strong rental history and the opportunity to have short-term rental income then we would be able to afford to live back in Portland,” Hogan said. “We ended up buying a home built in 1875, so you can imagine there is a lot of repair work to do.”

However, Burnett, the People First Portland spokesperson, said that nonowner-occupied short-term rentals are taking away precious housing stock and undoing housing gains in recent years – all while sacrificing quality of life in the city’s neighborhoods.

“In this city that we love, it really changes a place when you don’t have long-term neighbors and have people coming in and out,” they said. 

But Mike Webster, who operates both long- and short-term rentals, said he’s not sure what he’ll do if the ordinance, along with other referenda proposed by People First Portland, pass at the polls. He said he may consider increasing rents in his long-term units, since the short-term rentals provide additional income that helps him keep rents more affordable. He’s also considering renting his short-term units on a monthly basis, or simply converting them into condominiums.

“There’s so much on the table this year, I don’t really know,” Webster said. “They wouldn’t go back to yearly (rentals) that’s for sure.”

The full ordinance can be read on the city’s website.

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