For at least the third time in four years, Portland is again considering a proposal to further regulate short-term rentals.

The latest proposal, written by Councilor Kate Sykes, would implement dozens of changes but mostly takes aim at lowering the number of non-owner-occupied short-term rentals in the city and strengthening enforcement.

The Housing & Economic Development Committee voted last week to recommend the changes to the full City Council, which will decide whether to accept the changes outright. Only one amendment regarding proof of ownership would need to be put on the November ballot as a referendum.

Kate Sykes Photo courtesy of Kate Sykes

The council is set to consider the proposal Monday night in a first reading, with a vote scheduled for next month.

Sykes said in an interview before the committee meeting that the city’s long-term rental housing vacancy rate, which measures how much long-term rental housing is on the market, is too low – about 2.2% – and she thinks changing short-term rental rules could increase the long-term housing stock and make the rental market less competitive (and therefore less pricey). In Portland, any housing unit that’s rented for less than 30 days is considered short-term.

“A healthy vacancy rate for a city the size of Portland is about 5%,” Sykes said. “It’s not that every short-term rental would suddenly turn into a long-term rental because we know that doesn’t happen. … But I think it does have some impact on the amount of (long-term) rentals that are available.”

HOUSING AVAILABILITY

This proposal is the latest in years of efforts to reduce the number of short-term rentals in Portland. After one referendum to amend the 2018 ordinance failed in 2020, two competing proposals appeared on the 2022 ballot and also failed.

Wes Pelletier, who campaigned for more restrictions as a member of the Maine chapter of the Democratic Socialists of America in 2022, attributed these failures in part to the outsized voice that opponents of regulations have in shaping rental policy.

“I think one of the loudest constituencies, even though they’re not the majority, is these landlords and Airbnb owners, especially people who own multiple units who would be affected,” Pelletier, who is running for a City Council seat, said in a phone interview. “This group will really have time to push on City Council. I think that’s why it’s taken so long to see anything on something that’s been an issue for at least half a decade, if not much longer.”

Among Sykes’ proposed changes, one would limit the number of non-owner-occupied short-term rentals to 1.5% of the number of long-term rentals registered in the city, which, according to Sykes, is currently around 19,300.

That would reduce the number of non-owner-occupied short-term rentals allowed in the city from 400 to about 290. Sykes said existing operators would not lose their licenses, but until the number of operators meets the 1.5% cap, the city would stop approving short-term rental license requests. And, if approved, it would not go into effect until 2026.

The committee debated whether to cap the number of short-term non-owner-occupied rentals at 2% (currently 387 units), 1.5% or 1% (193 units).

Councilor Roberto Rodriguez pushed for 2% because he said short-term rentals allow locals to benefit from tourism in a way that hotels don’t.

Chris Korzen, who operates short-term rentals and helped write one of the proposals that failed in 2022, believes it is important to maintain some amount of them in the city because of their effect on the economy. According to the Maine Office of Tourism, they brought in between $649 million and $794 million to the Greater Portland and Casco Bay region in 2023.

“I feel very strongly that short-term rentals are an essential part of Portland’s economy,” Korzen said. “Those guests who are coming to stay with us are spending money in restaurants. They’re spending money in gift shops.”

But Pelletier said such data doesn’t reflect the effect of long-term housing shortages on the economy.

“There’s a lot of messaging about how much money short-term rentals bring in. I think that data is a little shoddy, to say the least,” Pelletier said. “I think what’s not being calculated is the cost to people that live in Portland. We are losing workers … and I think those costs are hard to measure.”

‘UNDENIABLE TREND’

The majority of the proposed changes focus on lowering the number of non-owner-occupied short-term rentals.

One amendment would cap the number of non-owner-occupied short-term rentals in a multiunit complex at no more than five, or half the number of units in the complex.

On Peaks Island, which currently has no restrictions, the proposal would cap the number of non-owner-occupied short-term rentals at 40, which is close to the current number of non-owner-occupied short-term rentals on the island, according to Peaks Island Councilor Peter McLaughlin.

Owner-occupied rentals would have no restrictions.

“There is an undeniable trend that anyone on Peaks has seen that homes are transitioning from year-round residence to short-term residence, whether that be as investment properties … or as summer homes,” McLaughlin said in a phone interview. “So each loss of a unit that’s a year-round home for a young family to buy or rental housing for low middle-income workers … has an effect that you can really feel in a community of this size.”

Citywide, accessory dwelling units would be exempt from the cap within five years of their construction because they are expensive to build and in short supply, and allowing them would make construction a more profitable investment, Sykes said.

The proposal also would require those with owner-occupied units to show they have a homestead exemption on their property taxes as proof that it is in fact their primary residence.

“We’ve seen instances of people coming in and showing a license, a driver’s license, as proof of actually living in the unit. But in fact, they don’t really live there,” Sykes said. “So there’s too many ways to get around that, and the tightest type of documentation that’s easily verifiable is the homestead exemption.”

If the owner is not eligible for a homestead exemption, they can also show a redacted copy of their most recent tax return as proof of residency.

It is the only change in Sykes’ proposal that would require voter approval. Because some of the current regulations were passed by referendum within the last five years, any changes to those rules also have to be approved by the voters.

Another amendment would require booking businesses, such as Airbnb, to verify the licenses of each rental before someone can list that rental on the business’s website. Right now, she said, only the hosts are held responsible for listing rentals without a license, not the booking services. 

“Every year we have 60 to 120 units that we find on this site that aren’t registered … so that will make it so that you can’t even register unless you have the license,” Sykes said.