Portland will freeze new hotel starts for 6 months as it mulls affordable housing rule
File photo / Renee Cordes
Portland has seen a surge in hotel development over recent years, including construction of The Longfellow, shown here as work was wrapping up in May.
Hotel developers will have to cool their heels until next summer before launching new lodgings in Portland, thanks to a moratorium imposed Monday night by the City Council.
The six-month freeze on new hotel development begins in December and is intended to give the council time to reexamine Portland's inclusionary zoning ordinance. The rule requires hoteliers hoping to build guest rooms in the city to also build affordable housing — or pay a fee instead.
The requirement is similar to one Portland places on housing developers, who must include one unit of affordable- or workforce-priced housing for every three market-rate units in a building of 10 residences or more. The opt-out fee for housing projects is $178,000 per unit of required housing.
Hotel developers have to create one unit of affordable housing for every 28 guest rooms they want to build. The opt-out fee is $4,700 per room.
The fee-in-lieu payments go to a city trust fund and eventually support efforts to address the worsening shortage of affordable housing in Portland. But the city's inclusionary zoning ordinance — adopted in 2015 and modified in 2020 — has not spurred hotel developers to build a single unit of housing.
City Councilors Pious Ali and Kate Sykes, who proposed the moratorium, said it's simply cheaper to pay the fees. For example, the developer of a 28-room hotel would need to spend at least $370,000 on a low-income apartment, while the opt-out price is about $131,000.
"This discrepancy demonstrates why the current fee does not meet the ordinance’s affordable housing goals and how allowing additional hotel development without adjustments could exacerbate serious public harm during a housing crisis,” Ali and Sykes wrote in a memo supporting the proposal.
It passed in a 6-2 vote, with Mayor Mark Dion and Councilor Roberto Rodriguez opposed, and will take effect Dec. 4.
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