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Portland moratorium on hotel development is extended by six months

hotel under construction Photo / Tina Fischer A boutique hotel that received approvals prior to the moratorium is under construction in the Granite Block at 215 Commercial St. in Portland.
By Tina Fischer

The Portland City Council voted unanimously Monday night to extend the ban on new hotel development in the city to give policy makers more time to review a controversial zoning restriction tied to the housing shortage.

The current 180-day moratorium was set to expire June 2, before policy makers would have had time to craft potential amendments to the zoning ordinance that was designed to make hoteliers pay for new affordable housing.

The rationale behind the provision is that new hotels strain the already tight housing market by usurping land or existing buildings that could instead support new housing, and they create jobs for employees who cannot find housing affordable to hospitality incomes.

The Hotel IZ (Inclusionary zoning) Ordinance, requires any new hospitality build with 10 rooms or more to either create one unit of affordable housing for every 28 rooms or pay a fee of $4,831 per room, to the city’s Housing Trust Fund. 

Since the ordinance was enacted in 2015, it hasn’t spurred the creation of a single housing unit; it’s less expensive to pay the fee. 

Portland City Hall exterior on a rainy day
Photo / Renee Cordes
Portland City Hall

Economic headwinds

Housing and Economic Development Committee chair Pious Ali said Monday night that the committee is still drafting potential amendments to the ordinance. The existing moratorium would have expired before the planning board’s June meeting.

There are several hotel projects that were approved prior to the moratorium, including a repurposing of the Granite Block at 215 Commercial St., currently under construction by South Portland-based Optimum Construction, and a project at Thompson’s Point, which received the go-ahead in 2012, before the zoning restriction was enacted, so is not subject to the affordable housing fee.

Additionally, two projects on Congress Street near Monument Square — one in the Time and Temperature Building, the second in the former Maine Bank and Trust building at 465 Congress St. — have approvals but are not yet under construction. Another at Canal Plaza is poised to get underway and Jim Brady at Fathom Companies said he has approvals on a "ground up" project at the corner of Congress and Myrtle Streets, next to Portland City Hall and the Merrill Auditorium.

Portland’s Housing and Economic Development Director Greg Watson told Mainebiz that there has been little recent opposition from hotel developers over extending the moratorium. He said the current economy coupled with labor shortages are likely more impediments to projects moving forward within the next six months than the moratorium itself.

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