Lawsuit expected after South Portland moves to restrict housing rentals

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SOUTH PORTLAND — The City Council took a major step in a meeting that ended early Wednesday toward restricting short-term housing rentals in the most densely populated parts of the city – and a step toward possible litigation. 

Councilors voted unanimously, with Councilor Eben Rose absent, to ban non-owner-occupied rentals in all residential neighborhoods. Hosted stays in all areas of the city would still be possible, and non-homeowner-occupied rentals would be allowed only in commercial and mixed-use neighborhoods.  

A short-term rental is defined as any stay 30 days or less. 

The vote was a first reading of the ordinance crafted by Assistant City Manager Joshua Reny after a January workshop, the fourth on short-term housing rentals.

A deciding vote is slated for Feb. 20. If approved a second time, the ordinance will take effect June 1. 

Two amendments to the ordinance were approved in the meeting that began Tuesday night and didn’t adjourn until after 1 a.m. Wednesday: Allowing the owner-occupants of three- or four-unit apartment buildings to rent one unit as a short-term rental, and allowing homeowners who have contracts with renters confirmed before Feb. 6 to honor those reservations through Sept. 15, with certification by the city clerk. 

Mayor Linda Cohen on Wednesday said she believes the city will likely be sued over the restrictions on popular vacation-rental services like Airbnb and VRBO, citing a page set up to raise funds for a legal battle.

The page was established Jan. 31 by resident Margaret Birlem. As of Wednesday it had pledges for $4,500 of a $25,000 goal. 

Airbnb is also paying close attention to the city’s actions and has urged its users to lobby the city. 

In January, councilors nixed so-called “Type II” rentals, or rentals of primary residences for less than 90 days. This action would prohibit, for example, rental of a primary home while the owner is away on a three-week vacation. 

Several residents spoke against the Type II rental option, contending it creates a loophole that allows disruption of residential neighborhoods during peak seasons.

Attention then focused on hosted stays and rental of non-owner-occupied residences.

Hosted stays, where a visitor may rent a room while owners are also living on the premises, would be allowed in all areas of the city. Non-owner-occupied rentals will only be allowed in mixed-use and commercial neighborhoods, such as Knightville. 

Opponents of the restrictions argued the ability to rent their properties via online services is a vital piece of supplemental income. Those who sought bans in residential neighborhoods said the rentals have essentially created neighborhoods without neighbors. 

According to Reny, as of last November, there were 282 short-term rentals listed in South Portland, with 75 percent of those for entire homes. A quarter of the listings were for single rooms in a home. The average price for an entire home in South Portland was $124 per night, according to Airbnb, he said.

In the first 10 months of last year, South Portland had 160 hosts who housed about 10,000 guests. According to Airbnb’s data, the typical host made $8,000 from renting their home for an average of 36 nights a year, or three days a month, according to data provided by Airbnb.

An attorney for the corporation, Andrew Kalloch, declined to provide information about how much money Airbnb makes from South Portland rentals but said the company paid $3 million in taxes to the state last year. 

The council first began discussing the issue last July, when Councilor Susan Henderson said she was receiving complaints from constituents about parking issues, noise and disruptive behavior caused by some renters. 

In January, a short-term rental owner, John Murphy, suggested the council create a committee with varying viewpoints to work out the issue and provide guidance. Others contended the issue is pitting residents against each other, a result of inaction by the city and the council. 

Several residents have contended the housing market has gone haywire in the city, with people paying $50,000 more in cash than the asking price of a property, making it cost-prohibitive for some people and families to settle in the city. 

Councilors eventually agreed that people interested in offering their homes as short-term rentals will be required to register with the city, and could be subject to inspection by the Fire Department with a notice of 48 hours. Owners offering hosted stays would also have to present documentation to prove the rental property is their primary residence.

Failure to register with the city could be punishable by fines. A third-party, internet-based platform linked to a graphic information system will be used to track registrations and lengths of stays, Reny said. A registration deadline of April 15 was suggested by councilors if the ordinance on Feb. 6 gets the first of two required approvals. 

Councilors decided not to impose additional parking requirements for short-term rentals, and also informally agreed that for a hosted stay, a two-person limit per room should be enacted, regardless of the number of rooms available in residential areas. In commercial or mixed-use areas, the limit would be capped at two people per room for as many bedrooms are in the house. 

Juliette Laaka can be reached at 781-3661 ext.,106 or at