PORTLAND — Hotel developers could be required to pay one-time per-room fees for new construction in the city.
The City Council Housing Committee, led by Councilor Jill Duson, on June 27 unanimously sent the Planning Board a draft ordinance for setting the fees.
“It is not a tax, it is a fee; it would be assessed one time,” city Planning Director Jeff Levine said before the committee vote.
Revenue from the fees would go to the city’s Housing Trust Fund to help support affordable and workforce housing.
“Labor demand for hotels is predominantly low-wage occupations and the (hospitality) growth in Portland is very significant,” Levine said.
A study by the Greater Portland Council of Governments determined there are 2,850 hotel rooms in Portland, and Levine estimated that will increase by 400 in 2020.
Hotel development has burgeoned in Portland compared to the rest of the nation, he said, with the national growth rate from 2013-16 of 2.9 percent, compared with Portland’s 14.6 percent.
The Planning Board will be asked to make its own recommendations on the ordinance and possible changes before forwarding it to the full City Council. Public comment will be taken by both the Planning Board and council.
As drafted, the ordinance would assess a $2,500 per-room fee for hotels that already have building permits, but not occupancy permits. Planned hotels without building permits would be assessed $5,000 per room.
“Clearly, the data suggests the hotel market is one of the most lucrative in Portland, and that is why we are seeing so much development,” Levine said. “We do believe the market could handle (the fees) at this point, but there is certainly room to adjust.”
Levine said city staff prefers to call the charge “linkage” as opposed to “impact” fees, in part to prevent any confusion with the overall impact fees for development that could become a part of the site planning process in the future.
Should impact fees be enacted, they would also apply to hotel development, Levine said.
The linkage fees also differ in that they were suggested by Councilor Belinda Ray as a way to help hospitality industry employees afford to live in the city.
Sourcing U.S. Census data, the GPCOG study notes the hospitality industry employs 10 percent of the Cumberland County workforce while providing 5 percent of its income.
“Clearly, the hospitality industry has a high impact in terms of employing low-income people who often need to live near their work,” Levine said.
In Portland, the median weekly income for hospitality staff is $353 per week, the study notes.
Several hotels are under development, including Home2Suites at 203 Fore St., a 148-room Marriott hotel at Thompson’s Point, a 93-room hotel on Fisherman’s Wharf, and a 139-room hotel to be built as part of the redevelopment of the former Rufus Deering Lumber Co. at 383 Commercial St. An AC Hotel by Marriott at 158 Fore St. is scheduled to open this month, and would not be affected by fees.
Levine said a change to the ordinance draft that could be done at the Planning Board level would amend its text to dovetail with the city’s inclusionary zoning ordinance. That requires builders to set aside 10 percent of units in developments with 10 or more units as workforce housing.
Levine said the change could be made with the expectation hotel developers would not be setting aside rooms based on income guidelines.