Portland city councilors are pressing pause on a citywide hotel boom that they say is exacerbating the affordable housing crisis.

The council on Monday voted 6-2 on a moratorium that will stop new hotel development for 180 days while the Housing and Economic Development Committee studies the city’s inclusionary zoning ordinance, which, in part, aims to make hoteliers either provide or foot the bill for more affordable housing.

But Councilors Pious Ali and Kate Sykes, who proposed the temporary ban, argue that current requirements are not strict enough to make hotel developers are pulling their weight.

The moratorium was originally proposed as an emergency measure, which would cause it to take effect immediately, but that would have required seven supporting votes. Instead, the moratorium will take effect 30 days after passage after all but Mayor Mark Dion and Councilor Roberto Rodriguez voted in favor.

“We are at a critical point in addressing our housing crisis,” Sykes told the council at its meeting Monday evening. “This presents an emergency to Portland.”

She added that hotels compete with housing projects for valuable city land, and argued that the moratorium should come in tandem with the implementation of the ReCode zoning changes, which the council voted to approve minutes earlier.

The city’s inclusionary zoning ordinance requires that 25% of units in a housing development of 10 or more units be affordable- or workforce-priced. Developers can also opt out and instead pay $177,559 for each unit that was supposed to be affordable to the city’s Housing Trust Fund, which subsidizes affordable housing.

But for a hotel, the fee to opt out is dramatically lower. Under the ordinance, hotels with more than 10 rooms need to include one unit of affordable housing for every 28 rooms or pay a fee of about $4,700 per room. Smaller hotels with under 10 rooms are exempt.

To date, no hotel developers have elected to build housing into their plans. All have paid the fee.

“Continued hotel expansion competes directly with residential projects for prime land, materials, labor, and city planning resources, escalating land prices and limiting the availability of sites for affordable housing,” Ali and Sykes wrote. “The current per-room (inclusionary zoning) fee structure does not reflect construction inflation, land value, or the broader impacts of larger hotel developments on housing resources.”

It costs an estimated $370,000 to build a low-income apartment, Ali and Sykes said. But a developer of a 28-room hotel could get around building that unit by paying just $131,376 – less than half the cost.

“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 the memorandum.

During the moratorium, the committee could eliminate the fee-in-lieu process and replace it with something that ensures all hotels are contributing fairly, they said.

But while several councilors said they support an underlying need to protect and encourage housing development, some questioned whether it was appropriate to pass the moratorium as an emergency measure.

The council voted to waive a second hearing on the item, teeing up an emergency vote Monday night. Mayor Mark Dion was the only one to vote against waiving the second read.

“When we move too fast, nothing good comes from it,” Dion said.

Several residents and representatives of Portland’s hospitality industry opposed passing the moratorium as an emergency measure.

Eamonn Dundon, director of advocacy at the Portland Regional Chamber of Commerce, said the public should have been given more time to consider the moratorium.

“The harder you make safe, regulated and legal hotel developments, the more you suppress our overall lodging supply,” Dundon said. “The result of (pausing development) will be no projects and empty properties.”

Councilor Anna Bullett said “there’s a lot of voices that are not in this room tonight” who support pausing development of hotels.

“I do think it’s important to press pause, because it allows our city staff to really be able to dig into this,” Bullett said.

Hotel development in Portland is booming as the busy season has extended further into the fall and investments from large companies have drummed up more business travel.

The city has added nearly 450 rooms in the last four years. Portland has more than 800 hotel rooms in various stages of the planning process, and there are more than 400 in the works in the surrounding area.

Those 800 rooms in the city are expected to add almost 500 hospitality jobs.

The income range for these jobs, between $27,000 and $42,000, according to Ali and Sykes, would put them well within the income threshold for affordable housing.

“This new demand, layered onto Portland’s existing housing shortage, highlights the need for more affordable housing options to support the workforce,” they wrote.

Further complicating the issue, while hotel development in Portland is picking up, housing development seems to be slowing down.

The city approved 1,300 new housing units in 2023 – more than in any other year since at least 2010.

But 2024 has been tepid in comparison. The city has approved just 439 units this year, a 66% decline.

Some projects that were originally pitched as housing have since switched gears to hospitality.

The old Fidelity Trust Co. building at 465 Congress St. is being converted into a 92-room bank-themed boutique hotel.

Fathom Cos. bought the property this summer from out-of-state developers who had previously announced plans to convert the building into 63 apartments. The prior owners would have paid the city more than $2.7 million in place of the 16 affordable units that would have been required.

But now that the property will become a hotel, the fee to skirt the inclusionary zoning requirements is substantially lower at just $432,000 in place of three units.

In 2022, developers announced plans to convert 54 York St. into 14 apartments, including four low-income housing units. But this summer, they pivoted the project to a hotel with 14 apartment-style guest rooms. The fee-in-lieu was only $65,000.

“Hotel fees are significantly outpaced by both actual housing costs and fees required from residential developers, requiring less from hotels despite the higher demand their workforce places on Portland’s affordable housing resources,” Ali and Sykes said.

Staff Writer Daniel Kool contributed reporting. 

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