Portland planning board reviews options to raise hotel inclusionary fees during moratorium

City planning staff on July 8 briefed the Planning Board on options to revise Portland’s hotel inclusionary zoning (IZ) requirements while a citywide moratorium on new hotel development remains in effect.

The workshop was informational; no binding vote was taken. Staff said the City Council’s moratorium (enacted in December and running through late November) asked staff to report back with alternatives because concerns have been raised about hotel growth, low wages for many hotel employees and limited contributions to the City’s Housing Trust Fund.

Why it matters: Portland’s hotel IZ ordinance, adopted in 2019, requires developers to build one low‑income housing unit for every 28 hotel rooms or pay a fee in‑lieu. That 2019 linkage fee was set from a nexus study and is adjusted annually. Staff told the board the 2025 figure used by the city is currently $4,831 per room (monthly equivalent in the presentation), and that an updated nexus study produced a per‑room range between roughly $9,520 and $13,730. An alternate “cost‑to‑build” methodology could produce still higher per‑room figures and, if adopted in full, could produce six‑figure fees on the example 85‑room hotel highlighted in staff materials.

What staff proposed: Two main paths were presented. Option 1 keeps the existing nexus methodology and updates the data sources (rent data from the city rent board, ACS and HUD fair market rents) and the fee adjustment table. Option 2 would replace the nexus‑based approach with a cost‑to‑construct model that estimates the full cost of building the affordable units tied to hotel job generation and then applies a residency/subsidy adjustment. Staff said either choice would likely require outside consultant work to finalize defensible numbers and recommended getting the board’s direction on which path to pursue.

Board and public reaction: Board members broadly described option 1 as the “path of least resistance” and recommended staff pursue the updated nexus approach and bring back a draft amendment. Several said a maximum‑defensible fee should be calculated even if council ultimately adopts a lower fee for feasibility reasons. Board members also urged staff to coordinate timing with an upcoming city study of residential inclusionary zoning so the Council can weigh both policies together. Councilor Kate Sykes (public commenter) said room counts are an appropriate basis because employment generated by hotels is often estimated relative to room numbers. The Portland Regional Chamber urged caution, warning that a large abrupt increase in hotel IZ fees could stall hotel projects and that the fee models should account for outside subsidies typically used to finance affordable housing.

Next steps: Staff asked the board for a direction (Option 1 or Option 2). Multiple board members said they preferred Option 1 (update the existing model) so the city can finalize a recommendation sooner; several members asked staff to return with the analytic materials and, if necessary, an RFP for a third‑party consultant to test feasibility and pro formas. Staff said the moratorium expires in late November and that the Council could extend it if needed.

Speakers quoted in this article came from the meeting transcript and public comment materials and included staff and stakeholders shown in the speaker list below.