City to impose tougher fines on vacation rentals

Portland will impose tougher fines on illegal vacation rentals, with penalties as high as $5,000 per occurrence.

The new rule takes effect March 31, the city’s Bureau of Development Services announced Wednesday, finalizing a proposal it first presented in November.

The new fines aim to curb illegal rentals through online platforms like Airbnb and HomeAway. The city legalized such rentals in private homes in 2014, but the operator must secure a permit and pay hotel taxes, and a permanent resident must live in the home at least nine months of the year.

The city rules were intended to balance demand from users of the platforms with its undersized housing supply. Officials were concerned that full-time rentals could cause homes for residents to be converted to more profitable rentals for tourists.

Illegal rentals are currently fined only after a 30-day grace period to come into compliance with city code — and even then, the fines were only $707 to $1,414 a month, which could be earned back by an active, full-time rental.

Under the new rules, violators could be fined immediately, starting at $1,000 for a first offense and climbing to $5,000 for third and subsequent offenses.

The bureau believes there are hundreds of rentals operating illegally across the city. It had issued fewer than 700 permits for short-term rentals in the first two years since the rentals were legalized, but the bureau found more than 3,000 active listings for vacation rentals in Portland.

— Elliot Njus