Bo Mullan was just trying to follow the rules.

In 2022, Mullan reached out to Portland’s Permitting and Development office to ask what was required to convert his Southwest Portland four-bedroom house into an Airbnb. Mullan said he followed a staffer’s instructions to apply for a certain short-term rental permit, and began accepting guests.

He was shocked to learn, in 2024, that the city had slapped with a nearly $20,000 fine for having the wrong permit. He had 15 days to pay up.

“It was deeply upsetting,” said Mullan, 65, who had to take out a loan to cover the cost. “I was trying to play along. And they were trying to take advantage of me. I realized I wasn’t dealing with a city, I was dealing with the mob.”

Mullan is one of many Portlanders hit with hefty fines without warning for violating the city’s short-term rental rules.

A report released Wednesday by the city ombudsman’s office, the independent city watchdog office that fields citizen complaints and launches investigations, recommends city officials overhaul the process.

“Large fines have financially and emotionally harmed individual operators in Portland,” the report reads. “We found that the city’s rules are flawed.”

City department leaders say they are open to the recommendations, but reducing fines could impact the city budget — which is already facing a massive shortfall.

Portland was one of the first U.S. cities to adopt rules and regulations for short-term home rentals, like Airbnb and VRBO, in 2014. The proposal came as a way to address Portland’s housing crisis. Under the policy, a short-term rental must have a full-time resident who spends at least 270 days a year at the house.

Under the city rules, those wanting to operate a short-term rental must apply for one of two permits. A Type A permit, which is for rentals with up to two bedrooms and five guests at one time costs $400 every two years. A Type B permit, for up to 5 bedrooms and 10 guests, costs roughly $9,000 with an annual fee of $245. Rental operators have to pass a safety inspection and meet other requirements — for some, a lengthy land use review process — to obtain permits.

Enforcement has been spotty. In 2019, after city negotiations with Airbnb to share a list of all of its available rentals in Portland fell through, then-Mayor Ted Wheeler pushed a policy to bar Airbnb and similar rental platforms from advertising unpermitted vacation rentals.

Four years later, reporting from The Oregonian/OregonLive found that the city was falling short on enforcing its own permit requirements, allowing hundreds of rentals to skirt city rules.

Now, it appears the city’s Portland Permitting & Development office has swung far in the other direction.

The ombudsman’s office was first alerted to issues like Mullan’s back in 2024, when a rental operator reached out after receiving a $115,000 fine. In that case, the operator had a Happy Valley address and didn’t believe they were subject to Portland’s program or permit requirements. Yet the city determined the property was in Portland city limits. They received no warning before being fined.

The ombudsman’s office immediately urged the city to lower the first time fine rate. The city agreed to limit first-time fines at $27,513 in May 2025.

But, according to the ombudsman’s report, this fine remains “at least 27 times higher” than any other city it reviewed. In Denver, for example, a first-time violation brings a $150 fee for a short-term rental operator. In Minneapolis, it’s $500.

According to the ombudsman’s report, Portland’s fines for first-time permit violators is “at least 27 times higher” than any other U.S. city with short-term rental regulations.

“Portland’s short-term rental enforcement is more punitive than enforcement by other cities across the country,” it reads.

The report said that, to pay these fines, some Portland operators were forced to sell their properties, and one had to pull from their retirement account to pay up.

For Mullan, the nearly $20,000 fine for unknowingly having the wrong permit required him to take out a bank loan. Mullan chose to convert his Southwest Portland house into an Airbnb after being diagnosed with a terminal blood disease. He converted part of the house into a studio apartment, where he lives. He saw the conversion as a way to set up his children financially if he died suddenly.

After receiving the fine, Mullan said he tearfully “begged” a city staffer on the phone to reduce it – pointing out that he was already in the process of applying for the correct permit.

“At the time I was paying $14,000 a month for my medication, I didn’t have the money,” Mullan said. “I told the guy this, and he didn’t care. A complete lack of compassion.”

Mullan doesn’t know how his permit caught the attention of city staff.

The report recommends city leaders give rental operators a warning about permit violations before issuing fines and suggested lowering the cap for first-time offenses. It also suggested changing the enforcement process, which is largely driven by public complaints. Previous ombudsman reports have found that complaint-driven property violations have led to people of color being disproportionately targeted.

That trend continued in this report, with at least 40% of the operators fined over $10,000 identifying as people of color, immigrants or members of the LGBTQ+ community.

Donnie Oliveira is a deputy city administrator who runs the Community & Economic Development branch, which oversees the Permitting & Development bureau. In a response to the memo, Oliveira said he wants enforcement to be “applied fairly.”

But he said that lessening fees could bring “fiscal challenges” to the bureau, which is facing a $6 million budget shortfall this coming year. He also said the department didn’t have enough staff to change its enforcement practices. He punted many of the decisions to Portland City Council.

“If the City Council wishes to revisit the existing allowances and restrictions on use of [short-term rentals] within Portland, we are open to engaging in those discussions,” he said in a written response.

It may be hard to reverse the damage inflicted on some short-term rental owners. Mullan said he’ll continue to operate his rental in Portland, only because he’s poured too much money into it to change course.

“But I’m done with giving this city a pass,” he told OPB. “I despise Portland because of this experience.”

News Source : https://www.opb.org/article/2026/03/04/portland-fines-short-term-rental-operators-report/