South Portland zoning changes over the past few years have made it easier to add units on existing lots, cut parking requirements and opened a path for denser affordable projects, but the pipeline of large new apartment buildings remains modest and slow-moving. For owners of existing buildings, the result so far is a market where new supply arrives in small increments, while state housing laws and the city’s new comprehensive plan steadily widen what can be built.
This guide explains the state laws driving the changes, how South Portland has applied them, which projects are actually in the pipeline, and what the shifts mean for people who already own apartments in the city.
South Portland’s housing market in numbers
South Portland is its own city in Cumberland County, across the Fore River from Portland. The city describes itself as home to a major industrial working waterfront, a regional airport and a shopping mall. The Census Bureau’s QuickFacts for South Portland estimated the population at 27,007 in July 2025, up from 26,498 at the 2020 Census. Over 2020–2024 the city had 12,152 households and an owner-occupied rate of 58.1%, so roughly two in five households rent.
Housing costs are high for Maine. The same Census profile puts the median gross rent at $1,812 and the median value of owner-occupied homes at $441,200, against a median household income of $86,838. Retail is a large part of the local economy: the Census lists 2022 retail sales of about $1.54 billion, or roughly $56,900 per resident, reflecting the mall and the regional shoppers it draws. Those numbers explain why housing supply has become a policy priority at both the state and city level.
The state laws behind the changes
Much of what has changed in South Portland’s land use rules started in Augusta. The state’s March 2026 housing legislation guidance for municipalities summarizes three laws that matter most for apartment development:
- LD 2003 (Public Law 2021, chapter 672). Among other things, it created an affordable housing density bonus: a qualifying affordable development may build 2.5 times the number of units allowed for a market-rate project. For rental projects, at least 51% of units must be affordable to households at 80% of area median income, with long-term affordability covenants of at least 30 years. A 2023 follow-up law, LD 1706, moved the compliance deadline for council-run municipalities to January 1, 2024.
- LD 1829 (Public Law 2025, chapter 385). Municipalities must allow at least three dwelling units on any lot where housing is allowed, and four in designated growth areas or areas served by public water and sewer. Cities may not require owner occupancy or Planning Board approval for accessory dwelling units. The deadline for council-run municipalities was July 1, 2026.
- LD 427 (Public Law 2025, chapter 374). Effective September 24, 2025, municipalities may not require more than one off-street parking space per dwelling unit, and for affordable housing no more than two spaces for every three units.
Together these laws shift the default in Maine toward more housing on existing land. For apartment owners the most important practical change is the parking cap: parking requirements are often what makes adding units to an existing property, or building a small infill project, physically or financially impossible.
How South Portland has applied the new rules
Accessory dwelling units
South Portland moved early on ADUs. In November 2022 the City Council unanimously gave final approval to allowing accessory units in all single-family residential zones, with size limits of up to 800 square feet on lots of a quarter acre or less and 1,200 square feet on larger lots. The changes also removed a two-space parking requirement and the need for a Planning Board hearing, according to Portland Press Herald coverage at the time.
The owner-occupancy question took longer. In December 2024 the council kept the requirement that the property owner live on site, at a time when the city had more than 150 ADUs. The city’s current accessory dwelling unit page now lists removal of the owner-occupancy requirement, which lines up with LD 1829, along with a $500 zoning permit fee and a review time of roughly two to four weeks.
Short-term rentals
South Portland is stricter than many Maine communities on short-term rentals. In November 2018, voters upheld a ban on unhosted short-term rentals in residential zones by a vote of 6,375 to 5,378. The city’s registration form, last revised in 2019, sets fees of $200 for hosted and $400 for non-hosted rentals, plus a $100 fire inspection and a $20 processing fee, and caps occupancy at two guests per bedroom with a maximum of six. For apartment owners this means converting units to short-term rentals is not a realistic strategy in residential zones, which keeps those units in the long-term rental pool.
The 2040 comprehensive plan and housing goals
South Portland has a new long-range plan. The city submitted its 2040 Comprehensive Plan to the state on December 30, 2025, received a finding of consistency with the state’s growth management law on March 5, 2026, and the City Council adopted the plan on a 5-2 vote in spring 2026. Comprehensive plans in Maine do not change zoning on their own, but they set the direction for future rezonings, and local zoning is expected to be consistent with the adopted plan.
The city has also set explicit housing targets. According to a February 2025 Affordable Housing Committee memo, the council adopted an eight-year housing production goal at the end of 2022:
- 50 owner-occupied and 400 rental units for households at up to 60% of area median income
- 100 owner-occupied and 760 rental units for households between 61% and 120% of area median income
The same memo reports actual permits: 102 housing units in 2023, 55 of them below market, and 80 units in 2024, 49 of them below market. Against a goal of 1,160 rental units over eight years, or roughly 145 a year, total permitting of 80 to 100 units a year across all types suggests the city is running behind its own targets.
The Affordable Housing Trust Fund
The city’s Affordable Housing Trust Fund made its first investment in 2023: a $400,000 loan to the South Portland Housing Authority. The memo notes that repayments over 30 years, at 4% interest, will return to the fund to finance future programs. The scale is small relative to the cost of new construction, but it is a sign of the city’s preference for partnering with the housing authority and nonprofit developers on income-restricted units.
Apartment projects in the South Portland pipeline
The city’s major projects page and recent announcements give a picture of what is being built and what has stalled:
- Betsy Ross Crossing, 101 Preble Street. A five-story, 52-unit building for residents aged 55 and older developed by the South Portland Housing Authority, with first move-ins on July 23, 2025. The city reported average rents of $1,332 for one-bedrooms and $1,597 for two-bedrooms, and the authority’s campus there now totals 175 units. Mainebiz put the project cost at $16 million.
- 170 Ocean Street, Mill Creek. The council approved a tax increment financing agreement on November 19, 2024, for a mixed-use project planned at 124 to 146 studio and one-bedroom units over roughly 17,000 square feet of retail, at an estimated cost of about $79 million according to local reporting.
- 675 Main Street. A proposed five-story building with 80 apartments in the Main Street Commercial-Residential zone, with access from Westbrook Street, scheduled for a Planning Board hearing in December 2024.
- 42 O’Neil Street. A 43-unit development on the former public works site, approved June 22, 2022. As of late September 2026, eight certificates of occupancy had been issued, no permits had been filed for an 11-unit rental phase, and all development must be completed by June 22, 2028.
- Yard South, Madison and Front streets. A proposal for up to 1,200 residential units whose zoning application was withdrawn effective November 4, 2024.
Two patterns stand out. First, the projects that are actually delivering units tend to be income-restricted or senior housing with public partners. Second, the largest market-rate concept, Yard South, did not proceed, and smaller approved projects are taking years to finish. That is typical of a high-cost market where construction and financing costs are steep relative to achievable rents.
Energy and building rules that affect apartments
Development rules in South Portland also include climate-related requirements. The city adopted its One Climate Future plan on October 13, 2020, with goals that include cutting community-wide greenhouse gas emissions 80% by 2050.
Two specific rules matter for apartment owners:
- Energy and water benchmarking. The council passed a benchmarking ordinance on January 4, 2017. According to the Institute for Market Transformation’s tracker, it applies to non-residential buildings of 5,000 square feet or more and multifamily buildings with 10 or more units, but only in the Village Extension, Broadway Corridor and Mill Creek Core zones. The first reporting deadline was May 1, 2018. Owners of covered buildings in those zones must report annual energy and water use.
- EV charging requirements. The city revised its electric vehicle charging ordinance on November 6, 2025, effective November 26, 2025. The requirements now apply only to new or rebuilt parking lots with 25 or more spaces, and affordable housing projects are capped at two required chargers.
The revision narrowed the rule’s reach considerably. Owners of existing buildings are generally not affected unless they rebuild a large lot.
What South Portland zoning changes mean for existing owners
For people who already own apartment buildings, the South Portland zoning changes are more of an opportunity than a threat in the near term:
- New supply is arriving slowly. Permits of 80 to 100 units a year, many income-restricted, are unlikely to flood the market-rate segment in a city of more than 12,000 households.
- Adding units may be easier. State minimums of three to four units per lot and the one-space parking cap can open options on properties with extra land, garages or underused parking. Any plan still has to meet the city’s ordinance and building codes, and owners should confirm how South Portland has written the LD 1829 rules into its local code.
- Short-term rental conversion is limited. The residential-zone ban keeps long-term rental supply in place and limits that exit strategy for owners.
- Compliance obligations depend on location. Buildings with 10 or more units in the benchmarking zones carry annual reporting duties that buyers will ask about.
- Affordable projects compete at the lower end. New income-restricted buildings with rents like Betsy Ross Crossing’s offer an alternative to older market-rate units for some tenants.
Owners weighing whether to add units, refinance or reposition can find definitions of terms like TIF, area median income and certificate of occupancy in our multifamily glossary.
Keeping track of South Portland’s rules
Land use rules in Maine are changing faster than at any time in decades, and South Portland’s ordinance will keep evolving as the 2040 plan is implemented. Following the city’s major projects page, Planning Board agendas and the state’s housing guidance for municipalities is the most reliable way to see changes before they affect a property.
For context on other Maine cities, see our Maine market overview. Owners who want to understand how buyers are looking at apartment buildings in the city today can visit our South Portland market page.
