Residents of downtown Portland's Ladd Tower last year started noticing a growing number of strangers in their building's lobby and elevators, often with luggage in tow.

They arrived at a time when residents were already on edge over a series of break-ins, and crime prevention officials had warned them to watch out for unfamiliar people. It wasn't clear where they were coming from — until residents found the building listed on the website Stay Alfred, which rents out vacant apartments to travelers.

"I signed up to live in a home, not a hotel," said Lisa Cox, a resident of the building. "Holland Residential has turned this into a hotel without me even knowing."

Ladd Tower, owned by Holland, isn't alone. The owners of a handful of high-end apartment buildings are now offering rooms to rent by the night through Stay Alfred and a Portland-based competitor, Vacasa.

It's part of a small but growing industry that allows building owners to make money off of empty units, even as the city's housing shortage pushes rents and home prices to record levels. And while the city generally allows this kind of short-term rental in commercial zones, many of these high-rise apartments appear to be violating city code because they lack a required permit.

In recent years, Portland has enjoyed high demand for lodging near the downtown core. That's resulted in the construction of thousands of new hotel rooms.

Meanwhile, consumers are increasingly comfortable with online vacation rentals, and listings emphasize that this is not just an Airbnb; the rooms come with housekeeping services, and you won't find any of the primary resident's belongings, because there's no one living in the unit.

That's given developers an opportunity to earn a steady stream of income after a building first opens and most of its units are still sitting empty.

But the phenomenon has also grown in long-established apartment buildings like Ladd, which was completed in 2009. Residents say the vacation rentals have undermined whatever leverage they have with landlords.

The rentals are allowed in places like downtown and the Pearl District, where the buildings aren't in residential zones. Both Stay Alfred and Vacasa remit thousands of dollars in lodging taxes from guests, and they hold required business licenses.

But city officials say those units are subject to a stricter section of the state building code that governs hotels and motels. Compliance requires a city inspection and permit, and most such rentals don't have one, putting them in apparent violation of city code.

While Portland officials have cracked down on owners of single-family houses that violate the city's regulations, rentals in downtown high-rises have attracted less attention.

One of the largest is the Park Avenue West Tower, a 30-story skyscraper completed in 2016. At least 20 of its 202 apartment units are available as vacation rentals, including six that are available as a block for large groups.

Rooms are similarly advertised at several buildings in the Pearl District, including Asa Flats & Lofts, Block 17 and NV. The owners of NV said Stay Alfred's lease for the single short-term rental in the building would not be renewed when it expires in May.

Portland regulators were aware of plans to operate part of the building as a mini-hotel. Stay Alfred and Vacasa sought permission to rent out the rooms nightly, said Vanessa Sturgeon, the president of TMT Development, which owns Park Avenue West.

But the companies never finished the process. Sturgeon blamed a backlog at the city's permit office combined with confusion among city employees about what the permits require.

"The city was unable to articulate their own process for getting the permitting done because it was a new process. Every time Vacasa would approach them, or Stay Alfred, they would get a different answer," Sturgeon said. "We were specifically told to wait to submit until the city had their process ironed out."

Bureau of Development Services officials said there's no record of any such guidance.

"They should get into compliance," said David Austin, the bureau's spokesman. "If we get complaints, we'll investigate."

Scott Breon, a Vacasa executive in charge of revenue, said the company's permit application for Park Avenue West was delayed due to a mistyped email addess.

"As soon as it was brought to our attention, we took action and the permit is in process with the city," Breon said in an email. "The employee responsible for the oversight has been held accountable."

Two other apartment complexes with vacation rentals managed by Vacasa, Q21 in Northwest Portland and Dorian in Apartments in Southeast Portland, have secured the necessary permits for about 20 short-term rentals on the site.

Stay Alfred told The Oregonian/OregonLive it would secure the necessary permits.

"All of these buildings are either close to or in the process of being fully permitted," Nancy Allen, the company's vice president for real estate, said in a statement. She said the buildings should be properly permitted within five weeks.

The upgrades required at the apartment buildings would likely be minimal, said Michael Liefeld, the development services bureau's enforcement manager, since large new apartment buildings already have sufficiently wide corridors and have fire sprinklers.

Nonetheless, the city hasn't slapped the operators with fines or even warnings.

That's because the Bureau of Development Services typically only investigates in response to a complaint.

Inspectors with the bureau have been busy with complaints against owners of single-family houses they listed illegally on sites like Airbnb. In some cases, that's resulted in large fines. The largest was a $52,000 fine against an Airbnb operator who advertised a house in the middle of a single-family neighborhood as the perfect venue for a boisterous bachelor party.

But when the illegal rental is tucked on an upper floor of a high-end apartment building, a complaint appears less likely. None of the units reviewed by The Oregonian/OregonLive have been the subject of a complaint, Liefeld said.

The city has also preferred to enact change by negotiating with the short-term rental websites that facilitate them. It recently struck an agreement with HomeAway, one major operator of such a website, which would help the city find operators who aren't licensed or aren't paying taxes.

"With the limited bandwidth we have to do enforcement activities, we're focused on a bigger settlement with some of the bigger marketplaces," said Marshall Runkel, chief of staff for Portland Commissioner Chloe Eudaly. "If your business plan is not being in compliance with local regulations, I don't think that's a long-term recipe for success."

Residents of buildings that now have a side gig as hotel say they haven't complained largely because they didn't know where to direct their ire.

Cox, who's lived in the Ladd Tower since shortly after it opened, said longtime residents had raised questions about the rentals with city crime prevention coordinators and the police bureau, but not with the development bureau.

Residents of such buildings, meanwhile, say they are increasingly concerned about the comings and goings of travelers. Jenna Mills, who said she's lived in the Ladd Tower for seven years, said she increasingly runs into strangers in parts of the buildings that are supposed to be locked up — including a time when she had to leave her apartment suddenly because her dog had become ill.

"It's not exactly comfortable to get into your elevator in your pajamas and there's five guys you've never seen before," she said. "And then you find out they don't even live there."

After this story was published, Holland Residential regional property manager Josh Adams said the company was unaware the building's three units leased to Stay Alfred were being offered as vacation rentals until several months ago. He said his company believed the units would be used as corporate rentals for business travelers.

"It's not meant to be an Airbnb," Adams said.

He added Holland would be talking to Stay Alfred about returning to a corporate lease model or terminating the lease.

-- Elliot Njus

enjus@oregonian.com

503-294-5034

@enjus