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PDC, City Council at odds over control

Tension about agency's independence boils over
by: jaime VALDEZ, John Jackley, a Portland Development Commissioner manager, presented thousands of e-mails and documents to the media Wednesday afternoon after his agency was criticized during a morning City Council session for withholding documents.

The City Council and the board of the Portland Development Commission appear to be on a collision course, the result of which could shape this city's neighborhoods and economy for years to come.

Despite recent efforts by Mayor Tom Potter and PDC chairman Mark Rosenbaum to improve relations between the two bodies, a majority of the council now seems more determined than ever to take control of the PDC's multimillion-dollar urban renewal budget - the revenue source that has been used to revitalize downtown, build the Interstate MAX line and help fund the controversial Portland Aerial Tram.

The PDC's defenders say its current level of autonomy has cut down on red tape and political interference, helping the agency create jobs and new development. Some members of the council, however, say the agency's independence is a recipe for arrogance and costly developer giveaways.

Although long-simmering tensions between the council and the board have appeared on the mend in recent months, they erupted anew at a joint Wednesday morning meeting of the council and PDC board, prompting Potter to quip, 'I'm going to recommend marriage counseling for everybody.'

Potter's colleagues were less lighthearted. City Commissioners Sam Adams, Randy Leonard and Erik Sten complained that the PDC was resisting their efforts to gain more control over the agency's budget - even as PDC commissioners Rosenbaum, Sal Kadri and Bertha Ferrán complained the council was not respecting the agency's semiautonomous status.

'The present structure is doomed to failure,' said Sten, who affirmed that he still plans to ask voters to amend the charter to give the council direct control over the PDC's budget. If the council does not place such a measure on the May 2008 ballot, he will support a petition drive to place it on that year's November ballot, he said.

Meanwhile, Leonard used the morning meeting to accuse Rosenbaum and his agency of improperly withholding documents relating to a controversial land deal.

Rosenbaum then held a hastily scheduled news conference Wednesday afternoon. In an unusual move, he released the documents Leonard had been making an issue of, voluntarily waiving the attorney-client privilege PDC lawyers had cited in asking that the documents not be released publicly.

The PDC's stance on public release had been routine, he said, and was not an indication that the agency had anything to hide. The documents, he said, would show that 'the level of concern is a little bit out of line' with the reality.

However, he acknowledged public skepticism and announced the PDC's new mantra would be 'complete, total, open transparency.'

Agency almost 50 years old

The PDC was created as a semiautonomous city agency by a voter-approved charter amendment in 1958. Since then, the agency has created 11 urban renewal areas in various parts of the city, including most of downtown as well as much of the Pearl District and the inner central east side.

Despite such successes as the Pearl District and Interstate MAX, the PDC has been criticized over the years for not including the public in its decisions. A January 2005 City Club report was especially critical of the PDC's community outreach efforts.

The report helped persuade Potter to push for then-director Don Mazziotti's resignation and replacement by Bruce Warner, the former director of the Oregon Department of Transportation. Under Warner the PDC has adopted new policies calling for more public involvement in its decisions.

The council has been wanting more control over the PDC's budget for several years. After Potter took office in January 2005, he appointed Leonard and Sten to review the agency's budget during the council's traditional spring budget writing cycle. But Wednesday both commissioners complained that they had essentially been handed a completed budget that could not be easily changed.

The PDC is overseen by a five-member citizen commission appointed by the mayor and approved by the City Council. Potter has replaced all five commissioners since taking office, although his most recent appointment, labor leader John Mohlis, has not yet been confirmed. During Wednesday's meeting, Rosenbaum argued that it was not fair to blame the current board for the disagreements that have occurred in the past.

'This is a new board,' Rosenbaum said.

Leonard responded that the new board was behaving like all previous boards. He specifically cited the PDC's earlier reluctance to hand over documents concerning a proposed deal to redevelop an annex of the former Portland Police Bureau headquarters at Southwest Third Avenue and Oak Street.

After purchasing the property in 2002 based on an appraisal valuing it at $850,000, last fall the PDC proposed giving it to a developer, Trammell Crow Co., for free to build a 26-story condo tower. The agency based the offer on a new appraisal that put the property's value at negative-$2.7 million.

In June, Leonard spearheaded a push to audit the proposed deal. In a preliminary report, a new city-commissioned review valued the property at $1.86 million and said the previous appraisal 'fails badly' at estimating the property's market value. But after four months, the audit is incomplete - according to the city attorney's office, because the PDC had balked at turning over documents related to the deal.

'I am so disappointed by your response to my requests for the documents,' Leonard told Rosenbaum at the meeting.

At his afternoon news conference, Rosenbaum not only made public the documents regarding the Third and Oak property - which Leonard had sought - but he defended the PDC's handling of the deal.

He said the city's follow-up appraisal, so different from the PDC's, failed to account for several restrictions on the site, as well as the PDC's plans for a 26-story tower that included some affordable housing.

'The project was caught between conflicting public policy goals,' he said.

Talk of 'acting in ignorance'

The joint Wednesday morning meeting was held to discuss a new process for writing next year's PDC budget. By the end of the meeting, both sides agreed that a committee composed of two council members and two PDC commissioners would be appointed to review the proposed budget before it goes to the full board or the council.

But the discussion revealed continuing disagreements over how much authority the committee should have. For example, Leonard said that he thought the committee should be free to look at individual development deals being negotiated by the PDC.

Rosenbaum disagreed, however, arguing that the committee should only assure that broad policies set by the council were being followed.

Even the standards for judging the future success of PDC projects were disputed. Rosenbaum said the PDC staff collects a large amount of information on its projects, including how many new jobs it creates and changes in the per-capita incomes in the affected neighborhoods.

But Adams submitted a list of goals he developed as part of his informal Economic Dashboard project to measure the effects of city spending. They included whether the city's business growth meets or exceeds national averages.

After explaining that the PDC does not collect some of this information, Adams accused the agency's advisory committees of 'acting in ignorance.' Rosenbaum forcefully objected, saying, 'I won't accept that characterization.'

Separate status has pluses, too

Following the council meeting, in an interview with the Portland Tribune, city Auditor Gary Blackmer said he questions whether the council has fully considered the pros and cons of the PDC's semi-independent status. He said that while the decision is not his to make, he's not sure a charter amendment is necessary.

'There is some value in having an arm's-length distance between City Council members and the organization that they're using to make deals,' he said. 'You can get accountability without a charter change.'

Meanwhile, PDC insiders say morale at the agency is poor, and a steady stream of employees continues to leave. A recent Portland Tribune public records request showed that the agency has seen turnover in about one-third of its positions in the past two years. Subsequent to that request, Rochelle Lessner, formerly the agency's liaison to the City Council, left. And two weeks ago, Elissa Gertler, the agency's well-regarded spokeswoman, gave notice, saying she is taking a job with Clackamas County.

'It was the right opportunity at the right time,' Gertler said.

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