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Islanders battle for 'Lottery Row' fix

OLCC official gets an earful; police step up enforcement at strip


by: TRIBUNE PHOTO: CHRISTOPHER ONSTOTT - Larry Niswender, director of the Oregon State Lottery, was on the hot seat before fired-up Hayden Island residents, who blame a festering crime and vice problem  on the concentration of state video lottery terminals at one strip center.Portland police and state liquor inspectors are mounting a targeted enforcement campaign at Hayden Island’s “Lottery Row,” two years after the Portland Tribune first chronicled how the strip retail center had devolved into a vice-ridden gambling mecca built around state-owned video lottery terminals.

Mike Leloff, commander of Portland Police Bureau’s North Precinct, told irate neighbors last week that police moved into a “full-blown enforcement” mode after owners of the strip center’s 12 lottery delis, bars and restaurants failed to enact security fixes he suggested last summer to stem drug dealing and other crimes.

State liquor inspector David Luster assured residents at the neighborhood association meeting that he’s investigating all 12 businesses at Lottery Row, and will seek earlier bar closing times once their liquor licenses come up for renewal next April.

Oregon State Lottery Director Larry Niswender promised neighbors that the number of retailers hosting state lottery terminals at the strip center will be reduced from 12 to six in mid-2015, when their lottery licenses come up for renewal.

Many of the 30 residents at the Hayden Island Neighborhood Network meeting welcomed the police attention, but several seemed cynical about the promises.

“Basically, you’ve created this problem,” said Hayden Island resident Ron Ebersole, addressing the state lottery director. “I haven’t yet heard a real solution out of you guys.” 

Resident Cliff Roberts said he’s witnessed many drug deals take place openly inside the lottery delis and bars, and saw an on-site manager greet a drug dealer by name.

“It’s very easy to shut these places down,” Roberts said. “What we need from you, Luster, is to pull the frigging licenses.”

Others complained that Niswender appears poised to allow a 13th retailer to host state video lottery machines, at a newly relocated Denny’s Restaurant a stone’s throw away. Niswender, who pushed through a new state regulation in October that limits lottery machines at no more than half the establishments at a strip center, said the local Denny’s doesn’t count in that equation.

During the past several years, retailers at the Hayden Island Harbor Shops opposite the Jantzen Beach mall have installed 72 electronic slot machines in the 12 shops, attracting throngs of Washington gamblers. Because the Oregon lottery requires retailers to get at least half their gross revenue from non-gambling sources, Lottery Row proprietors offer cut-rate prices on cigarettes, alcohol and food to boost non-gambling sales and lure traffic, much like Las Vegas casinos. Some subdivided their spaces to open clones with different business names, so they could offer the maximum six electronic slot machines at each site.

Eugene-based C.J.’s Eateries turned a former Mongolian Grill restaurant into three lottery delis, which subsist largely on gambling profits. Nevada-based Oregon Restaurant Services Inc., which pioneered the lottery deli format with its Dottie’s chain, bought up or created six of the 12 Lottery Row businesses.

Police negotiations fail

The main problem at Lottery Row, Leloff told neighbors, is proprietors who tolerate drug dealing on their premises and in the parking lot. There also are people urinating in the parking lot and bartenders overserving patrons, he said, which leads to drunk driving.

by: TRIBUNE PHOTO: CHRISTOPHER ONSTOTT - Retired judge Charles Kuffner was one of several Hayden Island residents grilling leaders of the Portland Police Bureau, Oregon State Lottery and the Oregon Liquor Control Commission at last week's neighborhood meeting on 'Lottery Row.'Starting early this year, Leloff tried to negotiate a good neighbor agreement with Lottery Row businesses. Leloff asked them to stop serving alcohol two hours earlier, at 12:30 a.m.; to reduce the number of lottery machines from six to four at each site; to install video surveillance cameras inside and outside each business; and to hire certified professional security who would work closely with police.

He later backed off seeking fewer lottery terminals, in hopes of getting a deal. But the companies balked at spending the extra money on security, Leloff said, so he declared the talks at an impasse in August.

Then, the day before the Oregon State Lottery Commission was scheduled to vote on Niswender’s move to cut the number of lottery retailers in half, Oregon Restaurant Services sent Leloff a signed copy of a proposed agreement. Leloff said that was puzzling, because the company knew he was out of reach elk-hunting and thus unable to relay the news to the Lottery Commission.

Five days after the Lottery Commission passed the new regulation, Oregon Restaurant Services retracted the signed agreement, Leloff said.

Oregon Restaurant Services’ president did not return phone calls for comment on this news story. An attorney representing the C.J.s’ owner also did not return phone messages seeking comment.

There were 1,128 calls to police dispatch services last year about incidents within 1,000 feet of the strip center — more than three calls per day — according to Portland police, double the number in 2005. Police calls to Lottery Row have been rising in recent years, Leloff said, “while crime on the island as a whole has gone down.”

Lottery retailers denied the area was a crime problem in testimony before the Oregon State Lottery Commission, but Leloff said they are no longer disputing the crime problem there.

Police enforcement was relatively weak while he was trying to negotiate the good neighbor agreement, Leloff said. “We’re not weak now.”

He warned that more “dominoes” will fall unless businesses seek to change behavior of their patrons and control their premises and parking lot. On Dec. 8, Oregon Restaurant Services and C.J.’s voluntarily started closing at 1 a.m., Leloff said.

Retailers also scheduled a Jan. 8 meeting with Lottery Row landlord Gordon Sondland, a politically connected hotel owner, civic leader and philanthropist.

Sondland has declined interviews about Lottery Row. His spokesman, Brian Gard, said Sondland has not been involved in negotiations with police.

Julie Ramseth, the property manager for Lottery Row, was unaware of a drug problem or high crime levels at the strip center, and said that it’s safe for customers. Some of the retailers do have security cameras inside and outside their premises, Ramseth said, and the property management company employs a security company that conducts random drive-throughs.

As police continue their own crime investigations at Lottery Row, Luster is using the findings to issue warnings and fines to proprietors.

“It’s going to be a slow process and I assure you I’m going to be on top of it,” Luster told Hayden Island neighbors.

OLCC uses a system of “progressive discipline” during a rolling two-year period, much like car insurance companies track moving violations and accidents for motorists.

This year, OLCC has issued seven warning letters and six fines to Lottery Row businesses, with a seventh one pending, said agency spokeswoman Christie Scott. Most were for drug violations during October and November, after police stepped up enforcement. In addition, Luster issued four “educational” letters to Lottery Row businesses since June, again about drug activity.

Generally, OLCC does not take away establishments' liquor licenses unless it can show a persistent pattern of violations during a two-year period, though there are other ways that could happen quicker, Scott says.

Roger Staver, former chairman of the Hayden Island Neighborhood Network, asked what it would take to close down one of the bars — a murder? A death on the premises would result in an emergency liquor license suspension, Luster replied. However, that only would last a few days, and would be subject to appeal.

Hayden Island residents appeared to direct most of their ire toward Niswender.

Niswender said Lottery Row developed before he took control of the state agency, and said he didn’t have the authority to shut down any of the establishments until the new regulation passed in October.

“There was no rule in place . . . during the time this happened,” Niswender said. “There wasn’t any existing authority that said, ‘You get one, you don’t.’ “

However, a 2002 regulation granted the lottery director power to reduce the number of video lottery terminals if a company wanted to set up a clone in the same strip center.

Two months after the Tribune first publicized the formation of Lottery Row in December 2010, Niswender vowed to put the problem “on the front burner.” He appointed an advisory committee to consider a new rule limiting the concentration of lottery retailers at one strip mall. The committee was stacked with lottery retailer representatives and state lottery staff, plus one police representative and one citizen’s representative.

That rule, which might have given Niswender authority to yank retailers’ lottery machines immediately, was nixed in May by Oregon Lottery commissioners, saying it wasn’t fair to the retailers and might provoke lawsuits. The toned-down regulation passed in October would leave 12 lottery retailers in place at least until mid-2015.

By then, the strip center might be condemned to make way for the Columbia River Crossing bridge, freeway and light rail project.

Oregon Restaurant Services, perhaps in anticipation, recently purchased a former Zupan’s grocery story on Hayden Island, on the opposite side of Interstate 5. Residents fear that Lottery Row could be re-created there.