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Audit: City not always following office lease policies

Questions over future of 1900 Building complicate city efforts to fully lease it

Most Portland agencies are located in city-owned buildings, as directed by the City Council. However, the city-owned 1900 Building has 26,000 square feet of vacant space that cost the city $800,000 during the last fiscal year - and questions about the future ownership of the building are complicated the city's efforts to fill it.

There are some of the findings of an audit released Monday by the City Auditor's Office titled, 'Downtown office space: City uses most of its owned space, but lease practices need attention.' It found the city occupies all but four percent of the space in the downtown buildings it owns. They are City Hall, the Portland Building and the 1900 Building, which has the only vacant space.

The agencies that occupy city-owned buildings pay rents that vary depending on such factors as whether the buildings are paid off and their operating and maintenance costs. According to the audit, city agencies paid $11.7 million for the 590,000 square feet of space they occupied in these buildings last fiscal year.

The audit found the city also leased 67,000 square feet of space in five building privately-owned last year for $1.6 million. The buildings are Columbia Square, the Commonwealth Building, the Pioneer Building, the Harrison Building and the Congress Building.

The council has passed a number of resolutions over the years to encourage city agencies to locate in city-owned buildings and to coordinate their private leases through Facilities Services, a program within the Office of Management and Finance. Despite these resolutions, the policies are not always followed and some agencies have not relocated into city-owned buildings when they had the opportunity, the audit found.

For example, although there was vacant space in the 1900 Building, the Bureau of Fire and Police Disability and Retirement renewed its lease in the Harrison Square Building since 2010. According to the audit, the decision was made in part because of questions over the future ownership of the 1900 Building. In the past, some city officials have talked about selling the 1900 Building to Portland State University if the Oregon Sustainability Center is built.

But, as the audit notes, the lease renewal 'contradicted the existing binding City policies on office space use.'

After reviewing the audit before it was released, Mayor Sam Adams wrote a letter to City Auditor LaVonne Griffin-Valade saying he would create a city-wide process to ensure full compliance with Portland policies on city-owned and leased office space.