The city wants to spend $600,000 to spiff up this dock. A new lawsuit contends thats probably illegal—along with millions in other planned improvements.
The city wants to spend $600,000 to spiff up this dock. A new lawsuit contends that's probably illegal—along with millions in other planned improvements. Jason Desomer

Portland Parks and Recreation did itself a solid last year: The oft-cash-strapped bureau ramped up the fees it charges developers to pay for the strain brought by new workers and residents flocking to the city.

To hear parks boosters tell it, the change to these "system development charges" (SDCs) would finally mean a reasonable, adequate influx of cash to help build out city parks for increased use.

The developers paying the fees use different terms—like "slush fund" and "money-grab."

Now, a coalition of development, realty, and business groups have sued the city for a second time over the SDC changes, and it's a case worth paying attention to. If the developers can get a judge to agree with their lengthy arguments, they say the city might have to pay back millions in ill-gotten gains from its own general fund, squeezing out money for other purposes.

"This may well end up creating a fiscal catastrophe for the citizens of Portland," reads a strongly worded petition filed in Multnomah County Circuit Court yesterday.

Let's back up: In 2015, Portland City Council voted 3-2 to modify how it assigns SDCs for parks to new developments. The move involved foundational changes in how the fees were calculated—including a switch that meant larger homes pay more—and amounted to some hefty fee increases (here's much more on that discussion). In total, Parks said the new fees would rake in $552 million over 20 years.

Builders cried foul right away, filing a lawsuit shortly after council approved the changes. And they got a judge to agree with them on one thing: Earlier this year, Multnomah County Judge Cheryl Albrecht ruled the city hadn't drawn up a detailed list of the projects it planned to pay for with the money, as required by state law. The bare-bones project list PP&R had created included only the vaguest details of where and when money would be spent.

So the city went back to the drawing board. In May, the city council very quietly approved a new plan, flushing out some of the details of how it wants to spend its $552 million. We've already reported on the fact that one of those projects—improvements to a rickety boat dock—raises questions.

But in the suit file this week, a coalition of seven organizations say the whole list doesn't pass muster. They contend it was illegal that the city modified its first spending plan like it did, since that spending plan would have had to be legal in order to be modified in such a fashion—and it wasn't. They're asking a judge to toss the whole thing.

There are some serious allegations in the filing, many of which are familiar from the first suit (which is under appeal). Most severe, the plaintiffs—including the Portland Business Alliance— suggest the parks bureau has purposefully misled the public as to how much it will actually collect from its modified charges. By including artificially low population forecasts, the suit says, the city was able to claim it will only collect $552 million. In reality, the plaintiffs say, the number might be higher than $1 billion.

The potential problem for Portland taxpayers: The filing argues that if a court ultimately agrees that the city's plan is illegal, it'll have to repay the SDCs it began collecting as of July 1 out of its general fund. You know, the same scarce general fund that city council members were openly warring over during this year's budget process.

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That's what the city of Molalla had to do several years ago, when it was found to have misspent SDCs, and was sent scrambling to come up with $2.5 million.

We've reached out to PP&R and Commissioner Amanda Fritz's office, which oversees the bureau. We'll update if we receive a response.

You can read Monday's court filing here [PDF].