As promised, local attorney John DiLorenzo filed a fresh pleading today in an ongoing legal dispute over how the city spends sewer funds. He says Portland's on the verge of violating it's own rules at Terminal 1, the plot of land at 2400 NW Front controlled by the Bureau of Environmental Services.
As we've reported extensively, BES has been trying to sell that plot at City Council's direction—receiving offers as high as $10 million for the 14.5-acre site. But on August 10, council put the brakes on that process, instead ordering BES to lease the property to the Portland Housing Bureau for at least six months. There are tentative plans to put a large homeless shelter in a 96,000-square-foot warehouse at the site.
The specifics of the lease won't be worked out for months, but there's a decent chance that BES could rent out Terminal 1 for well under market rate. If that happens, DiLorenzo says, sewer utility ratepayers would effectively be subsidizing a project that has nothing to do with their bills. From the new supplemental pleading:
In contravention of the Portland City Charter, the City has:
a. used Sewer Fund monies for purposes not reasonably related to sewer services, including, but not limited to preparing and marketing Terminal 1 for use as a homeless shelter;
b. precluded BES from receiving fair market value (either for sale or lease) for the Terminal 1 property acquired and maintained with Sewer Funds, even after the property has ceased serving any purpose reasonably related to the sewer system, and after BES had marketed the property in an effort to return money to the Sewer Fund;
c. required ratepayers to subsidize services not reasonably related to the sewer system by forcing BES to enter into a lease of the Terminal 1 property for an amount far below market rent.
According to an e-mail DiLorenzo sent to news outlets, the City Attorney's Office is prepared to fend off this motion. Officials have declined to offer insight into any attorney opinions for why the city's actions aren't illegal. Commissioner Nick Fish, who runs BES and opposes a shelter there, has repeatedly suggested the vote could leave the city vulnerable in court.
A determining factor in that question might be how much the housing bureau is required to pay to lease Terminal 1. The resolution passed by council earlier this month set a floor for that rate at $10,000 a month. That's well under market rate—and also less than BES is currently leasing the space for—but there is precedent. As the Mercury's reported, BES leased the property's warehouse for that rate to Nike-affiliated TrackTown USA last year.
DiLorenzo doesn't care about that transaction.
"It appears that the Nike rental arrangement was temporary at best and preceded the bureau’s decision to designate Terminal 1 as surplus property and to sell it for the benefit of ratepayers," DiLorenzo told the Mercury (though, as the pleading he filed today acknowledges, the property was designated as surplus before the TrackTown lease). "This new arrangement conflicts the surplus designation and certainly any opportunities to sell the property for industrial use."
Here's the full filing: