Portland officials have spent the past few months reexamining the city’s police oversight system and proposing new accountability measures. Yet there's been no mention of a certain city program that’s long allowed law enforcement to operate with relative impunity: Enhanced Service Districts (ESD).

These districts are privately-funded zones that have the city’s permission to pay for additional, or “enhanced,” services not already provided by the city—like graffiti removal, expanded garbage clean-up, incentives for employees who ride public transit to work, and augmented police and security patrols.

An audit released Thursday by the Portland City Auditor’s office finds that the officers and prosecutors assigned to monitor these speciality districts circumvent city oversight, and instead adhere to rules and budgets established by business leaders who own property in those zones.

“Businesses and property owners seek the authorization for districts because of dissatisfaction with the level of services provided,” reads the audit. “The problem arises when security, enforcement, and management of public spaces are decided by one paying sector of the community without the city’s oversight and public input.”

Portland has three ESDs: Lloyd (based in the Lloyd District), Clean & Safe (centered in downtown Portland), and Central Eastside (a district encompassing inner Southeast Portland). All three ESDs are managed by business-centered nonprofits and are funded primarily by private business dollars.

Clean & Safe, run by Portland Business Alliance, is largely responsible for trash removal and discouraging homeless Portlanders from residing in front of downtown businesses. According to the audit, the ESD’s $5 million budget covers the cost of four full-time Portland police officers, an unknown number of “armed and unarmed” private security officers, and a staffer in the Multnomah County District Attorney’s office. These public employees operate at the behest of private property owners.

“The private security officers begin work in the morning, walking the streets and waking people up if they are blocking business entrance,” the audit explains. “Throughout the day, private security and Portland Police coordinate to respond to complaints from district businesses and residents.”

Lloyd ESD, managed by Go Lloyd, goes further by using its $500,000 budget to buy its own assistant district attorney, a county prosecutor whose sole responsibility is investigating and convicting people for crimes reported by property owners in the Lloyd District.

Central Eastside ISD, operated by the Central Eastside Industrial Council, uses its $3 million budget to clean up garbage and fund a private security team to report crime and interact with homeless residents. Because of intervention by concerned homeless advocacy groups, this district is the only ESD in the city that requires its board to have representation from community organizations and someone who has experienced homelessness. Board members overseeing Lloyd and Clean & Safe ESDs are almost entirely property and business owners.

While the city is expected to monitor these districts’ budgets and programs, the audit finds little evidence of this actually happening. Currently, ESD programs are overseen by the city’s Bureau of Revenue and Financial Services. Yet the audit finds that this office has not provided any meaningful oversight of how these districts are using their massive budgets.

This kind of financial oversight appears sorely needed. In 2018, the Central Eastside ISD board voted to fund a $1 million shuttle to operate along Water Avenue. The program was scratched in 2019, after the shuttle saw a paltry 1,500 riders in the course of a year.

In a response to Thursday’s audit, the city’s Chief Financial Officer Thomas Lannom writes that the hands-off approach is meant to benefit the community ESDs serve. The revenue bureau has “historically been strongly encouraged by… City Council to keep administration costs low to maximize available resources for service,” Lannom writes. He acknowledges that there has been little conversation or interest around ESD oversight for decades.

But it’s the dearth of police oversight within the ESD program that attracted the most scrutiny from city auditors.

According to one ESD contract with a private security firm, the city’s Police Commissioner—currently Mayor Ted Wheeler—is expected to “review reports on security officers’ activities, including complaints against officers.” Yet, the audit finds no evidence that this has ever happened.

When a Portland police officer is suspected of misconduct by a member of the public, that person can report the officer to the city’s Independent Police Review—where a city employee will investigate the claim. Private security officers, however, are exempt from this accountability system. As the audit points out, the city has no way to hold private security teams accountable for ESD work that the city itself has approved.

“For example, when community members object to the city’s approach to enforcing camping restrictions...they can go to City Commissioners for importation and advocate for a different response” the audit reads. “Without the city monitoring district activities, there is no way for the community to obtain information and to influence or hold districts accountable.”

This opaque system could also leave certain neighborhoods unfairly over-policed, the audit notes.

“A crime such as public consumption of alcohol that may be ignored in another part of town may result in different consequences in a district with security officers and extra police presence,” reads the audit.

Portland’s ESDs have drawn sharp criticism by homeless advocates in recent years, as homeless residents appear to be the main target of the districts’ private and public security patrols. This disproportionate focus already exists outside of the ESD framework: In 2018, the Oregonian reported that more than 50 percent of arrests made by the Portland Police Bureau (PPB) the previous year was of a homeless person.

Research by the Western Regional Advocacy Project (WRAP), a nonprofit that advocates for the civil rights of homeless populations, partially inspired the Portland City Auditor’s office to investigate ESD programs. In a statement emailed to the Mercury Thursday afternoon, WRAP writes: "The audit confirms what we feared the most: No oversight of financial activity regarding police and private security and nearly no oversight of physical activity by police and private security officers."

In a press release accompanying Thursday's audit, City Auditor Mary Hull Caballero writes, "The City needs to ensure that services provided in these special districts do not come at the expense of non-paying community members in these public spaces."

The audit ultimately suggests Portland City Council to work with city staff to create new city code to formalize the ESD program and mandate an “accountable and transparent reporting” system.

“The city has a responsibility to ensure that district services are equitable," the audit reads, "and [that] governance is inclusive and transparent.”