THE HOUSING ADVOCATES who strode into Portland City Hall on the morning of Wednesday, June 4, had a spring in their step almost as big as their smiles.

Housing Commissioner Dan Saltzman had baked them up one hell of a treat: a promise to earmark hundreds of thousands of bucks for affordable housing, every year, thanks to new tax money from soon-to-be-legal short-term rentals (like the ones offered through Airbnb).

As policy proposals go, it was both elegant and magnanimous. It tackled a looming problem—a potential loss of long-term rentals, what with owners maybe banking on better returns in the short-term market—by turning it into part of its own solution.

Saltzman even upped the ante by increasing the amount he'd spend on affordable housing at the 11th hour.

And the advocates, along with various dignitaries from the Portland Housing Bureau, had come to watch Saltzman triumphantly present his winning recipe to the rest of the city council.

But maybe you can guess what went down instead.

Saltzman's stunned colleagues—aside from Commissioner Nick Fish, who co-sponsored the proposal—blithely spit the whole thing back in his face and told him it needed more work.

It was a rare public repudiation in a council that's usually a bit more scripted and collegial. It also marked a major disappointment for advocates who thought they'd invested their hearts and time in a winning effort.

Even worse? The blame for that collapse, city sources say, rests with Saltzman himself.

The proposal, it turns out, had been coming apart politically well before the hearing, even as Saltzman's office was making changes meant to make advocates even happier.

First off, Saltzman nearly immediately annoyed two votes on the five-person council, Mayor Charlie Hales and Commissioner Amanda Fritz, with a procedural gaffe. He wanted to divert the money from short-term rentals even before the council technically approved them. In a hearing on the rules for those rentals later that day, the council tabled the discussion for several more weeks.

Beyond that, he and his staff didn't realize until the hearing that the new money he was hoping to start spending, in 2015-2016, had already been included in the city's financial forecasts—and therefore was being eyed by other bureaus. Never mind that Hales has made it his mission, since taking office, to eliminate earmarks as often as possible—and that commissioners typically prefer waiting for budget negotiations every spring for those kinds of discussions.

Sources say Saltzman also threatened to abuse the council's willingness to invest in housing and homelessness services, so soon after devoting millions more in the city's most recent budget.

And looming over the whole thing was a sense that Saltzman didn't sufficiently try to sell his colleagues. A bit of bonhomie might have found a receptive audience. (It also didn't help that his plan came up for discussion after another punchy session on the city's delayed street fee proposal, something he's opposed.)

Saltzman's proposal is back on the council agenda this Wednesday, June 11. But as of press time, it wasn't clear whether it would be defeated or pulled back until the final short-term rental rules emerge this summer.

"It feels like it's been a group effort," says Saltzman's chief of staff, Brendan Finn. "We definitely gave everybody a heads up."

Saltzman's staff didn't seem keen on backing down. "We've got problems in the city now," Finn says.

But Fish, the co-sponsor, seemed resigned to the reality.

"This is the kind of linkage [between short-term rentals and affordable housing] that's good to salt in the public discussion," Fish says. "We accomplished our initial goal."