Regulation Horror Stories

Living wage law costs $3.5 million: The New Eugene City Council has rejected the living wage proposal endorsed by the previous council members. The living wage law would have guaranteed wage levels for city employees and contractors. Labor wanted each worker to be guaranteed $14.28 an hour for those without benefits and $11.42 for those who do. Council member George Poling said it was “wishful thinking fraught with fundamental flaws. I don’t think this is the most effective way to use city dollars.” The added cost to implement the standard would have been as high as $3.5 million.  Eugene Register Guard 1-30-03. Oregon Tax Research (www.oregontaxes.org) Local Tax News 2/15/03

Rep. Kruse Highlights Educational Bureaucracy: Representative Jeff Kruse is concerned about the poor use of education dollars and the effect of red tape on classrooms. Kruse noted that there are 80 employees hired by the Department of Education who work on the CIM/CAM program. Kruse estimates that these programs alone cost the state an estimated $500 million. One of Kruse’s ideas is a moratorium on state mandates related to CIM/CAM to slow the unnecessary bureaucracy surrounding the program. As an alternative source of funding, Kruse points to the possibility of selling the Elliott State Forest in Southwest Oregon. Proceeds from economic activity on the forest are currently used for school funding. Drain Enterprise 9-26-02. Oregon Tax Research (www.oregontaxes.org) Local Tax News 11-1-02

Landowner Nailed By Portland Rules: Local Portland landowner Esther Niehaus wrote to the Oregonian, claiming that the city’s rules are worse than Vera Katz has described recently. Esther tells the story of trying to build a new home on a vacant lot she has owned next to her house for 44 years. To her surprise, she discovered she was living in a “conservation zone” and only half of the land could be used in order to spare the trees, foliage and creeks. Esther resubmitted the plan and was hit with a $17,000 permit fee and $539 environmental inspection fee. The Oregonian 9-3-02.  Oregon Tax Research (www.oregontaxes.org) Local Tax News 9-15-02.

$3500 in Tree Fines to Ashland Landowner: An Ashland landowner is facing a fine as high as $3500 for cutting down seven of his own trees and becomes the first victim of the city’s new tree protection ordinance. Trees that are over six inches in diameter and that are not part of an approved building area may not be cut without government approval. Violators face a $500 per tree fine. Ashland Daily Tidings 7-19-02

Commissioner to Review Portland Taxes: Portland Commissioner Jim Francesconi is taking the lead on reviewing a string of Portland taxes and fees that are driving away business from the city. The most recent bad publicity for the city came when a pizza store owner had to pay a $27,000 transportation system development charge just to move operations across the street. The charge is based upon trips generated by the business. Restaurants, with high customer traffic, pay more than most businesses. Such charges are too high for start-up and small restaurants, while chain restaurants find it easier to absorb the cost. Commissioner Francesconi also wants to investigate the parks system development charge and the business income tax. The business income tax has riled many business owners because it taxes based upon ownership structure. For businesses that are not widely held, deductibility of owners compensation expenses are limited, whereas widely held companies face no such limit. The Oregonian 6-28-02

Permit horror story sounds familiar to taxpayers: The Portland Ombudsman helped to remedy a permit fee horror story that is all too familiar with taxpayers. The Joy family paid for an electrician for some work which included a $70 charge for an electrical “reconnect permit”, for which the electrician never paid. The Planning Office went after the Joy family who responded by faxing their permit payment invoice to the office, claiming it must have been paid. When the Joys discovered that their electrician never paid the permit, they tried to make payments themselves, but were told that only their electrician can pay it — who no longer existed. The Joys desperately trying to remedy the situation, found themselves with the $70 permit fee turning into $2,427 worth of late charges and fines. The City Ombudsman stated “there was no reasonable avenue available for Marsha and Timothy Joy to resolve the matter, despite their repeated attempts to do so.” Even after payment of the permit, the billings continued. Not only did the Planning office give delays in responding to the Joys, they also delayed responding to the City Ombudsman for three months, despite giving the case the highest priority. The report stated “It’s not the city’s objective to make it difficult for property owners to comply with code requirements in order to have a good number of them fail and be subject to fees, penalties, and interest charges that will eventually accrue and become a source of revenue.” Portland Audit report 2001. Taxpayer Association of Oregon (www.oregonwatchdog.com) Waste Watch Report Spring 2002

Ashland Meals Tax Shows Little Flexibility in Time of Crisis: Ashland’s meals tax showed little flexibility for a local restaurant owner in time of crisis. Kathleen Macmichael and Ron Roth have been a part of running Geppetto’s Restaurant for 25 years. In 2000, a business slowdown and medical condition contributed to missing a tax payment. The owners paid the full tax a few months later, along with $1,000 penalty and interest. The owners note that the city never disclosed the annual percentage rate on the late fee, as lenders in the private sector are required to do. The following year Kathleen had an accident in which she was injured and another payment was missed. The owners followed up by paying the amount later, with interest and some of the penalties. The penalties totaled more than $9,000, far out-pacing their ability to pay. The owners wanted the same protection that the Oregon Department of Revenue gives for state taxpayers who suffer from death or disability in the family. The city refused. Mail Tribune 6-13-02. Oregon Tax Research (www.oregontaxes.org) Local Tax News 7-1-02

Business Calls on City Construction to be More Mindful of Their Needs: Corvallis businesses are frustrated at the new riverfront construction that is hurting business. Chuck Sebastian, of the Chippery, has seen his daily business drop from $1,000 to $200. Sebastian wishes the city had completed the construction in phases rather than closing the entire area for the entire project period. Another businessman complained that the construction closes parking in the evening when his business needs it. Corvallis Gazette 5-9-02. Oregon Tax Research (www.oregontaxes.org) Local Tax News 6-15-02.

Do Taxpayers need another environmental regulatory agency?: Salem has become the first city in the state to have its own environmental commission. The commission wants to make absolutely sure that the city is complying with federal and state environmental mandates. The commission also wants to examine the new disclosure requirements forced upon certain businesses just to make sure they haven’t violated any state environmental laws. The new director of the city commission is expected make $60,000 a year hunting down environmentally unacceptable businesses. The left wing mayor felt that Oregon’s land-use laws were not good enough and that “we’ve got scattered efforts at protecting the environment.” Salem Statesman Journal 12-31-01. Taxpayer Association of Oregon (www.oregonwatchdog.com) Waste Watch Report Spring 2002.

Gas Tax Administrative Costs Unknown: Benton County has been working on a county wide gas tax. The county has an estimate on how much it will raise but not how much it will cost to administer. The fee would be collected by DMV and distributed back to local governments within the county. DMV officials were unable to determine how much it would cost to administer, leaving the county in doubt about how much each jurisdiction would actually get. DMV has never administered a county gas tax, because the five times it was proposed in the past, it was shot down by county voters.  Corvallis Gazette Times 3-5-02. Oregon Tax Research (www.oregontaxes.org) Local Tax News 4-15-02

HOW THE CITY OF PORTLAND LOST COLUMBIA SPORTSWEAR: The City That Shrinks By Jim Pasero BrainstormMagazine March, 2002 Tim Boyle and Columbia decided, in 2000, that they had out-grown their headquarters in St. Johns. “We wanted to expand our facilities,” says Boyle, “and we knew that our building in St. Johns was not a good candidate. So after we did a survey to find out where our employees live, we found that ground zero was the East end of the Morrison Bridge.” “In other words, they lived everywhere,” says Carl Davis, the company’s general counsel, who was chosen to lead the survey for Columbia Sportswear’s new home when he was hired in ’98. Davis had previously been with NIKE for 17 years, working for five years in Washington, D.C. as the company’s top lobbyist to the federal government.

“I’m now an expert on land for sale in Portland,” jokes Davis, with only a touch of sarcasm about his lengthy search.  “In the process of our search we found a building owned by US Bank,” says Davis. “It was the old Ben Franklin building on SE Grand & Hawthorne, a six story red brick building. There were only two bidders for the building, MuOregon Tax Research (www.oregontaxes.org) Local Tax Newsomah County and us.”  After Columbia submitted their bid, Davis thought they had a new home, and one that wouldn’t require them building from scratch. “US Bank told us to do our final bid. We submitted the bid and the US Bank attorney called us and told us that the deadline had passed and that the building was ours, and that the other side hadn’t made a bid.” The other side being, of course, MuOregon Tax Research (www.oregontaxes.org) Local Tax Newsomah County. Columbia Sportswear had a brand new home…until…

“That following Monday,” says Davis, “the bank’s attorney called us again and said ‘you got outbid,’ and that the county came in with a bid before midnight.'” And then Davis relates a story he says “has been told to me by several sources. What happened to us was that the county brought in assessors and had the building reassessed so that they could increase their bid and outbid us by $5 million.” “The irony,” says Davis, “is that once the county increased the assessment and got the building, they then pulled it off the tax rolls, because the county does not pay taxes.” Before their move to Washington County, Columbia Sportswear was paying several millions of dollars in taxes to the city of Portland and MuOregon Tax Research (www.oregontaxes.org) Local Tax Newsomah County. “We were never looking for breaks,” says Tim Boyle. “What we wanted from the beginning is what you would be offered if you were a brand new business. That ought to be the minimum.”

Boyle and Davis continued their search, but their story only gets worse. “When I saw the property between OMSI and KPTV,” says Davis, “I could picture our employees running on their lunch hour along the Eastside Esplanade, and I could picture a ribbon cutting with Vera looking across the city at the nice view.” All of sudden the neighborhood was starting to take shape with the Portland Spirit, KPTV-12, Columbia Sportswear, OMSI, and an extension of Portland Community College located side-by-side on the east bank of the Willamette River–not a bad foundation to begin an eastside renaissance. For the Mayor, and the six floors of city planners at the Office of Planning Design and Review (OPDR), that kind of business renaissance didn’t align with the utopian vision. The vision was building a light rail stop and tearing down the Marquam Bridge.

As the property sits today, it is owned by PGE. The six and one-half acres originally held a power plant but are currently used only to store utility poles. Davis says of the property, “We liked the site because it has a great view of downtown, so we approached PGE, who owned the property, and they said they wanted to sell. We’re an outdoor company, so the process just seemed so sensible: an icon company for the city, building on the riverbank across from downtown.” Davis was encouraged because many of the potential sticking points regarding building on the property had already been addressed: the greenway was already in, the bank was stabilized, the property had the designated number of plants required by the city, and there was also a bike path in place. One of the sticking points was the setback from the river the city would require for Columbia’s building. “We needed to know,” says Davis. “We could have lived with 75 feet, but to this date no setback was ever adopted by the city. They couldn’t agree on whether it would be 10 feet, 100 feet, or 200 feet.”

This is the kind of planning politics that infuriates Dan Yates of the neighboring Portland Spirit. To Yates it is unbelievable that the city couldn’t give Carl Davis an answer, “because the setback is right there in the city’s code; it’s 25 feet.” Ken Novack, CEO of The Schnitzer Group, agrees, “The code does say 25 feet.” “They (City Hall) like to talk about sustainability,” says Yates, “but what this city needs is a regulatory climate that is ethical and regular. Businesses like predictability.” The other issue of contention was parking. With four hundred workers at its corporate headquarters Columbia’s employees would need a place to park their cars. There was enough property, but the city has something in its code called “area surface parking” which needed to be changed from urban restrictions to suburban use to accommodate the company’s workers.

Carl Davis worked with Wayne Kingsley and Commissioner Jim Francesconi to have the parking rules changed and they won the issue by a three-to-two vote, with the Mayor and Commissioner Charlie Hales voting against the change. “The mayor was very upset about it,” says Davis. Beginning to worry about just how much trouble they could have in building on this property, Davis asked the city for a pre-conference hearing to meet with representatives from the city’s various planning departments and determine just how many hurdles would surface. That meeting was held on October 4, 2000. The first thing that went wrong, according to a senior official from PGE, was that the city sent their underlings into a meeting instead of their big guns. In business, with a multi-million dollar deal on the line, would you send your inexperienced people? Where were the senior people from the city, the senior PGE official wanted to know? Davis remembers the initial obstruction from the city being that the property needed to be rezoned. “Well, that would have cost us $10,000 and a minimum of nine months, and they still couldn’t tell us where the setback was.”

And then came the deal sinker: “You have a problem,” Davis recounts a planner from Portland Department of Transportation (PDOT) telling him. “He said, ‘you can’t build surface parking; it’s a light rail station.'” “Well, they didn’t have a light rail station. What they had was a conceptual drawing of a light rail station,” says Davis. This was a light rail station that had previously been denied by voters. Both Davis and PGE pointed out to planners that this property wasn’t a light rail station. Davis remembers a representative from Tri-Met saying, “Yes, it is,” which was confirmed by the representative from PDOT, who then said according to Davis, “This rule is unwavable and non-negotiable. Do you understand?!”  Davis tried to restore reason in the meeting. “If you get light rail,” he told the planners, “we will accommodate it by building a parking structure. You don’t have to sell it to us; we will just do it. You have Columbia’s word on it.”

But the city wasn’t buying. The PGE official confirms accounts of the meeting, adding that the city has an attitude that amounts to: I don’t care who you are. I’ll do it my way because I’m in charge. They’re really despots, says the official. Sitting in his office more than a year and some months after that meeting, Comm. Francesconi looks physically deflated about downtown Portland’s loss of Columbia Sportswear.  “Columbia didn’t have an advocate in that meeting,” says Francesconi. “I don’t think the mayor had enough information about what was going on. We could have worked with Columbia. It would have been good for light rail. I believe that a ‘field of dreams’ approach to economic development, where you say, ‘build the perfect city and the business community will come,’ is wrong.”  The mayor doesn’t agree. But she does admit to being in the dark about Columbia’s frustration saying, “We didn’t know about the meeting.” That’s also what Sam Adams, the mayor’s chief of staff, told Carl Davis when he remarked to him afterwards, “Don’t blame the mayor. The mayor didn’t do anything in this.” “And I told him,” Davis recalls, “Sam, that’s the problem.”  Then Francesconi throws the match on the fire: “They tell me this wouldn’t have happened if Neil was mayor.” It’s a sentiment voiced by many downtown business leaders.

Sam Adams fires back, “Wasn’t Neil the mayor when Portland lost Georgia-Pacific?” The Mayor’s response: “I’m not going to respond to that because you wouldn’t like where the conversation would go.” On October 5th, one day after the infamous meeting, Carl Davis and Tim Boyle drove west to Washington County to look at a potential new home–three buildings just off Cornell Road. They stopped at the Oak Hill McMenamin’s Brewpub, drank a couple of Hammerhead Ales, and decided to move, ending a 63-year relationship with the city of Portland. Carl Davis recounts calling Washington County about zoning for the potential site on Science Park Drive. “The county planner answered, ‘What kind of zoning would you like Mr. Boyle?'” says Davis. Twenty-one days later Columbia Sportswear closed on their new home. Today, Columbia Sportswear has a beautiful new headquarters, one they were able to assemble in an expeditious manner. “I knew from that meeting,” says Boyle, “that if we have to fight with the city over whether some planner had destined the property for light rail, and the planner says this is ‘non-negotiable’ when the voters had already voted it down–well, if you have to fight about that, how difficult is everything else going to be?” Columbia Sportswear may be happy with their new home, but their treatment at the hands of Portland city planners has left a lot of residual anger among business leaders. BrainstormNW Magazine 3/03

Regulation refuses clock hands to move: The City That Shrinks By Jim Pasero BrainstormMagazine March, 2002“Having a dispute about the size of the windows at Tiffany’s created a bad taste in the business community,” says Commissioner Francesconi. For some time the Portland Chamber was trying to bring Tiffany’s to Portland. The rub: according to one source at PDC it is that windows in Tiffany’s are the same all across the country; it’s their signature, large windows and a small display in the middle of that window. But those large windows didn’t fit the city’s code. Neither did the moving hands on Tiffany’s clock. The city wouldn’t allow moving hands on a sign. To move things along, Tiffany’s compromised by covering up a portion of their windows and displaying their clock without moving hands. Mayor Katz looked embarrassed at the store’s grand opening with the frozen clock. BrainstormNW Magazine 3/03

Fine for compliance?: The City That Shrinks By Jim Pasero Brainstorm Magazine March, 2002 Another moment of dysfunction–when the city fined Tom Moyer, the builder of Fox Tower and the Broadway Building, $250,000 for violating his planning permits while building Fox Tower. Moyer may be Portland’s leading civic citizen and he is actively buying up the Park Blocks so that he can donate them to the city. The city wanted Moyer to build three floors of retail space beneath the tower, but granted approval to his plans for two stories of retail. Later in the process, Moyer was able to reach an agreement with Regal Cinemas for nine theatres (on a third floor), and then amended the plan to build Fox Tower with the three floors of retail the city originally wanted. The city’s price for Moyer’s compliance with their original plans was a quarter-million dollar fine. Moyer sued and the case was recently settled out of court.  BrainstormNW Magazine 3/03

Tri-met shuns better ideas: The City That Shrinks By Jim Pasero Brainstorm Magazine March, 2002Yates and Kingsley’s final frustration comes over the city’s short attention span regarding their idea for helping Portland’s traffic problems. The two have come up with a plan to move 5,000 commuters by fast ferries from Lake Oswego to downtown Portland, and from Vancouver to downtown, in less than 25 minutes–or about half the time the commute takes by car. Think of it: sunshine, a beer, and the Wall Street Journal, on board a boat, and home in half the time. The city would prefer not to think about it. Yates was asked by PDOT’s South Corridor Transportation Team to participate in a discussion on the viability of ferries running from Oregon City, Lake Oswego, and Milwaukie to downtown Portland. “I was given a one-day notice,” says Yates. “I was told they would get back to me. Needless to say they did not.” Why not? Because, says Yates, “They are slavishly attached to light rail…Tri-Met views ferries as competition and will fight fiercely to protect its turf.”  BrainstormNW Magazine 3/03

Churches and Zoning: A three-year permit battle between Umatilla County and a local church is nearing an end. Seven years ago the Oasis of Hope First Baptist Church bought a vacant horse pasture to build a church for it’s expanding congregation. The church however was denied annexation at the same time that surrounding properties (some were churches) were annexed. An agreement with all parties concerned is expected soon. East Oregonian 2-14-02. Oregon Tax Research (www.oregontaxes.org) Local Tax News 3-15-02.

City Passed on Bypass Because it Can’t Afford Environmental Impact Study: The influx of $500 million in new revenue for statewide transportation projects will not include the Jacksonville bypass that has been advocated for more than 40 years. Local officials lament the fact that they are unable to muster the $1.5 million needed to conduct an environmental impact study. Such a study is needed before the project can be considered for funding. Paul Wyntergreen, Jacksonville city administrator, commented on the cost of the impact statement by saying “That’s just about Jacksonville’s entire annual budget”. The county government is holding up the process because they have endorsed the idea but did not endorse a location. The city finished a required transportation system plan to comply with state land-use laws but is still waiting for state authorization of the plan seven years later. Medford Mail Tribune 2-14-02.   Oregon Tax Research (www.oregontaxes.org) Local Tax News 3-15-02.

Church Runs Into $2.5 Million Water Requirement: The First Slavic Baptist Church didn’t know what they were getting into when they bought some Marion County land for their expanding church. It turns out the land is outside the “urban service area” and the city requires the church to build a $2.5 million water tank. The rules allow the city to require landowners to build a tank larger than needed. The church bought the property thinking they could tap into the existing water and sewer system that is a few yards away from the property but still outside the service area. Statesman Journal 1-19-02. Oregon Tax Research (www.oregontaxes.org) Local Tax News 2-15-02.

Medford’s Fees Making Headlines: Several high profile battles over the City’s fees are causing a storm in Medford. A trucking company owner wanted to sell five acres and was slapped with $150,000 in expenses to meet city requirements. Local resident Val Bubb wanted to expand his business by one employee. To make room, he expanded an historic 1910 house in which the business was located. The cost of the 682-square-foot extension was $5,879 in city fees on top of a $35,000 cost of the project. Medford Mail Tribune 12-16-01 & Medford Mail Tribune 12-11-01. Oregon Tax Research (www.oregontaxes.org) Local Tax News 115-02

Economic Stimulus Comes at a Price
The opportunity to build a coal plant near Klamath Falls to help stimulate the economy is running into trouble. The county must pay up to $1.5 million in permits and environmental studies before it can proceed.
Herald and News 12-12-01. Oregon Tax Research (www.oregontaxes.org) Local Tax News 1-4-02

Jackson County Feels Taxpayer Pain Over System Development Charges
Jackson County is outraged over Medford’s System Development Charges for the County’s new juvenile Service Center. The city is asking for $664,000, which is three times as much as the county budgeted for. The charges are based on the claim that government administration buildings generate 55 daily vehicle trips per 1,000 square feet of the structure’s size, without regard for the traffic that the building actually may generate. The charges could be lowered if the county conducts a traffic study, hires a traffic engineer, and proves that Medford is incorrect. The county argues that it is obvious that the site will not generate 3,000 trips a day because it only has 64 employees and 111 parking spaces.Further delaying the building is approval of an environmental assessment by the federal government of which the County Deputy Administrator noted “I would say this federal process moves at a snail’s pace, but that would be an insult to snails everywhere.”
Medford Mail Tribune 12-13-01. Oregon Tax Research (www.oregontaxes.org) Local Tax News 1-4-02

Land-use Dispute Stalls New School GRESHAM – The Centennial School District has delayed for the second time a school opening because of conflicts with the City of Gresham. The district has spent more than $15,000 in attorney fees and 10 months in unproductive meetings over the land-use dispute. The City claims that the school’s plans violate Gresham’s 1991 “future street” plans. The delay caused the District to move the opening date to September 2003. The Oregonian 11-29-01. Oregon Tax Research (www.oregontaxes.org) Local Tax News 12-15-01.

Surprise six week regulation deadline –Since the beginning of the year the County has been trying to apply for a state enterprise zone. The Oregon Economic and Community Development Department delayed information on the program and in September surprised everyone with a six week deadline for applications. The Chairman stated “This is another typical state agency dictating to a local jurisdiction. We were supposed to get six months, and instead we get six weeks [application time].”Daily Astorian 10-25-01.  Oregon Tax Research (www.oregontaxes.org) Local Tax News 11-15-01

Service costs taxpayer money- The County approved allowing residents to get a faster permit response by paying a special $18-$189 fee. The typical wait is 120 days and the new fast track would be as quick as 40 days. Mail Tribune 9-21-01. Oregon Tax Research (www.oregontaxes.org) Local Tax News 10-15-01

Windfall misses danger road.  NEWPORT- The $400 million raised from the new state transportation road fee increase will not be going to the Newberg-Dundee Hwy 99W bypass. Hwy99 is considered by many to be the most congested and dangerous rural road in Oregon. Instead a $4 million environmental impact statement will be issued. Newport News Times 11-21-01.  Oregon Tax Research (www.oregontaxes.org) Local Tax News 11-30-01