On the Waterfront

[April 13th, 2005] When it comes to doing business with the City of Portland, lawyer Steve Janik towers above the rest.

But that preeminence can also create friction in some of the city's most elaborate deals. Earlier this month, ZRZ Properties argued in Multnomah County Court that the lawyer and his firm, Ball Janik, are wearing too many hats in the $2 billion South Waterfront development.

"Ball Janik has represented every single signatory to the development agreement: OHSU, North Macadam Investors, River Campus Investors and the City of Portland," ZRZ's attorney, Chris Reive, told Judge Richard Baldwin as Janik fidgeted in the back of the courtroom.

Reive was arguing a motion in a sidebar issue to a larger case: ZRZ's challenge to the city's intention to make it and other South Waterfront property owners pay for the aerial tram from Oregon Health & Science University's Marquam Hill campus to the riverfront.

ZRZ, an affiliate of Zidell Marine, the barge-building outfit located on 33 acres just south of the Ross Island Bridge, used to be fond of Janik's law firm. In 2003, Zidell hired Ball Janik partners to represent Zidell in complex environmental litigation.

But last year, Zidell found itself on the other side of the lawyer long considered among the city's shrewdest dealmakers (see "This Gun for Hire," WW, April 9, 2003). After City Council voted last summer to finance the tram by taxing adjacent property owners, Zidell realized it was holding the sharp end of a stick with the city pushing hard from the other end.

The company was not a party to the South Waterfront development agreement, which included only entities south of Gibbs Street; Zidell is north of Gibbs. Among other things, the agreement specified tens of millions of dollars in publicly financed infrastructure for the properties south of Gibbs owned by Janik's clients. All Zidell got out of the agreement was a $2.1 million tax bill.

Zidell sued the city last October, essentially challenging the validity and amount of the tram tax. Not long afterward, OHSU, the chief beneficiary of the tram tax, joined the lawsuit on the city's behalf. OHSU's lawyer: Steve Janik.

Zidell cried foul, asking Judge Baldwin to disqualify Janik's firm from representing OHSU against Zidell at a time when Ball Janik was representing Zidell on environmental matters. "The bottom line," Reive argued in court, "is that a conflict has existed since the day ZRZ hired Ball Janik."

(Oregon State Bar disciplinary rules require that when a potential conflict of interest arises, a lawyer must notify the affected client of the potential conflict in writing and seek a waiver.)

On Oct. 26, Janik wrote ZRZ a three-page letter, seeking a conflict waiver. ZRZ refused to sign and instead moved to disqualify Ball Janik from its representation of OHSU in the tram case.

Janik told WW that his firm earlier received oral conflict waivers from the involved parties; prior to a recent rule change, oral waivers alone would have been sufficient. Janik adds that ZRZ is overstating his influence on the South Waterfront development agreement. He acknowledges representing OHSU, lead developer Homer Williams and an investment group that includes both. But he says nobody should object since Williams, his investors and OHSU have aligned interests. As for the city, Janik represented its interest in both the Rose Garden and PGE Park deals but not in South Waterfront.

Judge Baldwin is expected to rule on the motion to disqualify Ball Janik by the end of April.