When Vera Katz declared March 20 "Great American Meatout Day," the press corps had a field day. When Ben Canada rode a bus on the first day of school, the media fought for seats. When Mark Kroeker helped a girl get a liver transplant, the entire city read about it. But when Mike Thorne, the executive director of the Port of Portland, cut a multimillion-dollar deal affecting prime public property, hardly anyone noticed.

One of the great curiosities of Portland politics--and the local media's priorities--is how little is known about Thorne, who has commanded the port for a decade.

And yet, it would be hard to overstate the importance of the organization he controls. Thorne oversees Portland's airport, its harbor and nearly 10,000 acres of land (including much of the city's waterfront). The port, which had a budget last year of $854 million, estimates that $10 billion worth of goods passed through its facilities in 1999 and that one in five local jobs depends on its operations.

"Without the port, this city would look like Des Moines," says Port Commissioner Jay Waldron. "The reason there are 1.2 million people here instead of 200,000 is the port and the global access it provides."

While the economy and Oregon's rivers make front-page news daily, Thorne has labored in relative obscurity.

On the brink of Thorne's expected announcement about whether he will seek the Democratic gubernatorial nomination, WW has obtained a previously buried draft version of a report that is unusually critical of him, going so far as to suggest that he should be replaced.

The draft was completed for the port 18 months ago by the local consulting firm David Evans and Associates, but it, like the final report, has been seen by only a handful of port officials.

When WW showed him excerpts of the document, City Commissioner Erik Sten, who was interviewed by Evans and Associates for the report, said, "What surprises me is the breadth of the criticism. I knew the port had environmental critics, but it's clear that significant business interests expressed similar thoughts."

News about the report can't help Thorne. Nor can continued criticism of the way in which his organization recently disposed of three large parcels of real estate.

But Thorne's greatest challenge as he weighs a bid for governor may come from the man who now holds the job. Gov. John Kitzhaber, a former Thorne ally, has begun taking a keener interest in the port--and he has made it clear that he's not happy with what he sees.

The Evans and Associates draft report includes excerpts from interviews with 24 business leaders, public officials and environmentalists who were hand-picked by port staffers. The list of participants, all of whom were quoted anonymously, includes Sten, Columbia Sportswear CEO Tim Boyle and Mike Houck of the Audubon Society. Collectively, the interviews portray an organization that is inflexible and unresponsive.

Jay Waldron says changing the port's culture is difficult: "It's like turning the Queen Mary."

Here are some excerpts from the draft:

* "The culture of the Port doesn't permit questioning or independent actions. Those well-intentioned staff who take the concerns of the community seriously soon come into conflict with a culture at the port that does not welcome any challenge to authority."

* "The Port will never act responsibly toward the environment until there are decision-makers who...don't simply think that you can rewrite a Mission Statement and suddenly be 'environmental.'"

* "The Port's problems in communicating with
the public were mentioned more than any other issue in the stakeholder interviews. It's not that the Port doesn't know how to communicate but that they really don't want to."

* "The CEO of a large business in Rivergate [the port's industrial park] said he called eight different people at the Port, trying to get answers to a key question about his lease, and no one could help him."

The strongest criticism in the draft report, however, was reserved for Thorne, essentially calling for his ouster:

* "Several stakeholders felt that the Port needs a more visionary and civic-minded Executive Director, and that until such a person is appointed, significant change is not possible."

In all, consultants spent 15 months preparing the report. The draft (which was delivered to WW anonymously late last year) was produced in August 1999.

While the final version of the report, completed a year ago, contains harsh criticism, it also contains a number of significant revisions, including the elimination of an entire chapter that discussed stakeholders' unhappiness with the port. Most notably, the direct criticism of Thorne was replaced with praise: "Several business leaders who had recently been invited to meet in small groups with Mike Thorne to talk about the future of the Port felt that the meetings were very productive."

Thorne was surprised when WW read him the passage from the draft that effectively calls for his replacement and then informed him that the passage was absent from the final report. "That's not the way we do things around here," Thorne says. "If that [criticism] was part of the record then I should have been aware of it."

After receiving the draft, WW spoke with nearly a dozen commissioners or interviewees. None recalls seeing either the draft or the final version. One of the people interviewed by Evans and Associates predicted the report's low profile: "I don't think this report will ever see the light of day," the interviewee told consultants, who were paid $60,000 for their services. "The port is run from the top, and there is no initiative for change."

Port spokesman Steve Johnson says the Evans report was not intended for circulation. But that explanation doesn't satisfy Port Commissioner Cheryl Perrin, who reviewed exerpts of the draft shown to her by WW.

"I'm disappointed and shocked that we didn't see this earlier," says Perrin. "If we spend money on a report, what good is it if you don't see it and learn from it?"

Few public officials in Oregon's recent history have wielded power as long as Mike Thorne. Prior to taking the top port job in 1991, he served 18 years in the Oregon Senate, the last seven as co-chairman of the Ways and Means Committee. Ramrod straight, the 6-foot-3-inch Pendleton native is so meticulous that his expense accounts record four-mile trips (cost to the port, $1.30) to City Hall.

A third-generation wheat farmer fond of quoting John Wayne--"talk low, talk slow and don't talk too much"--Thorne was a natural choice when the top port job became available.

Although a bronze bucking bronco and a photograph of a wheat harvest adorn his office, the port boss is no hayseed. In addition to serving on the boards of the Association for Portland Progress and OHSU, he is also a director of StanCorp Financial Group and Willamette Industries, two of Oregon's largest companies. And although his family farms 5,000 acres, he's as likely to spend winter weekends golfing at his Borrego Springs, Calif., home as he is mending fences in Pendleton.

Recently, the port endured the loss of Delta Airlines' international service and the Superfund listing of Portland Harbor. Nevertheless, Thorne's tenure has included notable successes. He sharply reduced the port's reliance on property taxes; he's overseen a doubling of traffic at PDX and has helped make Portland Harbor the second-biggest automobile importer on the West Coast. "He's done a fine job," says Jonathan Schlueter of the Pacific Northwest Grain and Feed Association. Others are more effusive. "Mike Thorne's one in a million," says Byron Hanke, the former director of the port of Vancouver, Wash. "He's a great leader."

It's also clear that Thorne has alienated people. He and Sten clashed over how to clean up the Columbia Slough. The Audubon Society's Houck and Nina Bell of Northwestern Environmental Associates have regularly battled with him on issues including deepening the Columbia ship channel, airport expansion and the proposed development of West Hayden Island.

"The port hasn't always been sensitive to who its shareholders are--taxpayers and residents of the Tri-County area," says Waldron, an environmental lawyer at Schwabe Williamson & Wyatt, who was appointed to the commission in 1999.

But Thorne doesn't deserve sole blame for his organization's shortcomings. "I think the problems at the Port of Portland are structural and go beyond Mike Thorne's dismal environmental record," says Astoria city councilor Doug Thompson, a longtime port watcher. "There is no political accountability for the decisions made there."

In theory, Thorne reports to a nine-member commission, appointed by the governor. But in practice, the commission rarely opposes him. One commissioner, who asked not to be named, says the executive director rules with an iron fist: "The commission is intimidated. If you disagree with him, you become a pariah."

Thorne scoffs at such talk but concedes that commissioners rarely vote against him. "I can't recall a situation where a resolution was rejected," he says.

Three recent port real-estate transactions shed light on one of the central criticisms aired in the Evans report--that Thorne and his organization are indifferent to the public's interest. In two of the three cases, the port sold or leased a major parcel of publicly owned real estate without a competitive bidding process. All three raise questions about whether the port made decisions that maximized value--or were simply expedient.

Slated to open in September, the $180 million project linking PDX to the existing light-rail systems is a joint venture between Tri-Met, the city, the port and San Francisco engineering giant Bechtel Enterprises.

The port's role in the deal was leasing 120 acres of land between Gateway and the airport for 99 years to Bechtel, the project's developer, in exchange for $28.3 million worth of work on the light-rail project.

At Thorne's urging, the commission approved the lease in 1998 without soliciting other bids. While airport light rail has been praised as an example of intergovernmental cooperation, the decision to skip competitive bidding, while legal, raised some eyebrows.

"Ultimately, I think the port made a mistake," says Portland State University urban studies professor Gerard Mildner, a light-rail critic. Mildner argues that without competitive bidding it's impossible to determine fair market value for the 120 acres.

Relationships between key players in the transaction also provoke questions. Two friends of Thorne's were key parts of Bechtel's team. One was the company's hired gun, former Gov. Neil Goldschmidt, who originally steered Thorne into the port job. The other was Bechtel Senior Vice President John Carter, a Pendleton native. "Mike made it known that he got the idea from Carter," confirms Port Commissioner Keith Thomson.

While there is no evidence that Thorne did anything wrong, Mildner says that the combination of personal relationships and a no-bid transaction creates awkward appearances.

"If you're dealing with nearly $200 million of public funds, you might want to steer clear of deals in which you might have a perceived conflict of interest," Mildner says. Privately, at least two commissioners told WW that they agree with Mildner, even though they voted for the deal.

Thorne concedes that after Bechtel approached the port, he felt no need to contact other companies. His relationship with Goldschmidt and Carter, he says, is irrelevant: "You don't let personalities dictate how you proceed."

* TERMINAL ONE:
On Feb. 8 of last year, Portland developer John Carroll offered to buy Terminal One, an unused 14-acre parcel along the Willamette in the River District, from the port for $6 million. Carroll's unsolicited proposal surprised commissioners. "I hadn't known that piece of land was for sale," Perrin says.

Nevertheless, 20 days later, before any public discussion of the sale, Bill Bach, the port's real-estate chief, wrote to Carroll, tentatively accepting his price, subject to commission approval.

But at its March 2000 meeting, the commission tabled Carroll's proposal, in part because of the highly unusual intervention of former port commission president Bob Ames.

Ames, now a Pearl District developer, warned the commission not to part with Terminal One hastily. "They've owned that property for nearly 100 years and it hasn't been used for 15," Ames later told WW. "There was a rush to judgment."

Pressured by Ames' intervention, the port solicited competitive proposals. A local group called Riverscape LLC bid $7.6 million for the property--$1.6 million more than Carroll's bid. Even then, commissioners Perrin and Junki Yoshida voted against Riverscape's proposal. "We never took a vote that the land was for sale," Yoshida says. "This is such prime land they should have opened the bidding up nationwide."

While the port's action was entirely legal, its approach differs from the process followed by other publicly funded entities. For instance, Pam Brown, Portland Public Schools' facilities director, says she could never sell a major piece of property in a month, as the port nearly did. "I can't imagine that it could happen," Brown says. "It's good to be aggressive with your property, but you have to remember that you're a public body and many people are your stakeholders."

For his part, Thorne makes no apologies for nearly selling to Carroll. "His bid was consistent with our valuation, and we recommended going forward," he says.

* PORTLAND SHIPYARD:
In 1995, the port agreed to lease its 94-acre shipyard, located on the east bank of the Willamette just northwest of the Fremont Bridge, to Cascade General, a local ship-repair firm.

In 1997, Cascade CEO Frank Foti began negotiating the outright purchase of the shipyard from the port. Cascade lacked adequate financing, however, and was unable to close the deal for three years.

Port records show that in the meantime, at least three other companies expressed interest in acquiring the shipyard: Singapore Technologies, a firm owned by the Singapore government; First Wave, a Gulf Coast ship repair firm; and Cammell Laird, a British ship-repair firm that ultimately teamed up with Cascade General to buy the shipyard.

Cascade's difficulties in completing the shipyard's purchase would have driven many property owners into the arms of another buyer. But the port went to extraordinary lengths to stick with Cascade. In 1998, the commission slashed the company's rent on the shipyard from $5.8 million to $3 million. In all, the commission set--and Cascade missed--four deadlines to complete the purchase.

In the end, the port sold Cascade and Cammell Laird 57 acres and all of the yard's equipment last August for $18 million in cash and a $5.8 million unsecured note. (Cascade also received a $7 million credit for rent already paid).

Critics, including Tom Maples, owner of the local ship-repair firm Mar-Com (which was also interested in the shipyard), argue that the port should have opened up competitive bidding. "I think they should have sold it for fair market value, which was more like $40 to $50 million," Maples says.

Thorne disagrees that sticking with Foti was a mistake. "Notwithstanding the missed deadlines, Frank continued to pay his bills," he told WW. "There was no compelling reason to make a change." Port Commissioner Michael Powell adds that selling to Cascade accomplished the goal of maintaining hundreds of shipyard jobs.

Today, however, according its own statements, Cammell Laird, Cascade's partner, is nearly bankrupt. Port officials say they have no direct risk but concede that the $5.8 million the Cascade/Cammell Laird joint venture owes the port in 2009 is unsecured, as is the joint venture's obligation to pay $2.5 million for eventual environmental cleanup.

While other Oregonians may not have paid Thorne much attention, Kitzhaber has been watching the port closely since his second term began in 1999. And based on correspondence between Kitzhaber and Thorne and conversations with sources close to both, it appears that Thorne has run afoul of the one person he cannot afford to ignore.

A letter Kitzhaber sent Thorne last February concerning the importance of at least considering breaching the lower Snake River dams illustrates the tension between the two. "What is unacceptable to me as a regional leader and as a policy maker is the tactic of simply attacking every option that comes along as too expensive, too risky, scientifically unsound or politically impossible," Kitzhaber wrote.

In December, Kitzhaber took the unusual step of summoning Thorne and commissioners Yoshida, Perrin, Waldron and Bob Walsh to his Portland office. The meeting came in the wake of a bizarre three-month period: In August, Thorne announced his resignation; then, after an aborted replacement search, the commission announced in late October that he was staying on. (It's not clear that Thorne's resignation had anything to do with the critical Evans report.)

Part of Kitzhaber's agenda at the meeting was Thorne's unretirement, which was reportedly as baffling to the governor as it was to some commissioners. "None of us had a choice on Thorne coming back," a commissioner told WW. "And the governor was incredibly pissed off." (Kitzhaber spokesman Bob Applegate says the governor was merely "surprised" at Thorne's return.) For his part, Thorne says that his relationship with Kitzhaber remains strong although they do have occasional disagreements that can get "emotional."

On March 6, in a move that sent shockwaves through the port's Old Town headquarters, Kitzhaber signaled the beginning of a major revamping of the port when he nominated Bob Eaton to the Port Commission to replace Walsh, whose term has expired.

Eaton, 55, a fisheries advocate, hails from Astoria, the center of opposition to Thorne's top priority--deepening the Columbia River shipping channel. If confirmed, Eaton would be the first port commissioner from outside the metro area. "This is probably one of the most significant changes in the port's hundred-year history," a port insider says of Eaton's nomination.

The governor's chief of staff, Bill Wyatt, argues that the only way to win approval for channel deepening will be to compromise with regulators, environmentalists and downriver residents. "We view Eaton as an important part of the deepening process, which the governor supports," Wyatt says.

As well as nominating Eaton, Kitzhaber is expected to strengthen his influence with the commission by appointing Waldron, a close ally, to succeed Walsh as commission president. In September, Kitzhaber will also get to fill the seats of commissioners Powell, who will finish his second term then, and Ann Nelson, who is unlikely to be reappointed after her first term.

As this story went to press, Thorne filed the paperwork in Salem needed to run for governor. The news surprised Yoshida and Perrin, the two commissioners WW was able to locate. Perrin says that given the highly public nature of the port, Thorne should have alerted commissioners to his plans.

"I think this is highly inappropriate," she says. "It does not speak well for his being forthcoming with the commission."

Should Thorne step down, it would open the job for Wyatt, the governor's right-hand man and a finalist to replace Thorne last fall.

In the meantime, Eaton's upcoming Senate confirmation hearings may expose the split between Kitzhaber and Thorne more publicly. In Salem, the first legislator to question Eaton's nomination was David Nelson, a wheat farmer and senator from Thorne's hometown of Pendleton.

Busting Up the Boys Club

Port Commission President Bob Walsh.

Earlier this month, Gov. John Kitzhaber appointed Bob Eaton to replace Port Commission President Bob Walsh. Walsh, a former chairman of the Portland Development Commission who has served on the port panel for 12 years, epitomizes what a fellow commissioner calls "the downtown boys club."

Walsh runs Walsh Construction, one of the Northwest's largest construction companies. He also has close ties to key players in two of the port's most questionable transactions. Although there's no evidence that Walsh profited from those relationships, his failure to disclose them illustrates the cozy atmosphere in which the port operates.

In 1993, Walsh Construction built the Virginia Street Rowhouses for developer John Carroll. A year later it built the Pearl Lofts for Carroll. Walsh, however, did not disclose those deals when Carroll's proposal to buy Terminal One came before the commission last year. Port counsel Cory Streisinger says Walsh was under no obligation to do so because selling the property to Carroll would have had no direct impact on Walsh or his company. (Neither Walsh nor Carroll returned WW's phone calls.)

Walsh also has close ties to Jeff Grayson, whose company, Capital Consultants Inc., loaned more than $10 million to what is now Cascade General in the '90s. Only once did Walsh disclose that he had personal and company investments with Grayson, and that was in a 1995 closed-door executive session with other commissioners. Walsh did not recuse himself from deliberating on Cascade's 1995 lease or subsequent purchase of the shipyard (see "The Fresh Connection," WW, Aug. 23, 2000). In 1996, Walsh's company built the $16.4 million Legends Condominium in Southwest Portland with financing provided by Grayson. Walsh never disclosed that transaction.

Again, Streisinger says that because the sale of the shipyard would not directly affect Walsh's company, he was under no obligation to disclose his relationship with Grayson.

--NJ