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April 11th, 2012 12:01 am COREY PEIN | Cover Story

The Road to Hales

Charlie Hales is running for mayor based on his record. It’s full of detours, roundabouts and switchbacks.

CHOO-CHOO CHARLIE: Hales’ campaign headquarters on Southeast Grand Avenue are along the new eastside streetcar tracks. Hales championed the westside streetcar in the 1990s.
IMAGE: chrisryanphoto.com

By 1990, Hales had his eye on running for office. He switched his voting registration from Republican to non-affiliated (and, in 1998, to Democrat).

In 1992, he announced he would challenge Portland City Commissioner Dick Bogle, who had been politically weakened by scandals involving expense accounts and a sex-harassment claim.

Also in the race was former TV newsman Chuck Dimond. Dimond, who supports Brady in this mayoral race, says he was troubled that Hales kept lobbying for homebuilders while running for office. In a debate, he asked Hales about the Beaverton tree ordinance. 

“He came back with a statement: ‘That was then and this is now,’” Dimond recalls. “He brought a kind of situational perspective to things. It wasn’t based on core political beliefs.”

Hales, though, was the long-shot candidate. He overcame it with a talent for raising money and by embracing street-level politics. He opened a storefront campaign office and knocked on thousands of doors—the same strategy he’s using today.

And it helped that Hales was an excellent public speaker. Many people expected Dimond and Bogle (who was also a TV reporter) to shine during an April Portland City Club debate, but it was a turning point for Hales.

Dimond, grandstanding, declared if elected he would turn down the perk of a city car and drive himself to work. He asked Bogle and Hales to join in his pledge.

Hales’ response won over the crowd: “Chuck, I’m amazed you want to drive from your home in Irvington to downtown. Why don’t you ride the bus?”

(After Hales was elected, WW reported that he took the bus three days a week.)

THE INSIDER: Hales won over many former adversaries from inside and outside City Hall.
IMAGE: chrisryanphoto.com
On the City Council, he made a fast ally with the new mayor, Katz, and competed for attention with a set of skilled politicians also on the council—Mike Lindberg, Gretchen Kafoury and Earl Blumenauer.

He surprised critics by shaking off the image of a homebuilders’ shill by emphasizing planning, density and alternative transportation. In his first year, Hales was the swing vote in opposition to a new Interstate 5 on-ramp from Southeast Water Avenue in the central eastside industrial district.

Business owners there wanted the on-ramp, while real-estate developers, who had visions of a Pearl District-esque transformation for that part of town, opposed it. 

Supporters, such as John Bradshaw, owner of Portland Transmission Warehouse on Southeast Hawthorne Boulevard, felt betrayed. “It still gives me heartburn,” says Bradshaw, who is supporting Brady for mayor. 

Hales says he was always up front with Bradshaw and other supporters of the project. “No good deed goes unpunished,” Hales says. 

Hales also made enemies in the Portland Firefighters Association, then led by Leonard, who is retiring from the City Council after 10 years.

Hales takes credit for diversifying a bureau famous for being clannish. In 1994, WW reported that the Portland Fire Bureau was 95 percent white and male, compared to 70 percent in Seattle. 

Hales appointed a new chief, Robert Wall, to improve that number. The union says its fight with Hales was less about diversity than preserving the union’s staffing levels and work rules—and avoiding reverse-discrimination lawsuits. The dispute was bitter. 

“Last time I checked, Charlie Hales was an elected fire commissioner, not a fire god,” Leonard told WW at the time.

Today, Leonard says he and the union deserve recognition for promoting an apprenticeship program aimed at improving diversity, which Hales eventually voted for. 

But Hales’ most visible legacy is the Portland streetcar, which opened in 2001 after an 11-year planning and fundraising process first championed by Blumenauer.

Hales tells WW the initial idea came from a private engineering consultant, Roger Shiels, who was inspired during a trip to Europe.

Shiels did not return a message from WW. His firm, Shiels Obletz Johnsen, has won more than $2.3 million in contracts to build and operate the streetcar, and he has donated $2,500 to Hales’ mayoral campaign. Another streetcar contractor, Stacy and Witbeck, donated $25,000. 

Blumenauer left for Congress in 1996, and Hales took over as City Hall’s streetcar evangelist.

Hales presented the downtown streetcar plan at a transportation summit at Benson High School in 1997. A streetcar line running from Legacy Good Samaritan Hospital to Portland State University opened four years later. Hales earned the nickname “Choo-Choo Charlie.”

In 2000, Hales ran for a third term and broke fundraising records for a City Council primary, collecting $286,000, largely from streetcar companies and development firms that benefited from the new line.

Once re-elected, Hales drifted away from the job and resigned in 2002. Records show he was absent or on vacation often during his last two years in office. At his last council session on May 30, colleagues presented him with a bouquet of roses, a model train and a lifetime streetcar pass.

“I didn’t quite understand why he left,” says former Mayor Katz. “I guess he wanted to make some more money.”

Hales quickly spun through the revolving door, going to work for HDR Inc. as a “transit-planning principal.” He traveled the country trying to convince other cities to build streetcars like Portland’s, and helping with design once they’d agreed to hire HDR for the job.

Hales says he made the switch because he’d accomplished much of what he set out to do, and he needed to make more money to put three kids through college. 

He also cites personal reasons: Hales and his first wife, Haywood, had divorced in 2000. He began dating Nancy Sourek, then executive director of the Community Foundation for Southwest Washington. They married in 2004, and Hales moved into her house in Stevenson, Wash.

He spread his streetcar message around the country. In Fort Worth, Texas, he told local officials in 2010 that “for every dollar invested by the city, $4 in development will occur, which will lead to higher revenue for the city.”

He pitched streetcar plans in St. Louis, Miami, Minneapolis and Kansas City, Mo. Key to Hales’ pitch to all these governments is the availability of federal money. 

The feds, Hales told officials in Salt Lake City in 2010, were their “new best friend.” He added, according to the Salt Lake Tribune, “They seem to have a habit of trying to find a way to fund streetcar projects.”

That money often came through a special federal grant program, created by Hales’ former City Council colleague, Rep. Earl Blumenauer.

Hales’ work has created a potential conflict of interest. His wife runs a program at Portland State University called First Stop Portland that brings delegations from other cities to tour Portland’s urban-design marvels, including the streetcar. At least eight times in the past three years, First Stop has hosted delegations from cities either already doing business with HDR or about to do so. 

In November 2010, Hales and HDR had been hired by the city of Fort Worth as consultants on a proposed streetcar. That month, Fort Worth officials visited Portland thanks to First Stop Portland. Its budget is largely paid for by taxpayers, including funding from TriMet, PSU, Metro and the City of Portland. It also gets private support, including from HDR. First Stop did not provide budget figures by WW’s deadline.

This February, Hales took a break from the campaign to visit Kansas City, where officials are preparing to ask voters for approval of a streetcar. That same month, Kansas City officials came to Portland, their expenses in part paid by Nancy Hales’ program.

Nancy Hales says her husband has no role in selecting which cities’ delegations are hosted by taxpayers. Charlie Hales says HDR already had consulting contracts with cities hosted by First Stop. “There was no marketing advantage to HDR,” he says.

If Hales is elected mayor, it will create another potential conflict. PSU’s contract with the City of Portland says Nancy Hales can’t be fired “without prior written approval” of the city’s planning bureau. Charlie Hales says if he’s elected mayor, he will eliminate city oversight of Nancy Hales’ job.

RETAIL POLITICS: Hales hopes direct contact with voters will once again take him to City Hall.
IMAGE: chrisryanphoto.com
Hales tries not make the same mistake twice.

Appearing on former Mayor Bud Clark’s public-affairs talk show in 1992, Hales let slip that he didn’t know who Jerry Garcia was. Chastened, Hales showed up to a later taping of Clark’s show with a necktie designed by the iconic Grateful Dead guitarist.

Portland’s challenges are different now than they were then. And they are immense. The next mayor must contend with an eroding infrastructure, a troubled police bureau and a stagnant economy.

Hales emphasizes the positive and strives to be all things to all Portlanders. Consider his various campaign slogans: “Charlie Creates Jobs.” “Charlie Fights 4 Schools.” “Charlie Plants Trees.” “Charlie Rides a Bike.” “Charlie Likes Beer.” Another bumper sticker labels Hales an “Aging Hipster” with horn-rimmed glasses. 

As in his first council race, during which he continued to lobby for the homebuilders, Hales is hedging his bets. He has not yet given up his $200,000-a-year job at HDR.

Hales says, if elected, he won’t leave office early this time. “I make an explicit commitment to the people of Portland,” he says. “If I’m elected to this office, I will with all my energy see out a full term. And if I seek a second term, and people choose to give me one, the same will be true the second time.” 

State of Charlie
Hales can’t laugh off residency issue.

Charlie Hales has been trying to deflect his most embarrassing issue in the mayor’s race with a joke.

Between 2004 and 2009, Hales told Oregon tax officials that Stevenson, Wash., was his residence. 

He now tells voters that, after serving on the City Council, he moved out of Portland for love: He had remarried, and his new wife, Nancy, lived in Stevenson.

“I didn’t move to Washington to cut my taxes. I moved to Washington to sleep with my wife,” Hales said last fall, in a typical response. As he put it in February, “It wasn’t tax evasion. It was cohabitation.”

But Hales’ quips gloss over the truth: He’s been trying to have it both ways, claiming it was OK for him to avoid taxes in Oregon while continuing to vote here as if he were a resident.

Last June, WW broke the story about Hales’ tax avoidance and his voting in Oregon while declaring Washington to be his residence.

Oregon taxes income in Hales’ bracket at 10.8 percent. Washington has no income tax. 

Hales’ tax returns show his Washington state residency saved him an estimated $29,900 in 2008 and 2009, the years covered by the returns Hales released to WW.

Claiming you’re a nonresident for tax purposes, the Oregon Department of Revenue says, requires declaring you no longer live in Oregon.

“You’re a nonresident if your permanent home was outside Oregon all year,” the department’s guidelines say.

Meanwhile, Hales kept voting in Oregon, a privilege state law says is reserved for residents. 

Records show Hales voted eight times, from 2004 through 2009, in Oregon elections. He did so using a Hayden Island address, even as he told Oregon tax officials he actually lived in Washington.

Steve Trout, Oregon’s Elections Division director, says the state lacks enough information about Hales’ situation to know whether he violated elections law.

“If he had an intent to return, he could remain an Oregon voter,” Trout says. “Without a complaint and a hearing, there’s no way to establish intent.”

Republican candidate for governor Chris Dudley faced similar questions in 2010. He had moved to Camas, Wash., in the 1990s to avoid Oregon taxes while playing for the Portland Trail Blazers. But Dudley kept his voter registration in Oregon. Unlike Hales, Dudley didn’t vote in the years he called himself a nonresident.

When WW asked Hales in June about his residency, he made false statements. He said he never declared Washington as his residence for tax purposes. “I am and have always been an Oregon resident,” he said.

Today, Hales says he was mistaken in his statements to WW because he had forgotten that he had filed his taxes as a Washington resident.

“I haven’t spent the last 10 years walking around thinking about my tax returns,” Hales says now. “Mea culpa. I’m not an accountant.” —COREY PEIN and NIGEL JAQUISS

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