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On Thursday morning, an administrative law judge overturned the $77,000 fee levied against Portland City Council candidate Rene Gonzalez by the city’s Small Donor Elections Program.
At issue was what the program alleged was an unreported, prohibited in-kind donation accepted by the campaign: a $250-a-month rental agreement for 3,000 square feet of downtown office space in a building owned by real estate mogul Jordan Schnitzer. The space is listed online as costing more than $6,900 a month to rent. That constitutes a 96% discount.
Judge Joe Allen wrote in his ruling that the city had failed to present adequate evidence that $250 a month for downtown office space was not fair market rent.
“The City failed to establish, by a preponderance of the evidence, the fair market value of the office space,” Allen wrote. “As such, the City failed to prove Appellants did not pay fair market value for the space during the period in issue.”
Allen wrote that conditions downtown—including vandalism, vagrancy, and lack of foot traffic—meant that landlords were taking steep cuts in asking prices for rent.
“The preponderant weight of the evidence established that, to combat high vacancy rates during these difficult market conditions, property owners and managers are seeking out short-term agreements,” Allen wrote. “In doing so, those entities are offering significant discounts—including structuring deals that merely cover operating costs of the space and offset some or all of the operating costs of the building—in order to get a tenant in the building that will increase foot traffic and reduce vacant retail space, particularly in ground-floor units that have become less desirable due to the proliferation of vandalism and crime in the area.”
The chair of the Portland Elections Commission, Amy Sample Ward, said in a statement that they were “stunned” by the ruling.
“This ruling creates a loophole for donors to give enormous in-kind contributions, rendering useless the contribution limits in the program and penalizing those who play fair,” Sample Ward wrote. (Schnitzer is a supporter of Gonzalez and recently donated $20,000 to a political action committee established to support Gonzalez’s candidacy, as well as the campaign of Multnomah County chair candidate Sharon Meieran.)
Sample Ward wrote that the ruling erodes the use of objectivity in such cases and replaces it instead with subjectivity.
“In issuing the penalty, the Small Donor Elections Director followed the law which requires the use objective evidence when determining whether a candidate accepted an illegal contribution. This ruling overturns the City’s use of objective evidence,” they wrote. “If the City were to follow this ruling, it would be impossible to enforce the law evenly and consistently, and would make enforcement of our election laws vulnerable to political bias.”
In a statement, Gonzalez campaign manager Shah Smith said the reputational damage levied by the city outweighed the fine. “While we are pleased with the decision,” Smith said, “the damage to the campaign has been done.”
Indeed, a campaign mailer from Gonzalez’s opponent, incumbent City Commissioner Jo Ann Hardesty, recently arrived in Portlanders’ mailboxes, saying Gonzalez “breaks the law,” using the elections program fine as its example.