Hotseat: Charlie Hales

WW: If you were a betting man, what sort of odds would you have placed in 2002 on whether you’d be running for mayor?

Charlie Hales: I would’ve placed less than a one-third chance that I would run for office again.

So what happened?

I love this city, and I’ve watched it drift for the last seven years.

So the city is in worse shape today than you thought it would be when you left office?

Yes. Definitely. One of the things I’ve seen in my work is that even a great city can’t sit still. You can’t just keep living off of the initiatives and the risk people took in the past. And that’s what Portland seems to be doing now. The current climate in City Hall is one in which there’s an initiative of the week. Very few are completed. And there’s little substantive progress.

Can you be more specific?

How are we doing with respect to our high-school graduation rate?

Isn’t education outside the purview of the mayor?

It is, formally. But you can make it a priority, you can bring people together, and you can get some stuff done.

Could you give some other examples of where the city is adrift?

How do we build an employment future here in Portland? We are still a manufacturing city. We still make steel. We still make barges. We still make pipe and wire and parts for airplanes. I’d like to see us grow that manufacturing base again.

When you’re talking to employers, and you ask them what can the city do to help you grow, what do they tell you?

Listen. Pay attention not just to industry in other countries but industry here. Give us some clarity as to what the rules are. 

Rules as to what? Land use?

Land use. Permitting.

So, City Commissioner Randy Leonard’s efforts to streamline permitting—

Partially successful. Only partially. Again, I see some other cities that have done a better job. Ralph Becker, the mayor of Salt Lake, he hired somebody specifically to do this: to have a permitting process that is entirely paperless. Our inspectors go out each morning with a piece of paper. Theirs go out with an iPad. 

The Portland Police Bureau is being investigated by the feds. How do you turn around the bureau, which some people don’t seem to trust? 

It’s sad, actually, that the level of trust between the Police Bureau and the neighborhoods has fallen so much. My impression of Chief [Mike] Reese is that he’s a good guy. But the culture of the bureau that was created by Chief Moose, the last time we had a gang problem—of really working with the neighborhoods, and spending as much time as possible on crime prevention and trying to spend less time chasing 911 calls—I think we need to get back to that model. I want to turn over every rock in terms of what rules of engagement people use when they’re out there in the field. Is it OK to shoot if a gun’s not being pointed at you? 

There’s been a lot in the news lately about the Water Bureau, and revenues from water rates going to programs that may not be directly related—do you have any thoughts about that?

Those funds cannot be used as an ATM for whatever initiative the Council wants to advance this week, whether it’s buying more green space or funding scholarships.

And would that stop if you were mayor?

Yes. They’d compete for it in the general fund—period.

 

What are your feelings about the Columbia River Crossing bridge project?

The CRC has just been painful to watch. The city has essentially ceded its leadership to the [Oregon and Washington departments of transportation], and now the two governors are taking this project forward. If I’d been mayor, I’d have tried to have had a lot more influence over the outcome. 

If you were mayor now would you support the CRC in its current form?

No.

Do you believe a new bridge is necessary? 

I believe it is. But the light-rail portion is critical. Clark County voters have to agree on funding light rail. And we have to have tolls in place for this thing to work. Instead, we just started engineering.

Is it your sense that the move of the Portland Development Commission under the umbrella of City Hall has not been a good one?

With the PDC, it is time to take a deep breath and say, “OK, what do we need urban renewal for?” PDC did great things downtown. Can you make the case that that’s still needed downtown? Not really. Are there places in Portland where that sort of tool might make sense, like 82nd Avenue or 122nd Avenue? I think we might want to really radically reconsider what’s urban renewal for—and not keep gerrymandering the boundaries downtown so we can fund another cool project. 

Do you have a sense of the city’s fiscal condition?

My sense is, the city is in reasonably good condition, but there are some weaknesses, and one of those is, we’ve put a lot of things on our VISA card. We don’t really have a general-fund capital budget. So parks, for example,…always competes at the end of the budget process for some bits and scraps. 

Are there some bureaus that may be worse than others?

We still have battalion chiefs in the Fire Bureau, for example. Battalion chiefs are there because when there’s a really big fire, somebody needs to take command of the fire. We have two of them on duty at any given moment. That position existed before these things did—[pulls out his cell phone]—and the chief has one of these. I’ve probably just caused the firefighters’ union to oppose me—but stuff like that needs to be examined. 

What programs are getting general funding now that you’d lop off to make room for structural funding for parks and other things?

There’s one that comes to mind, which is the Office of Equity. I don’t think we should incarcerate “equity” in some cubicles in the bureaucracy. It’s an operating principle that everybody ought to adhere to. 

You have said Adams’ views aren’t that different from yours. But you’ve used the word “integrity” to note a difference. Can you elaborate?

I’m going to run a positive campaign and say, “Here I am.” I don’t think I need to be painfully reminding people about every problem that Sam Adams has had. 

The mayor has the authority of the office, but do you think he’s leading the city?

The way you lead the city is you build agreement.

Do you think he’s doing that?

No. 

Eileen Brady…do you have any thoughts about her you want to share?

Nice person!

Where Charlie Hails From

Charlie Hales was a Washington state resident for tax purposes from 2004 to 2009. Hales confirmed this June 27, in response to questions WW asked him in an interview the previous week. At the time, Hales lived in Stevenson, Wash.—in a home owned by his wife, Nancy, whom he married in 2004. Hales said he lived there because his wife did, but it’s also likely that by doing so, Hales avoided paying some taxes.

Washington state doesn’t have an income tax. This means that for those years that he was a Washington resident, Hales did not have to pay Oregon income taxes on dividends or capital gains. It also means he did not have to pay Oregon income taxes on that portion of his salary that was earned outside Oregon.

During the time in question, Hales was employed by HDR, a large engineering and consulting firm with offices all over the globe. Hales worked out of the Portland office, but he says that most of his work was done elsewhere.

“Although most of my work was carried out in other parts of the country, I paid Oregon income taxes for the portion of my time that I was working in Oregon. My income was my HDR salary,” Hales tells WW in an email. (Read the rest at wweek.com/hales.)

Had he been an Oregon resident, Hales would’ve had to pay Oregon income taxes on all the money he earned on the road. “When you’re an Oregon resident, you are taxed on all the income that you earn, and it doesn’t matter if you are working for a company in Oregon that sends you out of town a lot, or you move to Wyoming for six months to work in a coal mine or something,” Oregon Department of Revenue spokeswoman Rosemary Hardin says. 

Hales’ tax preparer, Arnold Polk, tells WW that the candidate and his wife filed their Oregon taxes as Washington state residents “because that’s where they were living. When Charlie married Nancy, he moved to Washington.” 

As for the benefit of not having to pay Oregon income taxes on money earned out of state, Polk says, “I don’t think that was Charlie’s motivation.” 

Cross-border tax avoidance last year hurt Chris Dudley, the Republican nominee for governor, who established a Camas, Wash., address while playing for the Portland Trail Blazers in the 1990s.

“In 2007, with the kids all gone from home,” Hales says, referring to children he and Nancy had from previous marriages, “we began a transition, where we bought and remodeled our house on Southeast 27th Avenue and gradually started living here more.” The email goes on: “Your questions caused us to review in detail what we have just been doing as a practice in these gradually changing family circumstances. We have asked [our family accountant] to take another look at 2008 and 2009 to make sure we did those years correctly.”

In a Thursday, June 23, interview with WW, Hales said he had always been an Oregon resident for tax purposes, and had lived in his Southeast Portland home since purchasing it in 2007. “I’ve never changed my residency for tax purposes,” Hales said on Thursday.

On Monday, that story changed. – Corey Pein