Trader Joe's protesters last month

Portland Commissioner Dan Saltzman remembers the Trader Joe's controversy of 2013 and 2014. He didn't want to see a repeat.

(Courtesy of Khalil Edwards)

Portland Commissioner Dan Saltzman canceled a $7.25 million promise and redirected the money behind closed doors to a nonprofit that serves African Americans to avoid racial controversy in Northeast Portland, records obtained by The Oregonian/OregonLive show.

Saltzman originally agreed this spring to give city land and money to a California-based developer, Meta Housing Corporation, following the advice of the city's professional housing staff.

But Saltzman discreetly reversed that decision under pressure from Portland Community Reinvestment Initiatives Inc., one of the developers that Meta beat.

The entire episode, unreported until now, sheds light on the backroom deal-making allowed by Portland's process for handing out public assets, even as it shows the city taking pains to be seen as sensitive on racial equity.

And it highlights the broad autonomy - and lack of checks and balances - under Portland's commission form of government, which entrusts decisions on housing to a single politician.

Both companies competed to develop dozens of subsidized apartments at Northeast Martin Luther King Jr. Boulevard and Rosa Parks Way, a symbolic if not prominent crossroads in Portland's historic African American community. Meta, pitching a project for artists, prevailed in part because its local competitor had yet to deliver a development so large.

But after Saltzman selected Meta, the Portland nonprofit's executive director fought back. Maxine Fitzpatrick challenged the city's selection process, questioned officials' commitment to equity and invoked the 2014 gentrification uproar over Portland's plan to subsidize a Trader Joe's grocery store just a few blocks south.

It worked.

Saltzman reversed course less than two weeks after the city publicly announced Meta as the developer, and just days after meeting with the nonprofit's leadership to hear complaints.

Saltzman and housing officials then worked behind the scenes to mollify Meta, offering options and assurances for a replacement project, calling into question whether future selection processes are preordained.

"This is exactly what undermines trust in government," said Michael Thom, an assistant professor of public policy at the University of Southern California. "You see millions of dollars being given away, and there's no process for scoring it, and if enough people squawk they'll change their minds. There's no accountability."

Saltzman said he was trying to be responsive to concerns from Portland's African American community. But Saltzman, who has served on the City Council for 18 years, conceded his actions could undermine the perceived integrity of city funding decisions.

"It may," he said. "But in this form of government, that's what it's all about. Ultimately the commissioner in charge has the prerogative to make the final decision, and that's what I did - even though I reversed myself from an earlier final decision."

The decision

Portland Commissioner Dan Saltzman oversees the Housing Bureau. He's been on the City Council for 18 years -- roughly as long as commissioners Nick Fish, Amanda Fritz and Steve Novick, combined.

The path toward Saltzman's reversal began last fall, when city officials announced an unprecedented $61.6 million to subsidize construction of affordable-housing projects across Portland. The super-sized spending plan came on the heels of City Council's declared "housing emergency" and pledges to build more rent-restricted apartments as quickly as possible.

Developers interested in winning city money and land were told to craft proposals to mirror the Housing Bureau's values: equity, stewardship, innovation and transparency. In all, eight projects were chosen.

But the decision-making process was anything but transparent.

Portland set aside $10 million of taxpayer money for projects in the Interstate urban renewal district, which covers large swaths of North and Northeast Portland.

Of that, officials earmarked $4.5 million for roughly an acre of city land at Northeast Martin Luther King and Rosa Parks, called the King Parks site.

Three companies submitted proposals, with one quickly dismissed after being deemed unrealistic, records show. That left two evaluation committees to compare the projects pitched by Meta and the Portland nonprofit.

Portland lacked a clear system for scoring the proposals - a decision made by design. Officials scrapped a 100-point system used by evaluators for previous proposals.

Kurt Creager, Portland's housing director, said the bureau made the change to acknowledge the subjective nature of funding decisions.

"To try to standardize subjective factors into a point score makes it look more clinical than it really is," he said in an interview. "There's quite a lot of judgment that goes into these selections."

As a result, neither committee offered a quantitative assessment or written rationale for picking one company over the other. Instead, the evaluations amounted to a list of bullet points and a declaration that Meta and the Portland nonprofit tied.

"They show more intention of engaging residents than the other proposal," read the final evaluation of Meta, dated April 4. "They seem to be very organized."

"I was disappointed. There didn't appear to be a lot of thought that went into the proposal," read the evaluation of the Portland firm, adding, however, that the nonprofit also had a "good understanding of the community" and was "very focused on it."

Top Housing Bureau staff then presented recommendations to Saltzman.

Creager told The Oregonian/OregonLive the nonprofit and Meta "were basically equal" in terms of equity, after factoring in contractors and other firms associated with the proposals.

But the nonprofit had traditionally managed single-family homes and had yet to break ground developing its first apartment project, a city-subsidized endeavor called Grant Warehouse.

Meta, on the other hand, had developed more than 60 housing projects and wanted to break into Portland, adding to the local roster of capable affordable-housing developers.

Creager worried the nonprofit already had its hands full.

"It was a consideration of capacity," he said in an interview.

City officials eventually agreed to raise Meta's funding to $7.25 million from the advertised $4.5 million.

Saltzman personally reached out to each project winner except Meta. Could someone at the housing bureau call Meta, an aide asked, to "give them the good news?"

The reversal

City Council members and community leaders, including Maxine Fitzpatrick, celebrate a proposed affordable housing project in Northeast Portland on Aug. 17, 2015.

Portland's news release went out just before 11 a.m. April 20, naming Meta's "Creators Collective" among the victorious projects.

"Looks good," Saltzman emailed aides.

Fitzpatrick, the nonprofit's executive director, demanded a meeting less than eight hours later.

"This action represents historical practices that perpetuate the continued disregard of equity and the needs of its most disadvantaged residents," Fitzpatrick emailed city leaders.

Before the night was over, Fitzpatrick also contacted Bishop Steven Holt. He chaired a city oversight committee created in the wake of the 2014 Trader Joe's fallout that was meant to shape development in the area.

Holt's committee had no opportunity to evaluate proposals for King Parks, he told The Oregonian/OregonLive. In fact, no one bothered to notify him once a decision was made.

"If you're going to right a wrong, it would make sense that you're now extra cautious, careful, thoughtful about how you do what you do," Holt said. "And to me, it was just an affront. I was dumfounded."

In her email to Holt, Fitzpatrick said Meta's project would not address "massive displacement" caused by city urban renewal. To the contrary, she said, Meta's project "is in total disregard for what the community needs."

Fitzpatrick also highlighted the fact that Creager, earlier in the year, cut funding for her nonprofit well below a recommendation made by Holt's committee. She said Portland was "ripe for a civil rights discrimination case."

"I am reminded of the young people who stood up to the establishment and caused Trader Joe's to go away," she concluded.

Fitzpatrick met with Creager on April 25. But it "did not go as well as I had hoped," she later wrote to Holt and Saltzman's housing aide, Shannon Callahan.

Not only did Creager stand behind the funding decision, she wrote, but he and bureau staff also seemed defensive. Among other things, Fitzpatrick questioned why the evaluation committees consisted mostly of white men and no African Americans.

"There seems to be confusion about the meaning of equity," she wrote, asking to meet with Saltzman.

The email was forwarded to Saltzman. His response? "Yes, I guess."

That day, the nonprofit also requested city documents evaluating the proposals. A few days later, its attorney filed paperwork attempting to formally appeal.

But city officials concluded that the Portland nonprofit, under terms of the selection process, had waived any right to challenge.

"Good," Creager wrote to an aide, looping in Callahan. "Stay the course."

On April 29, a Friday, Saltzman met with Fitzpatrick for what he later described as a "global" conversation about her concerns.

Creager kept fighting for Meta, arguing its competitor's proposal would require additional money. It's "already more costly and produces fewer units than Meta, so additional equity would be an unwise precedent," he warned Callahan on April 30.

But by May 1, records show, Saltzman had changed his mind. The project would go to the Portland nonprofit instead of Meta.

"It was really just my own reflection over the weekend of the conversation I had, and the complications I could see this road leading to, with the community, once the selection would be more widely known," Saltzman told The Oregonian/OregonLive.

Saltzman said he also spoke to other community members, with no financial connection to the project, who questioned the initial decision. Saltzman declined to identify them.

Looking back, Saltzman said he failed to recognize the site's significance to Portland's black community. He worried issues of race and gentrification might be exacerbated by a California company planning to build apartments for artists.

And he didn't want to hurt Meta's chances of developing other projects in Portland.

"I felt it had the potential to become sort of a Trader Joe's issue," he said.

The future

Community leaders and activists meet on the vacant lot that was slated for a Trader Joe's in 2014.

Saltzman contacted Meta on May 3 to deliver the bad news.

"They agreed with my logic, once I articulated it to them," Saltzman said last week. "But they were disappointed."

The Oregonian/OregonLive began asking about Saltzman's pullback from Meta in June. At the time, a Housing Bureau spokeswoman downplayed the situation and offered no hint of the nonprofit's behind the scenes lobbying.

"It was a mutual decision by Commissioner Saltzman and Meta Housing," Martha Calhoon wrote, referring further questions to Saltzman's office.

The Oregonian/OregonLive filed two public records requests for documents in July and asked for fee waivers, arguing disclosure would serve the public interest.

Saltzman's office charged nearly $454 but later pledged to refund $210. The Housing Bureau charged nearly $168 and didn't produce records until last week, two months after the request.

The documents show that, since Saltzman's reversal, housing officials have been quietly working to keep Meta happy.

"They will be OK, but we may need to consider doing a negotiated bid project with them later this year to offset their loss and to get back on track with them," Creager wrote to Saltzman May 5. Records don't make clear how much Meta spent developing its initial proposal.

Saltzman answered that Meta's president wanted to talk with him.

"I think he may be looking for assurances that we do indeed have a future together," Creager wrote back. "I certainly emphasized our commitment to working with them in the future on something less polemic."

Creager met with a Meta representative May 12, initially pitching the company on a TriMet-owned parcel in the Kenton neighborhood.

A day later, Creager began pushing a different site.

The Housing Bureau was about to spend $2 million buying property on North Interstate Avenue, near North Alberta Street. But that wasn't public knowledge, and the City Council wouldn't approve the purchase for another month.

Even so, Creager told Meta about the site while asking officials not to disclose details until he got a green light from Saltzman.

"I am alerting you to this out of good will to demonstrate our intent to make Meta whole," Creager wrote.

In July, the Housing Bureau unveiled a new program that could make it much easier to hand a project to Meta. The so-called "Fast Start" program - pitched as a way to speed up affordable-housing construction - would allow city officials to hand-pick a preferred development team from a list of prequalified firms.

Meta is one of 32 companies that applied for precertification.

Kasey Burke, Meta's president, told The Oregonian/OregonLive in an email that he understands and supports Saltzman's decision to reverse funding.

"We are confident that we'll find another site in which we are able to partner with the city and we'll continue to seek out that opportunity," he said.

The Portland nonprofit, meanwhile, is moving forward with its King Parks project with a projected $4.5 million from the city, plus access to sought-after tax credits.

Fitzpatrick was out of the office last week and unavailable for comment. But Travis Phillips, the nonprofit's director of housing and development, was asked whether Saltzman's reversal was fair to Meta.

"I would have liked to have seen the process work differently," he said after a long pause. "And it doesn't matter which side of the argument we're on."

Saltzman insists no decision has been made to award specific property to Meta.

All the same, he said, "I believe we owe them one. I have no qualms here if it's the perception they got one back from us."

-- Brad Schmidt

503-294-7628

@cityhallwatch