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Bureau of Development Services director Paul Scarlett will leave after almost 12 years leading the city bureau.

(Beth Nakamura | The Oregonian/OregonLive)

Portland's newest city commissioner, Chloe Eudaly, has ousted her second bureau director within her first four months on the job, according to an email obtained by The Oregonian/OregonLive.

Paul Scarlett, long-time director of the Bureau of Development Services, will get $183,000 from the city to leave after running the development permitting office for almost 12 years. The golden parachute is equivalent to one year's salary for Scarlett, whose last day is Friday, said Eudaly's chief of staff Marshall Runkel.

The bureau's principal planner, Rebecca Esau, will serve as the interim director, according to a statement released by Eudaly Monday.

Scarlett announced his departure in an email to bureau employees Monday.

"Commissioner Eudaly has shared with me that she plans to take the bureau in a different direction and will be seeking new leadership," Scarlett wrote in the email. "I leave knowing we have made great strides in the work we do and I am confident the bureau and its employees will continue to play an important, relevant and necessary role in the development of this beautiful city."

Scarlett declined to talk to The Oregonian/OregonLive on Monday.

The director's announcement came three days after the City Budget Office released a summary report detailing problems within Scarlett's bureau. Operations there cause delays in the permitting and inspection process required to build affordable housing, it says.

Unfilled job vacancies at the bureau have posed workload challenges, the report found. Low staff morale, poor customer service and a confusing process for new developers have also contributed to development delays.

The report encouraged the bureau to fill vacant positions, create a technology-driven solution, reduce development fees when possible and coordinate better with other bureaus. The reported noted the need for the development office to coordinate with the Portland Housing Bureau to stay committed to project timelines.

The bureau now has 385 full time employees after filling more than 100 positions since June, Scarlett wrote in his departure email.

"Though several challenges still exists such as filling vacancies, updating our permitting system, improving service levels and working relationships throughout the bureau, I am optimistic good progress will continue to be made in all of these areas," Scarlett wrote.

The Portland representative for the American Federation of State, County and Municipal Employees Tweeted his surprise about Scarlett's departure on Monday.

"Really?!!" Rob Wheaton Tweeted. "Paul was great. Members loved him."

Low morale

Evaluations of the bureau and of Scarlett over the years have repeatedly noted low morale, a retaliatory work environment and a lack of direction from and trust in leadership.

An August 2014 performance review of Scarlett by then-bureau manager Commissioner Amanda Fritz also said "morale is very low."

Fritz told The Oregonian/OregonLive on Monday that Scarlett impressed her by addressing some of the problems she laid out in her evaluation. He embraced her emphasis on equity by hiring an equity director within the bureau, she said.

"When I was in charge of the bureau, I was very pleased with the progress we were making and I was very pleased with Paul's responsiveness to my directing," Fritz said. "I could have made more if I were able to keep the bureau."

A November 2015 organization assessment by a Portland-based consulting firm called Coraggio Group found "persistent equity issues" in the bureau that made it a challenging place to work for women.

"Women don't do well here," an employee told the firm anonymously.

The report included anonymous comments from bureau employees interviewed by the consulting firm.

"This is the most singularly unhealthy work environment I've ever seen," one employee reported. "People are great and vastly overqualified and contribute their best, despite the work environment."

An August 2016 performance evaluation of Scarlett by Commissioner Dan Saltzman noted increased complaints from customers frustrated by delays, a slow hiring process and a struggle to find new staff for the bureau. Saltzman managed the bureau from 2015 to 2016.

Still, Saltzman awarded Scarlett 48 additional hours of paid leave. He complimented Scarlett's effort to "move the equity needle forward."

Saltzman told The Oregonian/OregonLive Monday that he enjoyed working with Scarlett. He did not respond when asked why he did not get rid of Scarlett after several reports showed problems in the bureau.

Long-time development bureau worker Lisa Gill said the development services office has long valued and promoted men over women, a problem she said starts with Scarlett at the top.

"A lot of his managers need a lot of help," Gill said. "He is not willing to take that step to make them accountable."

Gill now works as a management assistant on the bureau's online permitting system after working for the city for 26 years.

She successfully sued the City of Portland for racial discrimination in 2002. She and former colleague Roxie Granville also made allegations of gender discrimination.

Gill said Scarlett is a nice guy and wished him luck, but said this leadership change is necessary.

"The bar needs to be raised," Gill said. "I think his tenure is done. I don't think he can do any more."

A colossal boondoggle

Employees quoted in the Coraggio Report placed hope in a new technology project that ended up costing the city millions before spiraling out of control. Portland's development services office failed to heed warnings and stop the massive technology project.

The so-called Information Technology Advancement Project, or ITAP, was supposed to create a 21st Century online permitting system into which developers and architects could electronically submit paperwork and from which city employees could access records from the field. It was supposed to cut costs for businesses by up to $1 million per year and shave payroll costs by $1.3 million by eliminating the need to hire nine more employees, the city estimated.

But ITAP failed after costing the city at least $8 million. As of November 2016, the city had spent 70 percent of its budget for the project but completed as little as 25 percent of the work. At that point, a report said, the city would need six months just to assess what had gotten done and the cost of moving forward.

The city blamed an ousted contractor, Sierra-Cedar Inc., but the report found "significant gaps in leadership, management and oversight of the project.

Project Manager Rebecca Sponsel took most of the blame. Scarlett forced her out in November.

Eudaly shakes things up

Scarlett is the second long-time bureau director pushed out by Eudaly. At Eudaly's bidding, the city paid the Office of Neighborhood Involvement's former director $144,000 to quietly leave in March. Amalia Alarcon de Morris's departure followed a scathing November audit and 11 years of Alarcon de Morris leading the bureau.

A political novice and former bookstore owner, Eudaly pledged to do things differently if she made it onto the Portland City Council. So far, she has.

Eudaly ousted the two long-time directors of the bureaus. It took her at least 30 days to have a face-to-face sit down with each of them, city officials told The Oregonian/OregonLive at the end of January.

Scarlett attributed the delay in meeting to the city's historic January snow storm that put a lot of city plans behind schedule. He told the paper in January that he looked forward to his first meeting with Eudaly, who he said seemed sincere and genuine.

"I imagine we'll have a good working relationship and a lot of trust," Scarlett said.

--Jessica Floum

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