Willamette Week| News| Politics

Harold Schnitzer is mad as hell.

In September the city of Portland enacted a landmark low-income housing preservation ordinance designed to stop private landlords from abandoning a key federal program that provides thousands of cheap apartments in downtown Portland.

Schnitzer, who owns some of the city's largest private low-income housing projects, was bitterly opposed to the ordinance. In a gravelly voice, the hawk-eyed 75-year-old president of Harsch Investment Corp. went before the City Council and denounced the proposal as a "Mafia-type offer."

The council passed the ordinance unanimously, but Schnitzer isn't ready to quit. He went to Salem, hired influential lobbyist John DiLorenzo and introduced House Bill 2636, which would effectively gut the ordinance.

Reaction from local officials and housing advocates ranges from the stunned to the apoplectic:

"Frustrating," says state Rep. Jo Ann Bowman.

"A travesty," says housing advocate Janet Byrd.

"It's ugly," says City Commissioner Erik Sten.

"We're appalled," says city lobbyist Marge Kafoury.

And it's not just the lefties who are stirred up by HB 2636. City Commissioner Charlie Hales--hardly a flag-burning radical--says the bill would overturn the principle of "local control" and grant the Legislature powers usually accorded to medieval potentates. "If the king can ride in on his horse and chop off your head, if that's going to be the law of the land in Oregon, let that be made clear," Hales says. "But I thought local government was supposed to take care of local matters."

Despite overwhelming local opposition, on Tuesday, Feb. 23, HB 2636 was voted out of the House General Government Committee and on to the House floor, where Salem-watchers give it a good chance of passage.

If the bill becomes law, Schnitzer will have almost single-handedly reversed a key element of the city's housing strategy. Advocates say this threatens Portland's dwindling stock of low-income downtown apartments, which shelter thousands of impoverished elderly and disabled residents.

Harold Schnitzer is by any measure one of Portland's most influential citizens. Born to one of the state's wealthiest families (his brothers own Schnitzer Steel), he has used razor-sharp acumen to build a real-estate empire employing hundreds of people in six different states. In the process, he's become one of the city's leading philanthropists, making generous contributions to a host of causes.

For most of his career, Schnitzer has preferred to avoid the public eye. But his feelings against the city's preservation ordinance run so deep that he has been willing to get up and testify in person. A lifelong Democrat, Schnitzer hired DiLorenzo--a Republican lobbyist--to carry his message to Salem.

The key to understanding HB 2636 is a federal subsidy program known as Section 8 housing. In Portland, the program governs 4,700 privately owned apartments built with state and federal assistance. Under Section 8, the owners agreed to rent their units to poor people for a fixed term, usually 20 years, with the federal government paying the rent.

For housing advocates, these units are precious. Average income for tenants in Section 8 units is just $500 a month, according to Susan Emmons of Northwest Pilot Project, who says keeping the units is "absolutely vital" to the city's poor.

But many landlords are reluctant to sign up for another 20 years because they can get more money by renting the apartments at market rates. As the contracts expire, landlords have been doing just that, leaving their impoverished tenants with nowhere to go. "That's why we're fighting so hard," says Sten. "It's so much cheaper to preserve the housing than to build new units."

The Housing Preservation Ordinance was designed to give the city a chance to maintain its Section 8 housing. It forces landlords who want to abandon the program to offer their property to the city before putting it on the open market--or pay a whopping penalty of $30,000 per unit.

Section 8 landlords acknowledge the dire shortage of low-income housing but insist that the ordinance encroaches on their property rights. They say it's not fair to change the rules in the middle of the game. "A contract is a contract is a contract," says DiLorenzo.

In addition, many legislators see the Portland ordinance as an "end-run" around existing state laws, which guarantee property owners the right to appear before a judge and jury, as opposed to an arbitrator, to resolve disputes over property values.

This property-rights battle cry has apparently found resonance among downstate legislators, many of whom represent rural communities wary of "government takings" and blissfully remote from urban housing disputes. "There's no doubt the bill has a good chance of passage," says DiLorenzo. If so, Portland housing advocates will have to go back to the drawing board to solve the city's urgent shortage of cheap housing.

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Willamette Week | originally published February 24, 1999