Rarely does the City of Portland drag a downtown property owner into court. Even more rarely does the case involve an elected official.
But on Aug. 26, the city filed suit against Old Town Lofts LLC, a now-defunct company set up by first-term Multnomah County Commissioner Judy Shiprack for a subsidized condo project that's already proven a major debacle for Portland taxpayers (see "Shipracked," WW, Sept. 17, 2008).
The lawsuit in Multnomah County Circuit Court claims Old Town Lofts LLC failed to pay property-management license fees for eight of the nine years from 2001 to 2009. The year not included in the suit is 2003. The suit alleges the company owes the city $9,000 in unpaid fees, penalties and interest.
Downtown property owners pay the fees to fund security, litter cleanup, graffiti abatement and holiday lighting. Megan Doern of the Portland Business Alliance says 99 percent of owners pay on time, unlike Shiprack's company is alleged to have done.
"Shame on you, Judy," says Howard Weiner, chairman of the Old Town-Chinatown Public Safety and Livability Committee. "It's especially frustrating in this case, since the management of the LLC is also a public official."
Shiprack declined to comment on the lawsuit. The history of Old Town Lofts, and of her leadership on the project, is byzantine.
In 1993, Shiprack founded the nonprofit Link Community Development Corp. to build low- and middle-income housing. Shiprack was the executive director. Representatives of various construction unions and former County Commissioner Lisa Naito have sat on the board of directors.
Link's big break came in 2000, when the Portland Development Commission loaned the nonprofit $3 million in taxpayer funds to help build Old Town Lofts. The eight-story condo complex at 411 NW Flanders St. was marketed as middle-income housing in a blighted neighborhood.
Link formed Old Town Lofts LLC to sell the building's 60 condo units and manage the 4,000 square feet of ground-floor commercial space. The last of the condos sold in 2003 before the market crashed, but the ground floor—still owned by Old Town Lofts LLC—remains vacant to this day.
Emails obtained by WW in 2008 revealed that from the PDC's perspective, the project was a mess of delays, missed deadlines and excuses from Shiprack, who ran Link and Old Town Lofts LLC. One PDC official referred to her in an email as "Judy Shipwreck."
Link formally defaulted on its PDC loan in 2003. The nonprofit last filed required paperwork with the IRS in 2006, with Shiprack listed as executive director. PDC spokesman Shawn Uhlman says Link owes the agency $1.9 million in public money.
In an email to WW, Shiprack said she left her post as head of Link more than a year ago and has continued to assist PDC in "seeking disposition of the assets" that remain in the Old Town Lofts building. "Progress is being made toward a resolution" of the 10-year-old debt, Shiprack wrote.
Now the city alleges Old Town Lofts LLC also failed to pay property-management fees on the ground-floor space (owners of the condo units are making payments, according to the city). The fees are paid by all downtown property owners within the city's 213-block Business District.
Old Town Lofts LLC was officially dissolved by the Oregon Secretary of State's Office last year for failing to file an annual report. State records still list Link as the company's manager and Shiprack as registered agent.
Shane Abma, a deputy city attorney, says the city sent Shiprack a letter demanding payment in October 2009 but never heard back. He says if Old Town Lofts doesn't pay up, the city would gain a default judgment and a lien on the commercial space, which is valued at $900,000. Then the city would turn the case over to a collection agency, he says.
Abma says it's unlikely Old Town Lofts will contest the lawsuit in court. "It's hard to imagine what they would fight about," he says.