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November 26th, 2003 NIGEL JAQUISS | News Stories
 

Coming Clean

A city development official was once in debt to a group that often works with his agency.

     
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NORRIS LOZANO
IMAGE: PORTLAND DEVELOPMENT COMMISSION
A senior official at the Portland Development Commission has a history of unpaid debts, WW has learned, including a loan default to a group that includes prominent local real-estate developers and investors.

In the small pool of Portland politics, Norris Lozano isn't one of the biggest fish, but he swims with them. You can bet, for example, that the members of the Portland City Council all know his name, though they might not be exactly sure what he does.

He works for the Portland Development Commission, a city agency that gets little attention from elected officials or the media despite its $307 million budget, which it uses to spur economic growth from the Brewery Blocks to the South Waterfront.

Private-sector experience is helpful at PDC, because much of its mission involves distributing public resources to developers. That's why two years ago, when the PDC hired Lozano, 53, as its resource-development director, it issued a glowing press release touting his "15 years of experience in law, asset management, banking, and real estate."

Lozano, who reports directly to PDC executive director Don Mazziotti, was brought in to diversify PDC's funding base. Currently, the agency depends heavily on bonds backed by an anticipated increase in property values in designated zones where it has projects.

A year ago, Mazziotti put Lozano in charge of the newly formed Portland Family of Funds, which is supposed to tap into a new $15 billion federal tax-credit program and generate funding for redeveloping low-income neighborhoods. That's exactly the kind of job that requires the private-sector savvy Lozano acquired prior to becoming a city employee.

Lozano, a gregarious Texan, came to Portland in the mid-'90s. At that time, he and two partners owned Hanna-Sherman International, a local firm that makes car-wash equipment. The business struggled, and in 2000, the partners borrowed about $1.8 million from Aspen Wash LLC, a Portland private lender (the Aspen group has set up dozens of limited-liability companies, many of which take names linked to their loans).

In March 2001, records show, Hanna-Sherman defaulted on the Aspen Wash loan and other associated debts, totaling $3.5 million personally guaranteed by Lozano and his partners.

Aspen Wash seized Hanna-Sherman's assets, which it claimed were worth far less than Lozano's debt. In September 2001, Aspen sued Lozano in Multnomah County Court, seeking payment of $2 million. The lawsuit was still pending when Mazziotti hired him in November 2001.

If Lozano were still in the private sector, or held a low-level PDC post, his financial tribulations would hardly be newsworthy. But he holds a key position in an influential public agency that does business with developers connected to Aspen. For instance, John Carroll, who has developed Pearl District properties with Aspen's help, is currently vying for a PDC-financed redevelopment of Fire Bureau headquarters and has Aspen backing his proposal.

In some cases, the connection is even more direct. Agency records show that at the time Lozano joined PDC, and was in debt to Aspen, other PDC staffers were negotiating with hotelier Gordon Sondland, the manager of Aspen Wash, who was trying to buy a piece of land that PDC owned in RiverPlace. Sondland ultimately pulled out of the deal.

Mazziotti says he was "generally aware" of Lozano's entanglement with Aspen. "He told me that he expected it to be settled," Mazziotti says.

The Aspen suit was settled in December 2001, court records show. Lozano and an Aspen lawyer told WW that he has no further obligations to Aspen, although, because the settlement is confidential, there is no way of knowing the terms.

There is no indication that Lozano has improperly influenced PDC loans, investments or contracts in any way, and he denies that his past in any way has compromised his current position. "If there were any conflicts of interest, I would have disclosed them," he says. "I've never done any business with Aspen at PDC."

Shelley Lorenzen of the League of Women Voters says hiring Lozano prior to the completion of the Aspen litigation "is bizarre."

City Commissioner Erik Sten says Lozano's past dealings with Aspen are of concern. "I would hope that they're being meticulous in keeping an eye on perceived conflicts of interest," he says. "Aspen backs a lot of the same people to whom PDC lends money."

Aspen Wash wasn't the only entity trying to squeeze money out of Lozano. He came to PDC carrying more than $100,000 debt on an American Express card, according to court records. (Lozano says he has settled litigation with Amex and is nearly finished paying his debt to the company.)

Mazziotti says he was unaware of that debt, although it had been the subject of protracted litigation. PDC's background check for prospective employees does not include civil litigation, he says.

Lozano's boss says he doubts the Amex debt is relevant to the development director's job at PDC. "People dispute credit-card charges all the time," Mazziotti says.

Still, Lorenzen, a former corporate lawyer, finds Lozano's hiring puzzling. "PDC holds itself as being the business arm of the city," she says. "If they're hiring people like that, it doesn't give you a lot of faith in their judgment."

 
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