Over the past year, no issue has split City Hall more sharply than the question of what to do with the Portland Development Commission.

Last week, City Commissioner Erik Sten dropped a bomb in the ongoing battle over Portland's urban development arm when he moved to pre-empt a review process that Mayor Tom Potter began 13 months ago. That review process of the city's governing charter has the PDC as one of its top targets.

But at a City Council work session set to review the city's priorities in the 2007 Legislature, Sten proposed a new initiative that would ask lawmakers to amend state statute and grant Portland's City Council the power to review and approve PDC's budget. That budget is $247 million this year for projects such as South Waterfront and the revitalization of Martin Luther King Jr. Boulevard.

Portland is the only city in the state whose council lacks such authority, Sten says.

"The PDC is the largest city agency [by budget], runs almost exclusively on property taxes, and yet it has no elected official oversight," he adds.

The last-minute maneuver irked Potter. Charter review is one of Potter's top priorities, and the citizen commission he asked to review the current setup is due to deliver its recommendations to City Council on Jan. 18.

"The mayor's position is that PDC was created by a vote of Portlanders," says mayoral spokesperson John Doussard. "And if changes are necessary, they should be carried out by voters here, not by legislators in Salem."

Although Potter and Commissioner Dan Saltzman both took issue with Sten's proposal last week, commissioners Sam Adams and Randy Leonard supported Sten. That makes for a three-man majority on the five-person Council, so the proposed change will be part of Portland city lobbyists' mission next year.

Sten has already briefed the new House speaker-elect, Rep. Jeff Merkley (D-Portland), on the issue and is optimistic about getting a legislative fix.

The detour to Salem is just the latest round in squabbling over PDC—on which Potter finds himself outvoted.

PDC Chairman Mark Rosenbaum has fought the efforts of Sten, Leonard and Adams to take greater control over the agency. But Rosenbaum and Potter have been outgunned on issues such as Leonard's demand for an audit of a controversial appraisal process for a proposed development at Southwest 3rd Avenue and Oak Street, the specifics of a new policy requiring that PDC spend 30 percent of its budget on housing, and, most important, the question of City Council control over PDC's budget.

Rosenbaum says PDC was established specifically to be independent of City Council. The agency's job, he says, is to implement policy that the council sets, but it needs to be able to allocate its budget accordingly rather than serve as a tool of individual commissioners' pet projects. Rosenbaum says the council has significant authority over PDC already. And he says it should be city residents, not the Legislature, who vote on any changes to PDC's operations.

"I don't think it's up to any city council to unilaterally make the decision of how PDC is governed for voters,'' Rosenbaum says.

Sten denies he is derailing the mayor's charter review process or that the City Council already has sufficient oversight over PDC.

"The charter commission has said it's satisfied with the status quo," he says. "And our current oversight is superficial. The way elected officials set policy is through budgeting."