IMAGE: Lukas Ketner

The past 12 months have not been kind to state Sen. Betsy Johnson (D-Scappoose).

A bright, fiesty timber heiress and rising star in Salem, Johnson had been on the gubernatorial short list for 2010.

But last summer, Johnson paid $600 to settle state ethics charges in connection with land dealings in her coastal district (see “Heavens to Betsy,” WW, May 30, 2007).

Then, in January, WW reported the FBI was investigating Johnson, possibly over an allegation she tried to use her post to intimidate a Portland State University professor (see wweek.com/wwire).

Now, WW has learned from emails obtained through a public records request that Johnson teamed up with the city of Portland’s top lobbyist to sweeten a city contract held by Johnson’s husband. The cost of that sweetening: up to $75,000 over three years.

Tom Feely, senior business operations manager in the city’s Office of Management and Finance, criticized Johnson’s tactics in a March 7, 2008, email he wrote to his boss, city chief financial officer Ken Rust.

“I’m troubled by this issue,” Feely wrote. “Having the city’s lobbyist intercede on behalf of an elected official on behalf of her husband in a normal business issue seems wrong to me.” (Read the full email here)

At issue: a contract held since 1989 by the Northwest Rotorcraft Association, a nonprofit run by Johnson’s husband and $2,258-per-month legislative aide John Helm.

NWRA operates a city-owned heliport atop a parking garage at Northwest Naito Parkway and Davis Street. The contract was designed to cost the city nothing. And it worked that way for 19 years. In exchange for the right to provide a landing spot and collect landing and parking fees, NWRA covered basic maintenance and insurance, which ran about $17,000 per year.

In August 2006, emails show, Johnson raised the prospect of the city covering NWRA’s insurance costs, because the association hadn’t collected enough from fees for that expense and Johnson and Helm were out of pocket about $15,000 annually.

“Do we have any information why they have been undercollecting from their users?” Rust asked Feely in an Aug. 7, 2006, email. “ Sounds like they want their problem to become our problem.”

Records show slightly more than 5,000 takeoffs and landings annually at the heliport, which should have covered most or all of NWRA’s costs from the per-landing fee of $5. But over the past three years, records show, NWRA collected only $2,096 in landing fees from users such as TV stations and businesses needing a convenient landing spot. The heliport also serves as a backup landing space for Legacy Emanuel Hospital and public safety users (Helm and Johnson don’t use the heliport). Helm ascribes the less than 4 percent collection rate to pilots’ failure to observe an honor system and to the heliport’s ineffective video monitoring system.

“We’re hoping a new system will work better,” he says.

For a year after Johnson first mentioned the heliport to chief city lobbyist Dan Bates, the issue was unresolved. Then, on June 28, 2007, Bates emailed Feely, Rust and Mayor Tom Potter’s chief of staff, Austin Raglione, about Johnson with the subject line “Heliport Insurance Issue.”

“This issue is going to rear its head again shortly,” Bates wrote. “The legislative session will finish today and the Senator made mention of the issue to me yesterday.”

Bates predicted two outcomes if the city didn’t help: “Betsy and John refusing to pay and the Heliport shuts down. Betsy and John pay the premium and a significant amount of goodwill lost.”

Bates says he was simply doing his job by trying to maintain good relations with a lawmaker.

Johnson is a member of the joint Ways and Means Committee, a powerful post because the panel writes the state’s budget. In 2007, she chaired its transportation subcommittee, which is key to Portland because of the city’s chronic backlog of street maintenance projects.

Asked by WW how often Johnson discussed the heliport with him after she first raised the topic with him during a Potter trip to Johnson’s district in 2006, Bates says, “10 or 20 times.”

Bates can’t recall any other time when a lawmaker sought his help on a family member’s business with the city.

Johnson’s communication with Bates about NWRA’s contract could run afoul of a state ethics law that says, “A public official may not use or attempt to use official position or office to obtain financial gain or avoidance of financial detriment for the public official, a relative or member of the household of the public official, or any business with which the public official or a relative or member of the household of the public official is associated.”

But Johnson’s “10 or 20” conversations with Bates appears to have yielded a benefit. In January 2008, the city renewed its contract with NWRA—the only bidder—and agreed to take over maintenance and pay NWRA an annual management fee of $25,000 for three years to cover insurance and other costs. The new contract included a requirement for more insurance—an additional annual cost of about $8,000 to be borne by the city. The bottom line: NWRA was $75,000 better off than before.

Johnson referred questions to Stephen Houze, an attorney representing her in the ongoing FBI probe.

In a statement, Houze says Johnson has done nothing wrong. “Senator Johnson has not sought, nor has she ever received, any benefit in any form whatever from the contractual relationship between NWRA and the City of Portland (read the full statement here).

At WW’s request, Janice Thompson of the watchdog group Democracy Reform Oregon reviewed city emails regarding the heliport. “At best, Sen. Johnson’s actions put city officials into a difficult position,” says Thompson. “At worst, they may violate legal restrictions on use of official position for family financial gain.”

Feely, who has overseen city contracts for 25 years, says he’s never known a legislator to use the city’s lobbyist to intervene in a contract. Feely says the amount of money at stake may be small, but adds: “I don’t care how much money is involved. That’s not the issue. The issue is influence and how it was brought to bear.”

Although the city awarded NWRA a contract extension in January, Helm still has not returned the required insurance certificates. On June 12, the city notified him it will terminate NWRA’s contract if he is not in compliance by June 27.