A Developer Promised Union Jobs in Exchange to Build Tall. The Construction Happened. The Jobs Didn’t.

Portland City Hall cut a lousy deal: “The rule and agreement were not written well.”

(Reid Kille)

In 2014, real estate developer Vanessa Sturgeon inked a deal with City Hall to build a 30-story downtown residential and office tower, the fourth tallest on the Portland skyline.

That tower, Park Avenue West, was a win for city officials, who had watched the property sit fallow for so many years it had earned a nickname: "the Moyer Hole," after owner Tom Moyer, Sturgeon's grandfather. It was a win for Sturgeon, whose building would be allowed to soar 30 stories—because the city agreed to let her build higher than zoning codes would usually allow.

And it was supposed to be a win for organized labor: In exchange for permission to build higher, Sturgeon agreed to contract with a company that hired union cleaners and security guards in the commercial parts of the building. (She also paid the city $100,000.)

But Sturgeon hired no contractors for cleaning.

Instead, she found a way to wiggle out of the deal: Commercial tenants at Park Avenue West would hire their own non-union cleaners and the agreement did not explicitly prohibit that.

"The intent was to require cleaning staff to be represented [by a union]," says Marshall Runkel, chief of staff to City Commissioner Chloe Eudaly. "Everyone agrees that is not happening." Runkel concedes City Hall cut a lousy deal: "The rule and agreement were not written well."

Service Employees International Union Local 49 says the deal is clear enough—the city just isn't enforcing it. Sturgeon, through an assistant, declined to comment. Her attorney, in letters to the city, contends she is abiding by the agreement.

"I thought we agreed to fair treatment—and fair wages—for janitors providing services to Park Avenue West, and I'm disappointed we haven't had a better partner" in Sturgeon's company, TMT Development, says City Commissioner Nick Fish. "I certainly didn't expect we'd spin our wheels for this long arguing over the letter and spirit of the deal."

The case of Park Avenue West is important because it demonstrates how the city gives away millions of dollars worth of value to developers—without ensuring they keep their end of the deal.

City zoning rules limit how high a building may be built on a property, by calculating the square footage allowed on each floor. This measurement is called floor-area ratio, or FAR.

When developers want to build higher, they may buy development privileges from other property owners to build more. (In the case of Park Avenue West, City Hall granted the development permission that would have belonged to a building erected above city-owned plaza Director Park.)

The city is now studying how to sell more development privileges on city-owned land through FAR transfers to developers looking to build higher and more densely in the central city.

An executive summary by consulting firm EcoNorthwest estimates the sale of such privileges could bring in nearly $63 million for the city by 2035. But what happened at Director Park raises a red flag whether the city can enforce the rules it places on such trades—including a requirement to build affordable housing.
"If we can't hold them accountable at least one time, why would they ever believe they have to be accountable?" says Felisa Hagins, political director of SEIU Local 49.

Over the past three years, City Hall and Sturgeon's company, TMT Development, have exchanged a series of letters through their attorneys without resolution.
Union members hope companies that pay union wages and provide benefits will get the jobs.

Nonunion minimum wage jobs pay $12 an hour in Portland. Union wages are at least $14 an hour after a probationary period, SEIU says, with roughly another $6 an hour in benefits.

"I'm hoping they change to a union company," said Renato Quintero, 52, a janitor and union vice president who cleans at Intel, at a protest earlier this month. "They charge a lot of money for wealthy people, but those who clean it hardly can make it to pay the rent every month."

In a statement to WW, the mayor's office appeared to give up.

"The city has gone as far as they legally are able to," says Mayor Ted Wheeler's spokeswoman Eileen Park. "We reiterate our values. The mayor believes in the importance of unions and the critical role they play in ensuring livable wages and benefits for employees."

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