Skip to main content
The Portland City Council this week mulled placing conditions on a transfer of the franchise agreement between the city and Zenith Holdings, the company that controls the largest oil terminal in the state, to a private equity firm seeking to buy Zenith.
While city staff has said the council must vote on the franchise transfer based only on the buyer’s “legal, technical and financial qualifications”—a very narrow set of considerations—members of the City Council seem keen on exploring how councilors might add conditions to the franchise agreement before they approve it.
The council’s left wing, in particular, has signaled an interest in exploring ways to tack additional conditions on the new buyer, I Square Holdings. Added conditions and demands have been heavily pushed by environmental groups long opposed to Zenith.
The Florida-based I Squared Holdings requested a transfer of the franchise agreement in January as it announced a deal to buy Zenith, which operates a 39-acre, 1.5 million-barrel terminal that receives and distributes crude oil and refined petroleum products, including diesel and aviation fuels. The terminal includes a pipeline that runs under city right of way, triggering a requirement that it have a franchise agreement with the city. Under the city charter, any transfer of a franchise agreement requires approval by the Portland City Council.
The council’s Finance and Governance Committee of the Whole discussed the franchise request on Aug. 6. The meeting took on additional tension because Zenith sued the city of Portland last week, alleging the council had “repeatedly and unreasonably delayed” approval of the purchase “in breach of its contractual commitments to Zenith.”
More than 50 people testified before the committee, including environmental groups that have long opposed Zenith, including the Breach Collective and Willamette Riverkeeper.
Heather King, co-executive director of Willamette Riverkeeper, said the franchise agreement should be strengthened before it’s transferred to I Squared.
“Willamette Riverkeeper has deep concerns about the proposed transfer,” King said. “For years, this city has shown an unwillingness to hold Zenith accountable...There needs to be a way for the public to enforce this agreement if I Squared has similar failings to what we have experienced with Zenith.”
Executives from I Squared also testified before the council, pledging the company was committed to transitioning the terminal to 100% renewable fuels.
Part of its strategy to convince council? Dunking on Zenith.
“Consider the contrast between today’s owner and the new one. Zenith is a Houston-based platform by the two private equity firms. Zenith runs terminals across the country, and this facility is one of many in its portfolio,” said Jerry Zhang, a vice president at I Squared Capital. “I Squared, on the other hand, is an infrastructure investor. The fund that’s acquiring this asset is legally bound by the [European Union]’s most rigorous sustainability standard, and this will be the only terminal in our fund.”
Zhang added: “Portland has a well-earned reputation for environmental stewardship, and we plan to contribute to that.” (To that, another testifier whispered in a hot mic moment: “Wow, so much bullshit in such a short time.”)
Following testimony, councilors questioned staff about the process that led the administration to recommend that the council approve the transfer. Andrew Speer, the city’s franchise utility program manager, said that “nothing found within the documents we received [from I Squared] that would pose staff recommending some kind of obligation outside of the current franchise.”
In other words, staff basically recommended the council approve the franchise transfer as is, based on the documentation provided by I Squared.
Councilors weren’t swayed much by that. Left-of-center councilors including Angelita Morillo, Mitch Green and Candace Avalos asked questions of City Attorney Robert Taylor about what avenue the council could take to add requirements to the franchise agreement. Taylor declined to answer most of those questions publicly. Whether that’s because of attorney-client privilege or the pending lawsuit from Zenith is unclear.
“Council needs the opportunity to do our due diligence on this,” Morillo said. “Frankly, since [they’ve] already threatened a lawsuit, I feel like I can take my time now.”
Others, including Councilor Elana Pirtle-Guiney, said the city could pursue other avenues of accountability for a new owner, but that the franchise agreement wasn’t the place to do that—especially given the narrow set of considerations city staff said council must gauge the transfer by.
“A transfer of a franchise with a very narrow scope shouldn’t be where we dig in,” Pirtle-Guiney said, “but that lawsuit has raised old distrust and I think not helped us move forward quickly.”
The committee voted 7-5 to refer the ordinance to the full council. All members of the progressive caucus voted against referring the ordinance, save for Council President Jamie Dunphy, who voted to send the ordinance to the full body.
