Gravy Train

Earl Blumenauer and the "transportation mafia"

On March 18, 2003, President George W. Bush told Congress he was about to invade Iraq. We all know how that went.

That same day, Rep. Earl Blumenauer, a Portland Democrat, introduced a bill to create a federal grant program for streetcars.

That effort has gone a bit better.

Two weeks ago, Portland got closer to benefiting from Blumenauer's work and receiving $75 million in federal funding for the eastside extension of the streetcar. While Portland's westside streetcar was built mostly with local money, the planned eastside loop—which will eventually cross the Broadway Bridge and run down to the Oregon Museum of Science and Industry—will be financed with tax dollars collected from citizens all over the country. It would be the first time such a big chunk of federal money—more than half the projected $147 million cost—has gone toward streetcars.

If the feds OK the funding—approval is possible by next spring—it will be another coup for Blumenauer, a streetcar booster for 20 years. It's no small feat to win congressional support for an anachronistic form of public transit, especially during an administration that prefers war machines.

"Earl, he's the godfather, you know," says Jeffrey Boothe, director of the national Community Streetcar Coalition.

Boothe's label cuts both ways. An analysis of public records, campaign finance reports and interviews with people here and in D.C. illustrates the murky ground on which the business of Washington sits. Depending on your point of view, Blumenauer has either masterfully maneuvered the levers of Washington to achieve longstanding goals, or brazenly used tens of thousands of dollars he's raised from those who stand to benefit from the streetcar expansion to make federal funding possible. And at the center of this effort are Blumenauer and his best friend, Rick Gustafson, whose employer has already received over $2 million in streetcar work.

"If this were money coming from a company seeking a big defense contract, and then—oh, what do you know—they got it, people would be jumping up and down," says Massie Ritsch of the Center for Responsive Politics. "It's hard to get worked up about a mass transit project. It serves a large number of people."

Some still manage to get agitated. "These guys are obsessed with trains," says Jonathan Charles, who heads the libertarian Cascade Policy Institute. "They know these trains don't make any sense" as a private investment, Charles says, so they go after federal funding instead.

"They call it the 'transportation mafia,'" says Portland City Commissioner Erik Sten, who counts himself a streetcar supporter. The term, Sten says, is meant endearingly. "I think there's some jealousy in other circles because they're so effective."

And "Earl is the godfather for sure," Sten says.

Blumenauer is proud of his work with the streetcar. "It's something I passionately believe in, and it's made a big difference in Portland," Blumenauer says. "I think people like the work I do. I hope they like the work I do."

Earl Blumenauer, 59, is a different kind of politician. He's no baby-kisser. Not for him is the affability of Gov. Ted Kulongoski, who would just as soon talk baseball as discuss state issues. Neither does he have the rumpled earnestness of U.S. Sen. Ron Wyden, or the hellfire passion of U.S. Rep. Peter DeFazio.

Blumenauer, by contrast, is cool, steely, bow-tied and somewhat misanthropic (even his wife has been known to kid him for not liking people).

He has been in public office since the age of 23, when the Lewis&Clark College grad entered the Oregon Legislature. He later served as a Multnomah County commissioner, and on the Portland City Council until joining Congress in 1996.

The focus of his career has been livability—supporting local agriculture, bicycling and light rail. His work has helped save Portland from looking like Houston.

While the streetcar may not be the capstone to Blumenauer's record as a livability wonk, it is certainly a demonstration of what he does best—and an example of why some say the federal campaign-finance system needs to be reformed.

Like many elected officials, Blumenauer has gone on record criticizing the role of money in politics. At the same time, he has used the current system as well as anyone.

With perhaps the safest seat in Oregon (his district votes overwhelmingly for Democrats), he has never had anything but token opposition. In 2004, for example, his Republican opponent was Tami Mars, an executive at a Portland jewelry manufacturer with no government experience. Blumenauer beat her with 74 percent of the vote, a typically large margin for the congressman.

Despite his safe seat, Blumenauer has been a surprisingly aggressive fundraiser, raising more than $4.1 million since he was first elected.

Federal law limits the money one donor can give to a candidate's campaign to $2,300 per election. Shortly after he joined Congress, Blumenauer formed a leadership political action committee (PAC), a well-worn tool politicians use to circumvent the federal $2,300 limit. These PACs allow donors to give another $5,000 a year. While PAC money can't be spent directly on campaign expenses, it can pay for travel and be shared with other candidates, burnishing the stature and thus the electability of an incumbent.

Such PACs are common but controversial. "They're a means to evade the contribution limits," says Meredith McGehee, policy director of the Washington, D.C.,-based Campaign Legal Center. "If you want to move up into leadership positions, or you want to run for president, they're almost essential."

Over the past decade, Blumenauer's PAC has raised more than $1.1 million, much of which has come from the same people who contributed to his reelection campaign, including people who have a direct interest in the streetcar.

They include Michael Powell of bookstore fame, who has given $12,000 over the years to Blumenauer and his PAC; Hank Ashforth, a large Lloyd District property owner, who gave $7,500; Rick Parker, an eastside businessman who, with his wife, gave $38,000; Pearl District developer John Carroll, who gave $21,000; and another developer, Dick Cooley, who with a few of his employees gave a total of $17,700.

All sit on the board of Portland Streetcar Inc., the nonprofit that oversees the streetcar for the city. And all have a stake in the streetcar's success, because having a transit line nearby adds value to their properties. "Your property will probably be worth four times as much," Powell, who chairs the PSI board, told the City Council this August. "It brings three million customers' eyeballs onto your business."

Rick Parker, a Republican, says he's known Blumenauer since the "super-nice" congressman was a city commissioner. "That's why I've tried to help him out where I can," Parker says. "It's just been exciting to see a congressman from the east side get some seniority, and get us some things once in a while."

An analysis of Blumenauer's PAC shows that $162,000 has gone to fellow members of Congress who had one thing in common: They could help direct federal funds to the streetcar. That's nearly the same amount he has received from people WW can identify as having an interest in the streetcar.

The recipients were current and past members of the House Transportation Committee, on which Blumenauer served until last year. Among the top recipients:

  1. Leonard Boswell of Iowa, who was given $20,000 from Blumenauer’s PAC.
  2. Michael Michaud of Maine, who was given $16,000.
  3. Rick Larsen and Brian Baird of Washington state, who received a total of $22,000.

All of the above were Blumenauer's colleagues on the committee that considered his streetcar bill, which was folded into a larger $244 billion transportation package. The transportation bill, which passed almost unanimously in 2005, created a new Federal Transit Administration program to give money to smaller projects, including streetcars.

Members of Congress who took money from Blumenauer—and returned WW's calls—denied that his donations influenced their support.

"Money is often given to get access to the decision makers," says Ritsch of the Center for Responsive Politics. "Blumenauer is a decision maker, so he had the access. The money may have been the cherry on top to make things happen."

When asked if his largesse helped get colleagues on board with the streetcar, Blumenauer said: "Well, [it] doesn't hurt. Part of what we try and do is develop a constituency for programs that would give people more control over their communities." Later, he added: "I have never accepted or given a contribution with a specific or implied request to anyone to support funding for a project in my district or for any other quid pro quo."

Chris Smith, who chairs the citizens advisory council for PSI, doesn't think Blumenauer's PAC contributions got Portland any special treatment. "In general, the impact of money on politics concerns me," says Smith, who may run for City Council next year. "With the way the game is played in Washington, I'm not sure Earl does anything that's particularly untoward."

Property owners aren't the only people who stand to gain from their contributions to Blumenauer.

A number of contractors who have given to Blumenauer and his PAC have already benefited from previous streetcar work and will probably benefit from the eastside extension.

The largest donor was Stacy&Witbeck construction, which also had the single largest streetcar contract: $34 million to lay track on the west side. Two of its top executives, John Bollier and Ronald Wells, have given nearly $70,000 to Blumenauer's funds. (In 1994, Stacy&Witbeck was banned from contracting with the City of San Francisco for overcharging, only to have the ban rescinded after hiring a lobbyist close to the mayor. The company went on to win a $118 million contract to build a new streetcar line.)

Employees of LTK engineering and Zimmer Gunsul Frasca architects have contributed $23,500 to Blumenauer over the years. LTK has overseen manufacture of the cars themselves, and ZGF has helped with planning and design.

"I am proud that a number of those people are friends and supporters of mine," Blumenauer told WW by phone from Washington, D.C.

"The streetcar is something I believe in, have worked for and championed for over 20 years, and there are any number of people who have supported me since before there was a streetcar," Blumenauer said. "I don't see any problem with [their contributions], and I don't think anybody else does."

The most interesting local connection to Blumenauer and the streetcar is the private nonprofit that runs it. Unlike, say, the bus system or light rail, which is operated by TriMet, a public agency, the streetcar has been run, since its inception, by the private nonprofit Portland Streetcar Inc.

While the City of Portland owns and is ultimately responsible for the streetcar, PSI manages the seven-mile line, plans new lines and chooses contractors. The nonprofit was formed in answer to the city's 1995 call for streetcar bids. The deal has been amended and renewed as the streetcar has grown.

The reasons for this "public-private partnership" depend on who you ask. Some say bringing the private sector in was the only way to pay for the streetcar, and that TriMet had little interest in trolleys. Others say the nonprofit allowed developers to retain more control over the routes and limit their risk. The structure is either "lean and efficient" (says Blumenauer) or "very corrupt" (says streetcar critic Charles).

Blumenauer was Portland's city commissioner in charge of transportation when PSI was formed. "Frankly, although we've had a great partnership with three general managers at TriMet, if this had been something that had just been dumped on them, it probably would not have ever gotten to the top of the list," he says.

The first PSI board was a self-selected group that included many developers.

And for most of the time since then, the guy in day-to-day charge of the streetcar has been Rick Gustafson, PSI's executive director.

If Blumenauer is the transit godfather, Gustafson is his consigliere.

The two men are best friends, says Gustafson, having known one another since they attended Centennial High School in Gresham.

"I don't know what difference it makes to Willamette Week who my 'best' friend is," Blumenauer says.

They are also business partners, sharing real-estate investments in several properties around the city, according to Gustafson and the federal financial disclosures Blumenauer files each year.

Gustafson joined Blumenauer in the Oregon Legislature in 1975 after working for TriMet. Before that, he worked for General Motors in Detroit. After the Legislature, Gustafson went on to become Metro's first executive officer, serving the regional government until 1987. Since then, he has worked at Shiels Obletz Johnsen, which manages transportation and development projects for public and private clients. Shiels Obletz hired Gustafson in 1987 to work on a Portland contract for the Jefferson Street Rail Line to Lake Oswego. Blumenauer was the commissioner for transportation at the time. He told WW back then that he'd had nothing to do with his friend's hiring.

Rep. Blumenauer tells WW the same thing today, in regards to the streetcar, stressing that's he's never had influence over the awarding of city contracts, during or after his time on the council.

"None of this has anything to do with Earl," Gustafson says. "When we first bid on this thing, I wasn't part of the deal."

Gustafson is not paid for his role as PSI's director. But the nonprofit has awarded his firm, Shiels Obletz, at least $2.3 million in consulting contracts, according to a May 2007 tally by the city.

Principals at the firm—including Gustafson—have given nearly $27,000 to Blumenauer and his PAC since 1996.

Outsiders might find it odd, and possibly sticky, to have a nonprofit award large contracts to its director's firm. "It's a potential conflict of interest," says Andrew Svitek, a Portland nonprofit lawyer. He adds, "It only becomes a problem if you can show that somebody got preferential treatment." That's a difficult thing to show.

Others use stronger language. "It stinks to high heaven," says Laura Otten, director of the Nonprofit Center at LaSalle University in Philadelphia. She says a nonprofit director's company benefiting from contracts with the organization is "one of the biggest red flags you can wave."

"The board has the right to say, 'We have a bid process,'" Otten says, "but there isn't a person whose eyebrows aren't going to be raised."

Gustafson, Powell and Vicky Diede, the city's streetcar project manager, stress that each streetcar contract follows a competitive bid process, subject to approval by the City Council. But since 1995 no company has ever bid against Shiels Obletz Johnsen.

"They're very valuable to us," Diede says. "They do have a lot of knowledge." PSI chairman Powell says nobody does a better job than Gustafson's firm.

"If I were advising the board, I would want them to get a couple of other bids," says Susan Gary, a University of Oregon law professor specializing in nonprofits.

There were a few questions about PSI's ongoing contract at a Sept. 6 City Council meeting. Mayor Tom Potter wanted to know whether PSI makes any money by acting as a pass-through for government funds. (It doesn't, though it does bill for board expenses.) Commissioner Dan Saltzman also had questions, but he didn't press too far.

"The whole issue with Shiels Obletz Johnsen and Richard Gustafson…I frankly didn't want to go there," Saltzman said after the meeting. (Saltzman's sister, Julie Leuvrey, serves on PSI's board.)

Those who oppose the streetcar as a waste of taxpayers' money have seized on Blumenauer's network as an example of what is wrong with government. Said one prominent elected official, a Democrat who asked not to be identified, "It's certainly a very chummy group."

Says Charles of the Cascade Policy Institute: "All these little public processes they have, they're all done deals. You know they're not going to consider something different. Any public participation process is all for show."

But for streetcar supporters, it is simply part of the game, one that Blumenauer has played extremely well. "Blumenauer absolutely gets the credit. He worked very hard" to create a federal program for streetcars, says Portland City Commissioner Sam Adams, who now oversees the Office of Transportation.

The fruit of Blumenauer's work has been renewed interest in streetcars in cities around the country. Certainly, not every streetcar contractor, in Portland or elsewhere, has donated to the congressman. And not every lawmaker who supports streetcars has taken money from Blumenauer's PAC. But his success at creating a nationwide network of streetcar supporters is undoubtedly impressive. Last week, for instance, House Speaker Nancy Pelosi (D-Calif.) was in Portland, talking up streetcars as an eco-friendly mode of transit. Sitting next to her there inside the Oregon Convention Center was the savior of streetcars, Earl Blumenauer.

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