Sten Calls It Quits

Portland's longest-serving, most controversial city commissioner will resign midterm.

In a surprise decision, Portland's longest-serving city commissioner, Erik Sten, is resigning midway through his fourth term.

In an exclusive interview with WW , Sten said he will leave City Hall by April 1. He does not yet have another job.

"I'm proud of what I've done," says Sten, who turned 40 in October. "With the mayor's seat and Commissioner Adams' seat open, my stepping down now gives voters a real opportunity to reshape City Hall."

Sten's decision will shock many in the insular world of city politics.

Although he first won election to the City Council in 1996, Sten actually started working in City Hall five years earlier for then-Commissioner Gretchen Kafoury. Portland looked different then: Bud Clark was mayor, the Westside MAX did not yet exist, and the Pearl District consisted of dusty warehouses and a contaminated railroad yard.

Sten's unexpected departure could ignite a free-for-all among previous and potential City Council candidates, including Nick Fish, Serena Cruz, Dave Lister and Metro Councilor Robert Liberty.

It will probably also lead to jockeying among those who have filed already for the May primary race to replace Commissioner Sam Adams, who is running for mayor.

All candidates have until the March 11 filing deadline to decide which seat to run for. (Sten's seat will sit vacant from when he leaves until a replacement is elected, either in the May primary or, if no candidate achieves a majority then, in a subsequent special election.)

For the average Portlander, Sten's resignation means the departure of the City Council member who, depending on one's perspective, was the most ambitious, controversial, Machiavellian, progressive and gifted commissioner Portland has seen since 1979, when then-Mayor Neil Goldschmidt left to become Jimmy Carter's transportation secretary.

Although Portlanders may take Sten for granted, people outside the city do not.

"In terms of passion, commitment and achievement, Erik is a national leader," says Doris Koo, executive director of the

Baltimore-based Enterprise Community Partners, which funds affordable housing projects around the country.

Sten will leave his mark on a variety of areas, particularly affordable housing, the issue he says matters most to him.

Shortly after joining Kafoury's staff in 1991, Sten tackled a mess similar to the current subprime mortgage crisis.

A lender called Dominion Capital had financed hundreds of homes in North and Northeast Portland but went bankrupt.

With Kafoury's help, Sten established a nonprofit corporation called Portland Community Reinvestment Initiatives Inc., to buy 352 homes from Dominion's creditors. In a move as novel as it was risky, the city guaranteed PCRI's debt, betting big on a portfolio of homes in a poverty-ridden part of pre-gentrification Portland.

"That saved hundreds of families from foreclosure," says Fred Stewart, who was then president of the King Neighborhood Association, where many of the homes were located. "Politicians usually only help the top 5 percent of income earners. In this case they helped the bottom 5 percent."

Enterprise's Koo say PCRI's success provided a new national model.

"Until Sten came along, there were basically two approaches: private lenders or publicly run housing authorities," Koo says. "He created a middle path of nonprofits which are grounded in the communities they serve."

In 1999, Sten inherited responsibility for the city's Bureau of Housing and Community Development after Kafoury retired.

He insisted that urban renewal projects, the city's largest form of discretionary spending, include affordable housing. One notable result is that the Pearl District, better known for glitzy condos, now includes 1,600 units of city-subsidized affordable housing.

In 2006, he went further, passing a city resolution—bitterly opposed by some PDC commissioners and developers—that 30 percent of urban renewal monies be spent on affordable housing, double the historical allocation.

Sten also focused on reducing homelessness. Since he instituted a 10-year plan to end homelessness in 2005, the city's homeless count has dropped 39 percent and more than 1,200 people have been placed in permanent housing, according to an August 2007 city audit.

As commissioner of the Bureau of Environmental Services, Sten helped secure federal protection for the Bull Run watershed, the source of the city's drinking water, and struck a 1999 agreement with Portland General Electric to remove two dams in the watershed.

When PGE demolished the first of the dams last fall, the occasion marked the first dam removal in Oregon in more than 40 years.

For all his accomplishments, however, Sten's unrealized ambitions may be what many people will remember most.

His 2001 plan to regionalize ownership of the Bull Run watershed fizzled two years later.

More recently, in 2005, he declared defeat in his long-running quest to acquire one of the city's most sacred corporate cows, PGE.

As early as 1999, skyrocketing electric bills led Sten to call for public ownership of PGE, the city and state's largest utility.

Although such cities as Seattle, Los Angeles and Orlando own their electric utilities, and PGE's parent company, Enron, fleeced ratepayers of nearly $1 billion, Sten's plan struck many business leaders as an affront.

Despite vocal opposition from the Portland Business Alliance and former Gov. Neil Goldschmidt and his network, Sten spent a great deal of time, energy and more than $1.5 million of city money pursuing the utility.

The city made a formal bid to Enron's creditors in 2005 but could not close the deal. Still, Dan Meek, a lawyer with the Utility Reform Project, says Sten's efforts helped keep PGE out of the clutches of a leveraged-buyout firm, Texas Pacific Group.

Sten also fought for campaign finance reform. Although he and City Auditor Gary Blackmer persuaded City Council in 2005 to make Portland the first city in the country to adopt full public financing of city election campaigns, it is unclear whether the new system will endure.

For one thing, Sten is thus far the only candidate to be elected to City Council using public funds. For another, the program got off to a shaky start. In 2006, Emilie Boyles, who ran against Sten, fraudulently qualified for $150,000 in public money and diverted the funds for personal use. (Boyles' associate, Volodymyr Golovan, was later convicted of felonies related to her scheme.)

Still, Sten is convinced of the program's virtue. "It's absolutely obvious that money has ruined politics," he says. "And it's obviously cheaper in the long run to have citizens fund their elections."

Sten's pursuit of PGE and his effort to reduce the influence of big campaign contributors provoked an epic battle with the powerful Portland Business Alliance in the May 2006 election.

The PBA handpicked Sten's chief opponent, state Sen. Ginny Burdick (D-Portland), and bankrolled a $350,000 ballot measure aimed at overturning public financing of election campaigns.

Sten handily defeated Burdick and was able to derail the ballot measure before it reached voters.

Amid his many successes, Sten has also experienced abject failure. None was more painful than the infamous water billing disaster.

In 2001, as commissioner of public utilities, Sten purchased a new computerized billing system for the Water Bureau.

The bureau switched over to the new system without first making sure the new billing software worked. It didn't, costing the city $40 million in uncollected revenues.

The problem lingered for a couple of years and led to staffing reductions and extensive deferred maintenance.

"I'm responsible for the water billing fiasco, and I've said that since '01," Sten says. "We lost $40 million, but what it really cost was enormous public trust."

Often accused by critics of being nothing more than a career politician, Sten is walking away from a sweet gig, a $95,000-a-year job in which he has enormous freedom, no term limits and a short commute.

"When I look back from my death bed, I'll probably say this was the greatest job I ever had," he says.

At 40, he's also arguably at the peak of his influence, having orchestrated, along with Commissioner Randy Leonard, victory in two pivotal May ballot measures. The first gave City Council far greater budget control over the Portland Development Commission. On the second measure, Sten and Leonard demolished Mayor Tom Potter's proposal to replace Portland's quirky commission form of government with a strong-mayor system.

In a nearly three-hour interview in WW's offices, Sten was in turns reflective, optimistic about his native city's future, combative toward those who have opposed him, and full of the confidence and directness that have been his hallmark.

Here is an edited version of that interview:

You just got re-elected in 2006. Why quit now?
When I ran in '06, I made my priorities putting the homeless plan in place and finishing reform of the Portland Development Commission. Those things are all at a pretty good spot now. I've been feeling like it's time for me to make a change. Sometimes decisions line up with life and cycles and elections. But in this case they didn't.

Is that code for being bored with your job?
No. It's more like I'm ready for my next act in life, whatever that is. My dad died a couple of years ago at 61, and life looks a little shorter to me now than it did 11 years ago.

You rarely attend public functions anymore. You abandoned your eastside roots by buying a $1.2 million home on the west side last year. Is this all part of some midlife crisis?

I'm not exhilarated by being a public figure like I used to be before my wife and I had our son [Nicholas, now nearly 4]. When he was born, I made the decision to be home at night unless I absolutely had to be out. And the longer you're in it, the more you realize there's not much privacy in public life. When I walk down the street, everybody says, "Hey, you're that City Hall guy. I thought you were taller."

Did anything trigger your decision to step down?
Last summer, a headhunter approached me about a job with a large foundation in Seattle [the Bill&Melinda Gates Foundation] working on housing and homelessness issues in the Northwest. That didn't work out, and that's probably for the best. But after considering that opportunity, I realized I was looking for a change and couldn't really explore what might be next while still serving as commissioner.

Do you have a job lined up?
No. But it will be something in the private sector. I might be getting involved in some of the green technology, but I haven't made any decisions.

Will you work in Portland or elsewhere?
Both are possible.

You were an early supporter of Sen. Hillary Clinton's presidential bid. What if she wins and offers you a job?
I don't know if that will happen. But in any case, I think I'm junior and obscure enough that I wouldn't want the jobs I might get offered.

What do you think your legacy will be?
I'm most proud of my work in affordable housing and homeless work. I think we've added somewhere between 10,000 and 12,000 affordable units in the last few years. We've housed between 1,200 and 1,500 chronically homeless people in the past 3 1/2 years. When I started, housing was an important but secondary issue, and now it's fundamental to all city strategies. The home ownership rate in Portland is 56 percent; in San Francisco, it's 20 percent. A big challenge going forward is going to be to keep the city affordable to as many people as possible.

Other accomplishments you'd point to?
I'm really, really proud of public financing for city elections, although it's been a real battle. Certainly, some of the entrenched interests in town hate public financing. But it's cheaper for citizens to fund their own elections than to have special interests fund them. Nobody really disputes that.

What about missed opportunities?
Combining the Portland Water Bureau with the 26 water providers in the region. There's a lot of redundancy there. If we'd done that, we wouldn't have to tap the Willamette, we wouldn't be tapping Hagg Lake [in Washington County], and we'd be using Bull Run more efficiently, instead of at 20 percent of capacity. In a world with a real water shortage, we have a self-imposed one. Not using the water in a world that needs it is morally stupid and economically crazy.

Wasn't the water billing screw-up part of the reason nobody went along with creating a regional water bureau?
Absolutely. The water billing mess was entirely my responsibility. I've said that from the beginning.

Some people have drawn a parallel between the water billing debacle and the implementation of another of your ideas, publicly financed elections. In 2006, Emilie Boyles gamed your system for $150,000. Doesn't that show public financing is fatally flawed?
Not at all. The election officers never should have approved her signatures. If you read the rules that were in place, the election officers did not scrutinize the signatures adequately. But look, she got caught, and Volodymyr Golovan [who gathered Boyles' signatures] is going to jail. There's a strong case to be made that their punishment shows it's a better system than what we had beforehand. The clean money system isn't perfect, but it's 90 times better than what we had before, when contributors regularly broke elections laws with no consequence.

You spent a lot of time and city money unsuccessfully trying to acquire Portland General Electric for the city. Was it worth the effort?
I wish I had succeeded. But there's no question that ratepayers are much better off today than if Texas Pacific [a leveraged-buyout group whose bid for PGE was rejected by the Public Utility Commission] had won. There were too many people who make too much money off PGE the way it is, and ultimately they wanted the status quo. But I have no regrets.

Critics pointed to your attempt to take over PGE as evidence that you are anti-business. Were they right?
No. I'm all for competition and free markets, but utilities have nothing to do with free markets. I think they're the ultimate monopoly.

You helped Mayor Potter beat Commissioner Jim Francesconi, with whom you served for two terms. Any regrets?
No. I think Tom was the better choice. His work with the police has been excellent. He's also very supportive of the work on homelessness and the Portland Development Commission budget. My critique of Tom is that the voters got exactly what he advertised: a citizen mayor who's not terribly interested in politics. He's done a lot of good things, but where he stumbled was his decision to take on his base on charter reform. He misjudged why people supported him.

You helped Potter get elected but then helped kill one of his signature efforts—his charter reform measure in May. Why?
Tom and I have a complex relationship. We don't hang out on the weekends, but we're truly friends. I've never lost my personal regard for Tom Potter. But when he wasn't able to help me finish the PGE deal [by initiating condemnation proceedings against the utility], I realized the limitations of his style of government. He thought the damage to Portland's reputation, especially with other cities and suburbs, would be greater than any benefit. I don't think he was right on that, but that was his analysis. I realized he's not going to make structural change. He sometimes will do it by letting others do it; for instance, he really let Randy [Leonard] and me reshape the PDC, but he's not a hands-on guy.

Right now, it looks like Sam Adams will be our next mayor. How is he different from Mayor Potter?
Sam and Tom are very different, but they're both classic Portland archetypes. Sam is a hard-charging, ambitious, creative guy who wants to be out every night. He is the Portland creative class, he's at the fashion shows, he's at the rock shows, he's having fun, he's working hard. He's out of the closet but not flaunting it. Tom's a similar kind; older, very principled: "If the FBI doesn't want to work my way, I'll tell 'em to go to hell." I think Sam may be closer to Potter than he is to [former Mayor Vera] Katz because Sam decided what he wants to do and does it, whereas Vera came out of a legislative background where she wanted to make sure all sides got heard and served.

Sam's proposing a street maintenance fee for homeowners and businesses at the same time he's running for mayor. Political courage, political stupidity or just an unusual way to get elected?
I think it's all three. It's politically somewhat dumb and bold at the same time. I also think he is absolutely convinced that we have a short window to get something in place to solve some of our local needs before our Legislature screws it up.

You and Sam used to have a terrible relationship when he was Katz's chief of staff, but now you've endorsed him. What's changed?
In the first profile ever written about him, I was the only one who said he was a jerk on the record. You had 20 people off the record, and one on record. When I worked for [former Commissioner] Gretchen Kafoury and he worked for Vera, Sam and I didn't like each other. And I was right, of course [laughs]. I've grown to really like him a lot, and I think he's doing really good work, especially on poverty issues. Where he sometimes screws up is when he goes too fast and jumps to conclusions too quickly. If Sam wins, the question will be whether he can slow down and manage the council like Vera could.

Some say the atmosphere in City Hall is "toxic," as bad as between Multnomah County commissioners a couple of years ago. Are relationships between commissioners and the mayor noticeably different?
The mayor's really tired. He's a great moral leader on stuff like the FBI and issues that really matter, but when it comes to leading the council he didn't have much of an appetite for that to begin with, and his appetite for that has lessened. I actually think this council gets along better than any council I've seen. There's a couple of major dislikes­—Potter and Sam, and from time to time Randy and [Commissioner Dan] Saltzman—but there's no fatal connection, and they're all pros.

Do you regret never having run for mayor?
No. In 1996, I went out to lunch with [then-Commissioner] Mike Lindberg, and he asked me to take over his work on global warming. I said, "OK, what's global warming?" I also remember asking him why he'd been a city commissioner for 18 years and never run for mayor. He said being commissioner is a better job, and he was right.

So, are you done with politics?
I have no idea if two years from now I'm going to absolutely treasure being a private citizen and have no interest in doing this thing again, or if I'm gonna be unable to live without politics. The truth is probably somewhere in the middle, but right now I honestly don't know.

Who are the best and worst commissioners you've worked with?
I wouldn't really say there've been any duds. Even when I've disagreed strongly with people, as I did with Francesconi at times, I've respected them. Randy Leonard's by far the most fun to work with. He's very loose, very smart, and he loves taking bold positions.

Why did you run in '06?
Two things: I was working on tasks that I hadn't finished, and then the Portland Business Alliance drew a line in the sand and said, "We're gonna go after voter-owned elections at the ballot, and we're gonna knock you out." I felt I would be doing myself and the folks in the community a real disservice by backing away.

After being a fan of yours earlier, the i]Oregonian[/i] editorial board hammered you during the 2006 election cycle. Why?
Their point of view was, as long as you're working on homelessness, then great. But when you start getting into utilities and campaign finance contributions and trying to reform the Portland Development Commission, you've got to go. It's probably worth noting that the person who was the PBA's spokesperson at the time [Lora Cuykendall] was married to The Oregonian 's editorial page editor [Bob Caldwell]. They never disclosed that when they wrote all those editorials bashing me.

Is Portland heading in the right direction or wrong direction?
I think the city is heading in a great direction, although I've got some concerns.

Like what?
My main concern about Portland is the price of admission, how much it costs to live and work here. Does it become a place for elites rather than the type of place I grew up in? Does the school system that is the best in the country stay strong? And finally, how do we employ people? Maybe the influx of overeducated young people is a model that can work forever, but I kind of doubt it.

How do we create an attractive environment for employers?
I think we're well positioned for economic growth. Based on my experience, though, I think you grow employers more than attract them. I think we're getting there with the green technology. I think we'll continue to be the greenest city in the country, but there are big structural challenges.

Such as?
We're gonna run out of oil, and the only way you're gonna get around is through better land use and alternative forms of transportation.

Is the city hospitable to new business?
I really think it is. But it's just not clear yet what our employment base is going to be. The River District so far appears to be mostly empty-nesters, whereas most people thought it would be young creatives. I think there's some promise in the central east side.

Historically, the mayor runs the Police Bureau, but that's an area in which Sam appears to have no interest. Will he keep it?
I think he would keep it because he has to, though he could give it to Randy Leonard, which isn't a bad option. If Sam wins, he'll be the first commissioner to make it since Frank Ivancie [elected in 1980]. History shows it's not as good a path to mayor as coming from the outside.

Why?
I think it's the hands-on aspect of the commission form of government. You create a track record. I've got my water bills, Jim Francesconi had his Iraq vote [opposing a resolution against the U.S. invasion]. Part of the reason Potter was a good candidate is he had no record as a commissioner for Francesconi to run against.

What are some tough votes you took?
Early on, I voted against the River District. I have a crystal-clear memory of picking up the phone and calling Homer Williams, who was then one of my big backers, to tell him I was voting against it, because we gave away too much. The big ugly one I lost was a vote whether to allow parking lots to be added to Northwest 23rd Avenue. Katz and I lost 3-2 against real-estate interests. Katz voted last and said, "In x amount of years I truly never have seen a vote be bought, and I just watched one be bought."

What do you like least about your job?
The thing I like least is how scheduled it is. I tend to do eight to nine meetings a day, all in very prescribed chunks. The best part is how in 11 1/2 years as commissioner I've never had the same day twice.

Bloggers, especially Jack Bogdanski (bojack.org), have been critical of you. How do you feel about them?
I wish all those folks the best [laughter].

Have you ever spoken to Bogdanski?
Only once. I recognized him and introduced myself to him at Candidates Gone Wild [a campaign event, in 2006]. He said, "I know who you are," and kept walking.

Have blogs affected City Hall?
Politics has always been driven by media, and I think blogs have just accelerated the timeline. I sometimes think they may overly supercharge young staff. They get in a cycle of reading and responding to them all. But if you keep in mind that relatively few people read them, then you don't get too worked up.

Has the faster news cycle made The Oregonian now less able to influence political debate?
Hard to say. I hoped with the [Portland] Tribune and more good blogs we'd get more in-depth coverage, but actually I think there's less. Instead, people are competing for who's going to post something first and then moving on.

What's the biggest misconception people have of you?
That I'm anti-business. I'm anti-monopoly, and that's not at all the same thing. Things started to go sour when I debated Tom Walsh at City Club over whether Texas Pacific should buy PGE. [Walsh, a former mentor of Sten's, partnered with former Gov. Neil Goldschmidt and Texas Pacific to bid for the utility.] From that point, people tried to paint me as anti-business, but it was never true.

Biggest misconception of City Council?
I think there's a sense that it's kind of about itself and self-perpetuating. At the end of the day, those folks really deeply care more about those issues, especially poverty, than they do about their own power. What you do have on this bunch is, you've got five people who are all unwilling to back down from a fight. There's a series of fights, for good or for bad, and when people don't back down there's a sense it's "my way or the highway."

What's the takeaway for the public from the Chávez street-naming fiasco?
I hope it's that we screwed up royally. I don't think it's anything more than that. I don't see this as a trend—it was a perfect storm, and everything went wrong. Every organization has that happen from time to time, but when our organization loses it way and heads into a tailspin, it ends up on the front page, which is fair. External to City Hall, the process exposed a major rift between the emerging Latino community and white Portland. The inability for two sides to hear each other was unbelievable. Part of why it was a mess was, it never occurred to me that I couldn't mediate this thing. I don't know if "unmediatable" was the word, but it was. People were feeling like, "I thought people wanted me here, but in fact they hate me." You had literally a war developing between a bunch of really, really angry people on both sides, and I think there was something going on in that war that's really scary and not good for this very white city.

Erik Sten graduated from Portland's Grant High School in 1985 and Stanford University in 1989. He is married and has one child, a son.

Prior to entering politics, Sten served as a lifeguard, shelved books at Powell's and interned at WW . He wrote a cover story about Oregon's defense industry ("Two Faces of Oregon," WW , Sept. 17, 1987).

In 1995, Sten cofounded X-PAC, a predecessor to the Oregon Bus Project. Former legislators Deb Kafoury and Ryan Deckert were also active in X-PAC as was former Multnomah County Commissioner Serena Cruz.

Sten wasn't always at odds with business leaders. In 2001, he was the driving force behind a plan to rezone downtown's west end, paving the way for new development between the Portland Art Museum and Powell's Books.

Sten hopped on the global warming bandwagon early. In 1998, he addressed the United Nations Summit on Climate Change in Buenos Aires.

CHECK WWire throughout the day for updates on the political fallout from Sten's resignation.