Data Used To Calculate Portland Street Fee Full of Errors, Critics Say

Tuesday, December 30, 2014

Cornelius Swart, GoLocalPDX Director of Content

Alls Well That Ends Well, a colon hydrotherapy shop located inside Circle Healthcare, has over 30,000 employees according to some city data.

Business data used by the City of Portland to calculate the controversial Portland Street Fee, is riddled with errors and outrageous information, according to street fee critic Robert McCullough.

The City released the data to McCullough law week under threat of lawsuit. The information, used to help guide the city's most important tax proposal in a generation, contains "thousands of errors" according to McCullough's analysis. For example, the region's largest employer is not Intel, but a Portland enema shop on Northeast Sandy Boulevard, according to the data.

Alls Well that Ends Well, a shop that specializes in colon hydrotherapy in Northeast Portland, had 32,000 employees. The business only has three employees, according to its staff.

"The first thing that strikes you when you look at the spreadsheets is the amazing number of errors," McCullough said. "The spreadsheets were assembled from a number of different sources and apparently never double checked. In any normal business, the number of mistakes would have serious career implications.”

McCullough, who is President of the Southeast Uplift neighborhood coalition, has vigorously fought the proposal street fee. He said that errors in the data undermines the city’s credibility on the issue.

City officials say the information was used for estimating a broad picture of revenue that could be generated from a tax and specific errors in the data are not important.

Portland Mayor Charlie Hales and Commissioner Steve Novick are pushing forward on a proposal to raise $43 million in new revenue from businesses and residents to fund road repair and maintenance. Under the current proposal, a business tax -- based on a business's revenue, square footage and number of employees --would fund half, or just of $20 million.

Business licenses, county tax assessments and local and national statistical analysis were used by to calculate how the City might raise another the money, according to Dylan Rivera, spokesman for the Portland Bureau of Transportation. A portion of that data was released to McCullough and the Southeast Uplift neighborhood coalition. McCullough requested the data as a public record and then threatened to sue when the information was not forthcoming.

McCullough told GoLocalPDX he intended to release a comprehensive analysis of the data on Monday, but his initial findings found a large errors in which some companies declared that they had vast amounts of employees.

“The second-largest employer in the city appears to be the Multnomah Bible College Bookstore with 29,598 employees,” McCullough stated in an email to constituents obtained by GoLocalPDX. “The largest transportation employer appears to be the UPS Store on Sandy (Boulevard) with 18,388 employees."

Rivera said that the data given to street fee opponents were not used to generate business employee estimates.

“This [data] was intended to be used as an overall aggregate for revenue. It’s not used to estimate for a specific taxpayer bill,” Rivera said.

The specific data was pulled from city business license information. Businesses can voluntarily enter in the amount of employees they have, but it’s not a requirement. Business employment calculations were actually done using local and national industry statistics, according to Rivera.

If an business tax was actually to pass, then an in-depth survey of businesses would be conducted, he said.

"With about 120,000 businesses and non-profits in Portland, we haven’t gathered actual figures on a business-by-business basis, and we’re not planning to for estimating purposes,” Rivera said.

For almost a year, Portland Mayor Hales and Commissioner Novick have publicly wrestled with the street fee tax proposal.

A third iteration of the tax was released Monday, and proposed a tiered residential fee based on gas consumption rates. Commissioner Novick has said a progressive income tax is the most popular option with voters. The new proposal will be voted on by City Council in January. Novick said he was also prepared to refer the proposal, restructured as an income tax, to voters.

McCullough posted some of his findings on the blog NoStreetFee on Dec. 27.

[Ed: This story has been restructured from its original form. All the factual information and original quotes remain the same.]

Related Slideshow: Ways To Fund Street Repairs Without A Street Fee

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Portland Gas Tax

Currently, there is a $.03 Multnomah County gas tax. The tax revenue is split about 20 percent to Multnomah County and 80 percent to the city. Every $.01 increase in the tax would next about $1.36 million to the city, according to PBOT’s budget. Given that, the City of Portland has the power to levy its own gas tax.

The Politics: Hugely unpopular for not a lot of cash, but perhaps less unpopular than an income tax.

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Dynamic Pricing

Seattle and San Francisco use “dynamic pricing” on their parking meters. That means that the price to park goes up depending on the time of day and the location of the meter. For instance, if you are parking right in front of the Schnitz at 7 p.m. on a Saturday night, it’s going to cost you more than a $1.60 an hour.

Portland’s current meters could be programed for dynamic pricing, according to experts, and with 9,000 meters in the city, that could add up.

The Politics: Despite some grumbling, the city doesn’t need anyone’s permission to raising parking meter fees. Parking revenue is completely unrestricted, meaning it can be spent anywhere and on anything.

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License Registration

With 692,201 registered vehicles in the county in 2013 a $20 vehicle license registration fee, with a 20/80 split to the county (like with the current gas tax), could generate $11 million for the city every two years.

The Politics: This would have to go through the Multnomah County Board. The county doesn’t really need cash for infrastructure at the moment, as it has a few big federal grants lined up to pay for upcoming bridge repairs. The challenge would be offering the commissioners a deal sweet enough for them to take the political hit.

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More Parking Meters

A parking meter costs about $1 an hour to operate. So at $1.60 and hour, about $.60 is pure profit. More meters are already in the works for Northwest Portland. Meters in all major shopping districts from Southeast Hawthorne, Division and Belmont Streets to Northeast Alberta Street to North Mississippi and Williams Avenue could raise money for improvements in those areas.

The Politics: Neighbors and businesses would whinge endlessly. But many studies say that parking meters benefit businesses by keeping spaces turning over. Residents could be issued parking stickers to exempt them from charges.

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Raise Smart Park Fees

The city controls 3,800 spaces in six downtown garages. Smart Park cost about $11 million a year to run, according to PBOT’s budget. All told parking charges from meters and Smart Park brings in $45 million a year but the system is not operated to maximize revenue. Dynamic pricing might be hard to implement at the garages but the city could raise the rates.

The Politics: Downtown business interests might complain that raising parking rates would stop people from shopping and visiting downtown. The public interest would have to decide if that’s a risk to take, given the alternatives are an income tax or tattered roads.

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Shift SDCs from Parks

System Development Charges are fees that different city bureaus level against new construction projects in Portland. Parks, PBOT, the water and environmental services bureaus can all level SDCs at developers.

The rationale is, if new development puts a strain on city infrastructure, like roads and sewer lines, then it should pay extra to upgrade the systems. However, most SDCs get charged to developments in the city’s center, while the revenue goes to pay for projects all over Portland.

Over the last four years, Parks & Rec has averaged about $9 million a year in SDC revenue. The city could pull the bureau’s power to charge and let PBOT charge more.

The Politics: It would be a fight with parks supporters. Parks has said it needs $49 million a year just for new parks acquisitions. But it might be more logical to raise that money through bonds, or repurposing taxpayer-owned golf courses, especially ones in park-starved parts of town.

Photo: Berkeley Park in SE Portland, via Wikimedia Commons

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Raise Retirement

Raise police and fire reitrement.

Police Chief Mike Reese announced his retirement this year at the ripe old age of 55. But he qualified for retirement much earlier, at age 50. Putting five years on the clock would certainly save the taxpayers some cash that could be used on roads or anything else.

The Politics: You’d have to face the union and that wouldn’t be pretty.

Photo: Former Portland Police Chief Mike Reese

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Reform Retirement

Portland’s Police and Fire Retirement Fund was set up by voters in 1948 and has resulted in a huge hole the public must now dig itself out of. Despite voter-approved reforms in 2006 and 2012, the obligation is still a fiscal time bomb. As of June 30, 2012, unfunded liability in the fund was in the neighborhood of $2.9 billion.

The Politics: Public employee pension obligations are the stuff of municipal bankruptcy court. It’s a hard fight, but reforms were suggested by Portland’s City Auditor’s Office as recently as Jan. 2013.

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Fix Tax Compression

In 1996, Measure 50 cut and capped property taxes across the state. It froze the assessed value of homes at their 1995 level and limited growth in value to three percent a year.

In Portland, the result is a system in which homes that have increased in value rapidly pay very little taxes and homes that haven’t increased in value much can pay sky-high taxes. The short hand for the squeeze in tax equity is “tax compression.”

The city loses about $24 million a year due to tax compression, according to the city auditor. If the city, county or state could figure out a way to fix the issue there could more money for everyone: They’ve had 20 years to think about it.

The Politics: There has been endless talk about tax reform in Oregon. The Governor put it as a major priority of his fourth term. All the old tax-revolt warriors have long since left the scene, but the political will to do much more than talk will be hard to find.

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Stop Urban Renewal

About $.25 of every $1 that the city gets in property tax revenue goes to pay down debt on urban renewal projects. Mayor Charlie Hales has talked about sunsetting urban renewal districts.

On the immediate horizon, the Eastside Industrial URA has the power to issue new debt up until 2018. One step forward would be to stop that right now.

The Politics: Urban renewal is a cash cow for commissioners and their pet projects. No one really wants the system to change. But if it’s a choice between taking a hit on pet projects or a city tax revolt, commissioners might support clipping their own wings a bit.

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Put PBOT Out to Bid

Private companies can pave roads and clean them too can’t they? What if they could do it for less money than the city? PBOT could put services like street repair and cleaning out to bid.

It might not save a lot of cash, but it might win trust with the voters by showing them that the city was trying to get the best price for the public’s money.

The Politics: “Privatize” is dirty word in liberal Portland. But then, "income tax" might prove to be even worse.