Portland City Council candidate Rene Gonzalez on Tuesday formally asked elections officials to waive a whopping $77,000 fine, arguing that a deeply discounted downtown office space he received from a wealthy supporter does not run afoul of the city’s campaign finance rules.
Since May, Gonzalez’s campaign has paid a $250 a month to rent more than 3,000 square feet in a Southwest 11th Avenue office building owned by Jordan Schnitzer, a real estate mogul and philanthropist who also donated the most money allowed by law, $250, to the candidate.
That’s just a fraction of the $6,900 a month “fair market value” for the high-ceiling first-floor office, which comes with a pair of parking spaces, said Susan Mottet, director of Portland’s Small Donor Elections Program, in a letter to Gonzalez last week. The going rate for off-street parking alone is nearly $250 per space in that part of downtown, she wrote.
The unreported, 96% discount was also an illegal in-kind contribution under Portland’s public matching funds program, alleged Mottet, who, records show, based her fair market assessment on an online rental listing for the office space.
Gonzalez, a lawyer and businessman who is challenging incumbent Commissioner Jo Ann Hardesty, has thus far received more than $370,000 from the small donor program for his City Council race.
The Gonzalez campaign contends the program director’s assessment of downtown rental rates is grossly exaggerated, given the area’s current state. The campaign outlined its objections in a 10-page letter filed with the city Tuesday.
“Once upon a time, in happier days, this amount might have been accurate in that a willing tenant would gladly pay it,” the letter reads. “But downtown Portland is no longer in that time.”
The Gonzalez campaign said the space it’s renting had sat vacant since 2020 and also cited recent public statements by Schnitzer, who said the campaign did him a favor by moving in.
Because of these factors, the campaign objects to the city’s claims that the discounted office space constitutes an in-kind contribution that exceeds the $5,000 limit placed under Portland campaign finance rules.
Mottet also erred, the campaign alleges, because listings alone aren’t enough to determine what is fair market.
“The director compounded this error by not looking at any recent activity, instead assigning the entire fair market value from an ad that had not been answered for two years,” the letter claims.
To bolster its position, Gonzalez’s campaign detailed a recent rental agreement reached by the Multnomah County District Attorney’s Office and a nearby office building on Southwest Harvey Milk Street and Ninth Avenue.
A copy of the lease, reviewed by The Oregonian/OregonLive, shows the county prosecutor’s office pays $0 a month in rent and another $475 a month in operating costs for the 1,460-square-foot space owned by a Chicago-based real estate firm.
“While one can argue that there is a difference between the government taking advantage of discounted rent and a campaign doing so, any such difference is irrelevant for purposes of the present analysis,” the Gonzalez campaign claims.
Finally, it alleges city elections officials inappropriately injected themselves into the race and damaged Gonzalez’s candidacy by accusing the campaign of violating campaign finance rules.
The city’s election program began looking into potential campaign finance violations after someone filed a complaint with the City Auditor’s Office that referenced an Oregonian/OregonLive article last month that detailed the campaign’s cushy rental arrangement with Schnitzer.
City elections officials have ordered Gonzalez pay $33,250 for accepting the discounted office space and another $10,640 for failing to report it, according to the letter. He is also required to reimburse Schnitzer Properties Management the unpaid $33,250.
The total fine of $77,140 is nearly half the $175,000 Gonzalez currently has on hand, according to campaign finance records.
Mottet said Tuesday that the city expects to respond to Gonzalez’s challenge within the coming days. Should officials reject the challenge, the campaign can formally appeal the decision to a state administrative law judge.
-- Shane Dixon Kavanaugh; 503-294-7632
Email at skavanaugh@oregonian.com
Follow on Twitter @shanedkavanaugh
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