Isaac Laquedem

Why the courts will strike down the City of Portland $35 arts tax

It's now been reported that prominent Portland blogger and tax professor Jack Bogdanski has filed suit to declare the $35/head Portland arts tax unconstitutional.  Here's why Professor Bogdanski will win.

In 2000, in the case of Cook v. City of Portland, the Oregon court of appeals described a poll tax as "a fixed tax assessed on each eligible person."  In that case, Vern Cook (1925-2008), a Gresham lawyer, legislator, and longtime civic gadfly, challenged the City of Portland business license tax for four reasons, one of which was that it was (in Mr. Cook's view) an unconstitutional head tax.  The court of appeals easily decided that the business license tax was not an unconstitutional head tax, using these words:

Portland's business license fee is not a head or poll tax. It is not assessed per capita. Rather, it is assessed only on those persons or corporations who choose to do business within the city. Moreover, although there is a minimum tax, the tax is proportional. The amount of the tax is generally a function of the income a licensee earns. The tax does not possess the same characteristics that prompted the people to add Article IX, section 1a, to the Oregon Constitution.

By contrast, Portland's arts tax is assessed per capita (per person), and it is not a function of the income that a Portland resident earns.  The tax is either $0 or $35.

Does the Portland arts tax "possess the same characteristics that prompted the people to add Article IX, section 1a, to the Oregon Constitution"?  Here's how the court of appeals described those characteristics:

Article IX, section 1a, which prohibits those taxes, was added to the constitution in 1910. The amendment's supporters explained that a poll or head tax "is unjust not only because it is collected from very few of the men who are supposed to pay, but also because it bears so unequally on men in proportion to their ability to pay." Voters' Pamphlet, General Election, November 8, 1910, at 24-25.  The problem that the measure's supporters perceived was that poll or head taxes are not graduated. As they explained, "[t]he laborer supporting a family on $2 a day pays exactly the same poll tax as the corporation manager with a salary of ten thousand dollars a year." Id.

That sounds exactly like the Portland arts tax, if you adjust for inflation: the laborer supporting a family on $100 a day pays exactly the same arts tax as the corporation manager with a salary of $200,000 a year.  Based on the 1910 Voter's Pamphlet arguments as interpreted by the Oregon courts, the arts tax is an unconstitutional head tax.

"But wait," you might say, "didn't a judge already declare that the arts tax is not an unconstitutional head tax?"  Yes -- and no.  In August 2012 a Multnomah County judge, John A. Wittmayer, ruled that the arts tax was not a head tax, but he did not rule that it was constitutional.  Rather, he ruled only that the tax did not need to be described on the ballot as a head tax or poll tax, in response to challenges brought against the proposed ballot title and summary.  In Judge Wittmayer'>s words:  "The proposed tax at issue here is not a head tax or a poll tax because it is not assessed per capita -- it is assessed only upon income-earning individuals age 18 or older in households above the federal poverty guidelines."  (Judge Wittmayer's opinion, at page 5.)

The good judge is saying that a flat tax of $35 per person is not a head tax if not everyone has to pay it, suggesting that a $35/person tax is not a head tax unless absolutely everyone has to pay it.  Because the petitioners were challenging the ballot title, and not arguing that the measure was unconstitutional, the judge never ruled that the arts tax is constitutional -- no one asked him to decide that question.  Likely none of the parties invited him to read the 1910 Voter's Pamphlet and the decision in Cook v. City of Portland to see that the voters and the appellate courts consider "head tax" and "poll tax" to include taxes that are assessed at a flat amount per eligible person.

Look for a different decision this time around.

The Feds indict a Person Of Standing, ten years after Portland insiders guessed something was amiss

Five years ago I told the story of how some prominent Portland charitable organizations got together a few years earlier to encourage a Person Of Standing to make good on his pledges to those charities.  They wrote identical letters to the Person Of Standing, who was an well-known investment manager active in the Republican Party, all saying basically "You made a very generous pledge to our organization last year.  If things are tight for you right now, we can work out an installment plan so that you won't be embarrassed about not meeting your pledge."  The Person Of Standing, no doubt realizing that the well-connected trustees of these charities all talked with one another, paid his pledges by return mail.  He quietly ended his relationships with the charities and moved to Florida.

I don't know whether times were in fact tough for the Person Of Standing ten years ago, but they are now; this week the P.O.S. was arrested and charged with two counts each of securities fraud and wire fraud.  I'm guessing that none of the trustees of those charities were still doing business with him.

The first western pope takes the name "Francis," in 1979

Cardinal Jorge Bergoglio is the first of the 266 men elected pope to choose the name "Francesco," and is also the first pope from the Western Hemisphere.  In an interesting coincidence, he and the church are 34 years behind the world of fiction.

In "The Vicar of Christ," a 1979 novel by the late Walter F. Murphy (1929-2010), a professor of political science and jurisprudence, the cardinals elect an American as pope, who in Professor Murphy's fictional world is the first pope from the western hemisphere, and who is the first pope to take the name "Francesco," in his case after St. Francis of Assisi.

Coincidence?  Prescience?  Either way, Professor Murphy would have loved to see this day.

TriMet's suing the North Clackamas Park District on a promise that the District didn't make

TriMet has sued Clackamas County and the North Clackamas Park and Recreation District (run by the county commissioners), alleging that the county and the district are breaking a promise to convey two parcels of land to TriMet for the Milwaukie light rail.

Whether or not TriMet is correctly suing the county, it's suing the district for a promise that the district didn't make.  Here's what TriMet says in paragraph 42 of its complaint: 

TriMet has requested that the District enter into an agreement to convey the Trolley Trail Property to TriMet for the [light rail] Project, consistently with the District's duties under the IGA [the Inter-Governmental Agreement among TriMet, the County, and the District] and Trolley Trail IGA [an agreement between TriMet and the district].  In exchange for the transfer, TriMet has offered to convey to the District an adjacent property, to construct a trail on that property at no cost to the District, and to provide the District with additional compensation.  To date, the District has refused to enter into such an agreement.

In other words, TriMet is telling the court that the two inter-governmental agreements require the district to sell TriMet the Trolley Trail Property (a portion of the Trolley Trail that the park district owns and has been using for a bike and pedestrian trail). 

TriMet and its lawyers are putting words in the district's mouth.  The district didn't make that promise. Here's what the district actually promised in the inter-governmental agreement:

Section 1.5(b): "The Parties acknowledge and agree that all roadways, sidewalks, streets, and trails owned by or under the control of the County or District that are improved as part of the Project shall remain under control of the County or District with any ownership rights it has prior to construction of the Project, provided that the portion of the roadway on which trackwork is placed shall be subject to FTA's [the Federal Transportation Administration's] continuing control requirements and shall be operatied and maintained in perpetuity by TriMet as part of TriMet's system." 

In other words, the park district's property remains the park district's property.

Section 6.1:  "By execution of this Agreement, the Parties agree to negotiate in good faith the terms and conditions of all other agreements that may be reasonably required or desired to design, construct, and maintain the Project, which may include * * * right-of-way acquisition and permitting." 

In other words, the county and the park district will negotiate in good faith other agreements that may be reasonably required to build the light rail line.  That's as close as the district comes to promising to give TriMet any property.

What you won't find in the inter-governmental agreement is any promise by the district to sell or give TriMet the Trolley Trail Property. 

You also won't find that promise in the other inter-governmental agreement, the one made by TriMet and the park district in April 2012. All you will find is the district agreeing to allow TriMet access onto the property to build the light rail line, and obligating TriMet to build the Trolley Trail on the property from Park Avenue to River Road.  The district wouldn't need to give TriMet permission to build the trail if TriMet were to be the owner of the property.

In short, TriMet's suing the Park District to enforce a promise that the district didn't make.  Let's hope that the district's lawyers read the contracts more carefully than TriMet did.

More on TriMet's problem in Clackamas County: what if you can't park at Park?

Last month I wrote about an intriguing little problem that TriMet is facing with the Milwaukie light rail line near the proposed Park Avenue Station, the south end of the line.  That station is in an area without dense housing and major employers, and doesn't have a lot of innate demand for transit.  TriMet intends to build a 355-space park and ride across Park Avenue from the station.

A county street, SE 27th Place (classified as a local access road under ORS Chapter 368, I think), runs through the middle of the park and ride site, and TriMet will need to persuade Clackamas County to vacate 27th Place if it is to build the garage.  I had written that because of last year's light rail initiative that prohibits the county from providing resources to light rail without a prior vote of the people, the county won't be able to vacate the street without first holding an election, unless it waits until TriMet acquires title to the adjoining property and then vacates the street on the petition of TriMet, in its capacity as the adjoining landowner.

I've discovered that TriMet's conundrum is even more complicated.  Clackamas County requires people who petition to vacate a street to state why they want to vacate the street.  TriMet will have to say that it wants to vacate the street to construct a park and ride garage for the Park Street Station.  That itself makes the initiative kick in; if TriMet waits to ask to vacate the street until it owns the rest of the property, the county will have to put the street vacation up to a vote of the people.

Could TriMet ask to vacate the street before it buys the adjoining property?  ORS 368.326 and following sections authorize counties to vacate property, with some limitations.  A county has three ways to vacate a road, set out at ORS 368.341.  The county can vacate a road by adopting a resolutoin to vacate the road, but must include in the resolution the reason for vacating the road.  Is the reason to build a light rail facility?  That means that Clackamas County must then hold an election before it vacates the road.

Alternatively, the owner of the underlying property can file a petition (some public roads are actually public easements over private lands), or the owner of adjoining property can file a petition.  In either case the petitions must be signed by the owners of 60% of the property that adjoins the road to be vacated.

And there's the rub.  TriMet doesn't own the adjoining property, and may not own it for six months or a year.  It can't sign a petition to vacate 27th Place, and it can't make the landowners sign a petition.  Once TriMet acquires the rest of the land for the Park Avenue Garage, it will need to get a vote of the people of Clackamas County before it can get the street vacated so that it can build the garage.

Could TriMet build the garage in the public street without having it vacated first?  ORS 267.225 (part of the statutes under which TriMet was formed) gives TriMet the authority to enter into agreements with other governments for the joint use of right of way owned by the other government.  So Clackamas County could let TriMet use SE 27th Place -- as long as Clackamas County (i.e., the public) gets to continue traveling on SE 27th Place, meaning through the middle of the garage.  The same statute lets TriMet condemn the right-of-way, but requires the court that approves the condemnation to let the other government unit (again, Clackamas County, the public) continue to use the right of way also.

It's a pretty pickle for TriMet.  It can build the Park Avenue station, but maybe not the parking garage that gives the station a purpose.   Keep watching.

History note: The Interstate Bridges' humps were a solution, not a problem

The humps in the middle of the Interstate Bridges are two of the reasons that proponents of the Columbia River Crossing point to when explaining why a replacement bridge with a light rail line is the most pressing transportation need that merits $450 million, plus interest, of Oregon's tax dollars.  The interesting thing about the humps is that they were built not as a problem but as a solution.

The original Interstate Bridge (what is now the northbound bridge) had a drawspan, but no humps.  The road was level.  When the southbound bridge was built in the 1950s, the highway department wanted to reduce the number of bridge lifts, and built the southbound bridge with a hump, under which some river traffic could go without requiring a bridge lift.  When the southbound bridge opened, the northbound bridge was closed so that a matching hump could be added.

The basic problem with the project, and a possible solution, occurred to me a few days ago, and I'll share the problem and the solution this week.

LUBA deals a setback to the no-parking apartments at 37th and SE Division

Wednesday the Land Use Board of Appeals reversed Portland's approval of an 80-unit mixed-use building at 37th and Southeast Division, proposed to be built without any off-street parking.  (Thanks to Willamette Week for the story.)

LUBA reversed the City's decision, not for reasons relating to the lack of parking, but because of how the City wrote its zoning code.  The site is a rectangle with one of the short sides along Division and one of the long sides along 37th.   The developer proposes to build retail space on the ground floor and apartments upstairs.  The portion nearer Division is subject to the City's "Main Street" zoning, which is intended to make buildings along certain streets, including that portion of Division, look like buildings in small town Main Streets.  One of these standards says that if any of the building is in a non-residential use and the site is on a corner, then "for portions of a building within the maximum building setback, at least one main entrance for each tenant space must (a) be within 5 feet of the facade facing Division Street, and (b) either (1) face Division Street, or (2) be at an angle of up to 45 degrees from Division Street, measured from the street property line."

In that zone, the maximum building setback is 10 feet, meaning that the building's Division Street wall can't be more than 10 feet from Division Street.  In fact, it's built on the lot line, so it's set back 0 feet.  The portion of the building within that 10-foot area includes both street-level commercial space and twelve upstairs apartments.  The main entrances to the streetfront retail face Division Street, but the entrances to the apartments don't -- they're around the corner, on SE 37th, and are more than 5 feet from Division Street.

The City planners rallied valiantly around the developer, and argued that this provision of the zoning code was never intended to apply to apartments, only to non-residential uses.  LUBA rejected the City's argument, saying that the plain language of the code states that at least one main entrance to any tenant space within the 10-foot setback must be within 5 feet of the Division Street facade.

Here are the developer's options, none very attractive:

1.    Convert all of the street-level space to apartments so that the building will be residential-only, increasing the construction cost and reducing the rental income.

2.    Take out some of the commercial space on Division Street (the highest-value portion of the building) and put in a Division Street entrance to the apartments, also increasing the development cost and reducing the rental income.

3.    Remove the portion of the upper floors that's within 10 feet of Division Street; that is, chop off portions of 12 apartments.

4.    Persuade the City to change its zoning code very, very fast, before the neighbors force the City to make the developer tear down what is now an illegal and unpermitted building.

I'd be worried if I were the developer.  I'd be even more worried if I were the developer's lender.

O2 say can you see? Venerable Mom cuts the wrong budget

I spent some time with Venerable Mom this week, helping her navigate the vagaries of the health care system while she lay in a hospital bed awaiting some tests.  Somewhere in our discussions (which, in the parlance of diplomats, were "frank and open") she said that she didn't like what she was paying for her portable oxygen tank.

I've known for many years that Venerable Mom revels in thrift, but I couldn't let her statement pass without comment.  "Mom," I said, "first, you don't need to economize; and second, if you do want to reduce expenses, cutting back on your oxygen consumption isn't where to start."

No park and ride at Park Avenue? The Clackistanis beat TriMet to the punch

The Knower of All Things passes on this interesting tidbit about TriMet's light rail line through Milwaukie to Oak Grove, now under construction, and how last year's Clackamas County ballot measure might affect it.  (I'd hinted at this a few weeks back.)

First, the background.  In September 2012, Clackamas County voters passed an initiative, Measure 3-401, that prohibits the county from allocating or contributing resources to light rail without a vote of the people.  "Resources" includes, according to the explanatory statement from county counsel, not just money and staff time but also interests in property.

To comply with the voters' mandate, Clackamas County is working on a ballot measure for the May 2013 election that would authorize the county to transfer two small pieces of county land to TriMet for the light rail line.  However, the real challenge for the county, and for TriMet, is not with these two bits of land but with the park-and-ride that TriMet proposes to build at the south end of the line, at Park Avenue and McLoughlin Boulevard.

Why?  The Park Avenue station itself will be on the north side of Park Avenue, but the proposed park-and-ride is a multi-story tower on the south side of Park Avenue, straddling a modest dead-end street called 27th Place, which will be closed and vacated for the project.  And there's the first problem: SE 27th Place is a county street, not a city street.  Under Measure 3-401, the county can't vacate it for light rail without first submitting the question to a vote of the people, and it can't submit the question to a vote of the people unless 60% of the adjoining landowners consent to vacating the street.  There's the second problem: TriMet can't give that consent until it owns the adjoining property, which (given the slow pace of litigation) is about a year away.  The station may open a year or two before TriMet can start building the parking garage - a whimsical and unexpected effect of the Clackistani rebellion.  And if the ballot measure fails, the station may have to get by without any parking at all.

Oregon Zoo purchases Lily and Tusko

The Oregon Zoo is about to announce that it has agreed to buy Lily (the elephant born at the Zoo last year) and Tusko (Lily's father) from their owner.