Portland City Council hopeful Rene Gonzalez was slapped with a hefty fine Tuesday for accepting — and failing to report — a steep discount on rent on his campaign office from real estate company Schnitzer Properties Management.
The $77,000 fine — the biggest ever issued by the city’s Small Donor Elections program — stems from an unreported in-kind contribution Gonzalez is accused of accepting from the company, which is owned by property magnate Jordan Schnitzer. Schnitzer personally donated $250 to Gonzalez in May.
Program director Susan Mottet sent Gonzalez a letter Tuesday notifying him of the fine. According to the letter, a normal tenant would have been asked to pay $6,900 per month for the over 3,000 square feet of downtown office space located at 1010 SW 11th Ave.
But Schnitzer Properties waived most of the rent. Since May, Gonzalez’s campaign only had to pay $250 per month for the space, which also included two parking spots. (Two monthly downtown parking spaces alone would usually cost about double that, the letter notes.)
All in all, it’s a markdown any Portlander working downtown would likely drool over.
“Paying $250 month in rent for the 3,185 square feet at 1010 SW 11th Ave with two parking spaces, when the advertised fair market value is $6,900 per month, constitutes a 96.37% discount,” Mottet wrote.
Both Gonzalez and his opponent, Commissioner Jo Ann Hardesty, are taking part in the Small Donor Elections program, a city effort to get big money out of politics. Under the rules of the program, which the city began a few years ago, candidates receive a 9-to-1 match on the first $20 they receive from a donor. That means a donation of $20 could be turned into $200 ($180 from the city plus the original $20 donation). In return, the candidates agree to several restrictions, including capping the maximum amount they can take from an individual donor at $250.
Most relevantly, they are not allowed to take in-kind contributions — donations of time, goods, services — from businesses, Mottet said.
So far, Gonzalez has received $370,000 in city money through the program. He is now being asked to give up about a fifth of that, per the letter.
Gonzalez has been ordered to pay the city election program $33,250 for accepting the discounted office space, and $10,640 for failing to report it. He is also required to pay Schnitzer Properties Management back $33,250.
That brings the total fine to $77,140. Gonzalez currently has a little over $175,000 in his campaign coffers, according to campaign finance records.
Mottet said the fine stemmed from a tip the program had received. The Oregonian/OregonLive noted in August article about Gonzalez’s office space being vandalized that the campaign had only paid $1,580 in rent to Schnitzer Properties.
In a statement, Gonzalez campaign manager Shah Smith said that the cheap rent was not an in-kind contribution, but rather what anyone looking to rent office space would expect to pay downtown, an area that has struggled to rebound from the pandemic.
“We evaluated (city) rules when we entered into the lease and strongly disagree that the rent is too low given the dismal state of downtown,” he wrote, noting the area was in “shambles” and there was a “man smoking fentanyl in front of our building” as he typed.
“Landlords are having to offer substantial amounts of free rent months, secured parking and invest in tenant improvements to get tenants to even consider renting downtown right now,” he said.
Smith also said he’d been told by the city that this was not the end of the road and there are multiple opportunities to appeal the decision, which the campaign planned to do. Mottet’s letter states the campaign could win a reduction in the fine if they provide evidence that Schnitzer Properties had provided other people similarly low rent. Gonzalez could also get $6,650 of the penalty waived if he goes back and pays market rent for September.
Mottet said everyone who takes part in the small donor program is trained on what kinds of contributions they can accept and which they must reject.
“It’s in the laws, it’s in the rules, it’s in the trainings,” she said. “And they can always call us up when they’re not sure.”
At $77,000, the fine will make city history as the second ever issued by the Small Donor Elections program — orders of magnitude greater than the first.
Mottet said former candidate Candace Avalos, who unsuccessfully ran for departing Commissioner Amanda Fritz’s seat in 2020, gave a small donation to her own campaign, which, at the time, was against the rules (those rules have since been changed to allow it) .
She was fined $5.