A small but technical finding by a sharp-shooting city treasurer has plunged the Portland Streetcar Inc. into an existential debate about the role of the nonprofit in managing trains throughout the city's downtown core. It's also got any number of folks at City Hall up a fiscal tree. It's completely unnecessary, though lawyers parsing city codes and state laws will have the final word any month now.
At issue is whether an estimated $500,000-plus annually – collections of fares from streetcar riders and fees from streetcar sponsors – should be held and disbursed by the city or kept, as has been the practice for more than a decade, in a U.S. Bank checking account held by Portland Streetcar Inc. and withdrawn as needed. The city, of course, wouldn't keep the money. But by being its custodian it would force Portland Streetcar Inc. to turn the money in almost daily and ask for disbursements to cover expenses, creating inefficiency at best and a too-many-hands-on-the-money slowdown at worst.
Jennifer Cooperman's finding is smart, however. It throws into question whether streetcar revenues are, under state law, public funds that must be controlled by a public entity such as the city or whether they can be held by a nonprofit corporation such as Portland Streetcar Inc. But here's where the hair-splitting goes too far: The money is safe either way. And any number of proven nonprofit successes that work for the city – Pioneer Courthouse Square and the Lan Su Chinese Garden are examples – operate with fiscal independence and are nimbler for it. Would they, too, have to surrender funds to the city?
"If you're an independent board, you're an independent board," Jim Mark, the Portland Streetcar's board chairman, told The Oregonian's Brad Schmidt. "If you start moving it all over the city, the city might as well take the whole thing over."
Mark's comments should not be read as ill-tempered. In an interview with The Oregonian's editorial board on Thursday, he made clear that his sentiments center on the ability of Portland Streetcar Inc. to be agile and efficient in delivering a public service. "Mechanically, it would be cumbersome to run the money through the city and then come back to us through reimbursement," he said. "This is not about oversight. But the question is there: Is (Portland Streetcar to be) a city-run enterprise?"
The answer should be no. The city already has its hands full in figuring out how to better structure its Office of Management & Finance and in pondering the necessity of hiring a chief financial officer to provide better fiscal oversight in all its bureaus. Portland Streetcar Inc., meanwhile, was launched by a collection of downtown business leaders in 1995, and, despite recent trials of late-delivered streetcars, has shown it is perfectly capable of running trains on time.
The founders had responded to an invitation for bids by the Portland City Council, which granted them $2.5 million to design and build the system. Today the nonprofit continues to be run mainly by downtown business leaders, and the streetcar's budget is underwritten for the most part by the city's Bureau of Transportation and TriMet. Notwithstanding the popular joke about walking to one's destination faster than a streetcar, the system works, its riders like it, and its management is free of known financial malfeasance. Independent audits are routine. Separately, the nonprofit is under the lens of Portland City Auditor LaVonne Griffin-Valade, whose microscopic examinations elsewhere in city government ensure that internal practices, often with correction, are transparent and serve stated goals.
The question of whether streetcar fares are public funds to be kept and managed by a government agency needs answering. It was unclear as of late last week that Portland even has the option of allowing Portland Streetcar to continue having its fiscal way. Failure by both the nonprofit and the city government to comply with codes, despite years of possibly being out of compliance, could place them outside the law – if, that is, Cooperman is right. It would be wise for overseers of Pioneer Courthouse and the Lan Su Chinese Garden, meanwhile, to enter the conversation.
It would be wisest of all, however, to let common sense prevail. The city should pull its nose at least halfway out of the Portland Streetcar tent and encourage it to continue making downtown the vibrant place it is. Lawyers can duke it out in the coming months. But Mayor Charlie Hales and Commissioner Steve Novick, who oversees the transportation bureau, should be clear that if code or law changes are necessary to keep Portland Streetcar Inc. in business, they'll fight to make them.