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Portland Streetcar Inc. manages the city-owned streetcar system.
(ROSS WILLIAM HAMILTON/THE OREGONIAN)
Leaders for Portland Streetcar Inc. have refused to hand control of nearly $500,000 from annual ticket sales and sponsorships to city officials, saying it would undermine the organization's autonomy as the nonprofit hired to operate the city's streetcar system.
The dispute underscores a complicated and cumbersome relationship between the city – which owns the streetcars and pays millions toward operations – and the company formed 18 years ago to champion Portland’s streetcar renaissance.
To limit risk, Portland's finance officials say the ticket money should be designated as "public funds" and be controlled by the city. Both sides concede it doesn't matter who oversees the revenue because it will be spent on streetcar operations either way.
Even so, the Portland Streetcar Board of Directors shot down Portland’s proposal this summer, a first as far as anyone can remember. Months later, the issue remains unsettled.
Jim Mark, chairman of the streetcar board, said leaders objected to the money shift not only as a matter of principle, but also for fear of unintended consequences.
“If you’re an independent board, you’re an independent board,” he said Friday. “If you start moving it all over to the city, the city might as well take the whole thing over.”
Portland Commissioner Steve Novick, who oversees the Portland Bureau of Transportation and serves on the streetcar board, labeled the dustup a "technical issue" but said it does need to be resolved.
“The role of PSI substantively is not being questioned,” Novick said.
The spat comes at a turning point for Portland's streetcar operator. Portland Streetcar's management and operations are being reviewed by the City Auditor's office, and the board is looking to hire a new executive director, ending its long-term reliance on consulting firm Shiels Obletz Johnsen.
Portland Streetcar, a collection of business leaders from downtown searching for a way to resurrect streetcars after a decades-long absence, launched in April 1995. Among other founders, Michael Powell of Powell’s Books and developer Bill Naito served on the board, each with an interest in seeing the streetcar travel along routes fronting their businesses.
When the city sought proposals to launch its streetcar effort, only Portland Streetcar applied. In July 1995, the Portland City Council approved a $2.5 million contract with the brand-new company. It had no staff and handed over the money to various consultants.
In 2001, Portland’s first streetcar line opened and city officials contracted with Portland Streetcar, which in turn turned used Shiels Obletz Johnsen, to operate the system.
Oversight of ticket revenue didn't become an issue until last fall. The city's new treasurer, Jennifer Cooperman, began pressing the issue as new vending machines went into place at streetcar stations.
Transportation officials estimate that streetcar ticket sales will total $750,000 this year, which includes annual passes, money from street-side vending stations and money collected from machines on board the streetcars, said Greg Jones, who manages the city’s development and capital transportation projects.
As much as $250,000 is expected to come from ticket sales on the streetcar – and that’s the money, along with about $230,000 from sponsorships, in dispute.
Cooperman contends that onboard fare revenue and sponsorships should be designated “public funds” under state law and controlled by the city. With that designation, Portland would place the money in a bank authorized by the state and taxpayers would receive a guarantee that if the bank failed, the money wouldn’t disappear.
A spokeswoman for the Office of Management & Finance acknowledged the risk is minimal but exists nonetheless.
“It’s a great protection, specifically for public funds,” Abby Coppock said. “When the money’s in PSI’s name, and PSI’s bank, then we lose the benefit.”
Street-side collections are already considered “public funds.” And Coppock also said transferring ticket revenue to the city on a weekly basis would ensure “real-time” accounting instead of the current system, which includes an annual audit.
“We’d like to have a little bit more detailed record of it,” she said.
As it stands, Portland Streetcar relies almost exclusively on public money for operations. That includes $3.8 million from the Bureau of Transportation and $4 million from TriMet, Jones said. The company’s most recent tax filing, for the fiscal year ending in June 2012, listed 95 percent of its revenues from government grants.
But Portland Streetcar’s leadership says the city is overreaching on the fare-box issue.
"The more the City exercises dominion over PSI and its finances, the greater the risk the City faces if PSI's status as an independent not-for-profit entity is challenged," attorney Paul Elsner, who represents Portland Streetcar, wrote in a June memo to the board.
Mark, the board chairman, said the city entrusted Portland Streetcar’s leadership, and managing money is part of it. He said the model has worked well for years, drawing business leaders to the board and building support for a tax district that helped pay for the streetcar line.
“This model is being taken across the county. And it’s being taken across the country just because it’s a lot more nimble,” he said. “It makes people invested in it.”
Officials with the city’s transportation bureau, caught between streetcar leadership and finance officers, aren’t sure when they’ll broker a solution. But Jones said the city is committed to Portland Streetcar and isn’t looking to strip away its autonomy.
“We believe it is the best structure,” he said. “It’s here to stay.”
-- Brad Schmidt