A few days ago I talked with someone in-the-know about how the Salem (Oregon) City Manager, Linda Norris, ended up controlling on her own $215,000 in Economic Improvement District funds paid by downtown businesses.
It was a lengthy conversation. This person asked to talk with me because he/she was so disturbed about how the EID was handled, and liked my blog-reporting on other downtown issues.
I was on the phone with this person for about 90 minutes. I learned a lot about how the City of Salem ended up cancelling the contract Salem Downtown Partnership had to administer the Economic Improvement District (EID) money.
The headline, so to speak, is this:
Norris and other City of Salem staff set up Salem Downtown Partnership to fail. Instead of working cooperatively and collaboratively with this duly-selected organization that represented downtown businesses, the City undermined its efforts in various ways.
Now, admittedly this is the opinion of only one person. But this person was in a position to be very well informed about what happened during the period Salem Downtown Partnership (SDP) had the EID contract.
And, no, this person wasn't either of the key businesspeople who got SDP up and running -- Carole Smith and Eric Kittleson. He or she prefers to remain anonymous.
Here's some of what I learned from our conversation:
(1) Salem Downtown Partnership had some growing pains. However, it was making good progress for such a young organization. Good people were being recruited for the board of directors. SDP was on its way to being a much-needed voice that spoke up for the interests of downtown businesses.
(2) City staff, though, kept undercutting the efforts of Salem Downtown Partnership. The City's contract with SDP was written in an unprofessional manner, since the benchmarks Salem Downtown Partnership had to meet were made virtually impossible to attain and the City "set traps" for those involved with SDP.
(3) Once City Manager Linda Norris was told the contract didn't make sense. She replied, "I know." This shows that all along City staff wanted the contract with Salem Downtown Partnership to be terminated, the excuse being that SDP wasn't meeting the unreasonable goals the City demanded in its agreement with the organization.
(4) For example, after SDP was awarded the contract, the City changed an ordinance to allow parking district money to be removed from the funds being administered by Salem Downtown Partnership. This decision, I was told, came out of the City Manager's office.
(5) Then the City Council required large contingencies in the EID budget to deal with the uncertain parking district money. For this and other reasons, I was told: "The City did a predatory job of administering the contract with Salem Downtown Partnership."
(6) This isn't the way Economic Improvement Districts are handled in other cities. I was told there are generally three levels of community capacity under which a City responsibly administers an EID contract: A - With a large umbrella organization that has existed for a long time, like a business alliance. B - Through a city-facilitated effort lasting a year or two where the goal is to establish an autonomous downtown organization. C - Business owners organize independently to build the capacity and dialogue needed to take on an EID partnership.
(7) The person I talked with said that Salem didn't have either A, B, or C. Thus it was irresponsible for the City to administer the contract with Salem Downtown Partnership when it wasn't truly committed to B -- facilitating the growth of SDP into an autonomous organization capable of representing downtown businesses.
(8) Instead, I heard a litany of stories about how City staff undercut, back-stabbed, intimidated, and otherwise undermined the board and staff of Salem Downtown Partnership. I've heard similar anecdotes from other people associated with SDP, which gives this person's rendition of what went on more credibility.
(9) This doesn't mean, as noted before, that Salem Downtown Partnershp didn't have growing pains. It did. The initiators of SDP were businesspeople, not experts in the management of a non-profit organization. But it was the job of City staff to help, not hinder, the growth and development of Salem Downtown Partnership.
(10) Here's some other observations made by my knowledgeable commentator on downtown goings-on:
-- Salem now is in a bottom percentile of similar medium-sized cities regarding how well downtown is managed. There is a lot of groupthink at City Hall. This doesn't bode well for downtown, now that the City Manager has become a one-person "board" who oversees spending of the EID money with a hand-picked advisory committee.
-- The City's parking task force was a "snow job." As is the City's style these days, poorly publicized and difficult-to-attend meetings were held with hand-picked people, leading to a pre-determined outcome: a recommendation to put parking meters in the downtown HIstoric District.
-- Salem has a suburban style of downtown. The streets are like freeways with angled parking and overbuilt parking garages.
-- Salem Downtown Partnership was friends with downtown businesses. The friendliness went away after the City took over the EID funds contributed by those businesses. No one is holding City staff accountable (Salem has a very passive City Council.) No one at City Hall has noted past experience administering an Economic Improvement District.
Today the Statesman Journal ran a story about tonight's City Council meeting where renewal of the EID wll be discussed: "City reviews funding for business booster program."
Download City reviews funding for business booster program
The story sort of gives the impression that downtown businesses have doubts about whether an Economic Improvement District is needed. Actually, it seems clear that this isn't true. Or is true of only a few businesses.
Rather, the real concern is with how the City of Salem, in the person of Linda Norris, is mismanaging the EID funds contributed by businesses. She is treating the money as her own private fiefdom. But what downtown really needs is an independent organization that decides how to promote the area and is an autonomous voice for downtown interests.
Thus frustration is high.
So much so, there is an effort to grab the City's attention to how badly it has screwed up the EID via a remonstrance process where the Economic Improvement District would be dissolved if, as the newspaper story says, "the city receives written objections from downtown property owners on which more than 33 percent of the assessment is levied."
The City Council really needs to step in and fix what's wrong with the EID.
[Next day note: it turned out that the remonstrance processs succeeded. The EID is dead. All because of City Manager Norris and the City Council screwing up downtown promotion and organizational efforts.]
Download Business owners vote EID out of existence
Linda Norris shouldn't be managing the EID funds. Or rather, mismanaging them. The City of Salem is afraid that an independent downtown association would speak out against policies city officials want to pursue.
That was a ridiculous reason to terminate the contract of Salem Downtown Partnership and have the City Manager take over the EID funds. Sure, the City does a lot of ridiculous stuff these days. But we need to cut down on the absurdities, not add to them.
The Salem Downtown Partnership website is still up. Looks pretty good. I was told this was another effort undermined by City staff.
Salem Community Vision has a "position paper" about the Economic Improvement District on its web site. Well worth reading.
[Update: After sharing this blog post with the person I talked with, he/she emailed me some suggested changes. I've made some edits to the preceding material. Some additional thoughts also were sent along:
1) SDP never received professional or experienced public outreach, planning, goal setting, and bench-marking support from the City - this type of support is very commonly provided by City governments both large and small. (Especially when the City has a designated liaison to help support the downtown group). This greatly contributed to the predatory nature of the City's EID administration.
2) SDP's contract with the City didn't encourage best practices or even remotely suitable operating structures. Some outlined projects contradicted City goals or contained timelines that were poorly planned, budgeted, or even posed possible duplication of City efforts. Allowing a contract with such provisions and poor timelines is unprofessional and predatory.
3) SDP's City liaison failed to advise SDP about compliance issues for a period of six months - this includes the time frame right before SDP hired an executive director. (I feel the compliance issue situation was being extorted to blackmail SDP into staying the course with manipulative treatment)
4) The Parking District funding changes undermined SDP planning efforts and discouraged larger planning efforts at that time. When directly asked why the Parking District funds had to be administered differently (after 3 years of special procurement to Go Downtown) City staff failed to provide an answer on multiple accounts.
When SDP's City liaison was asked directly if she felt that SDP's situation was a problem (concerning the Parking District funds) she replied "I haven't formed an opinion on the matter." This matter concerned the conflict by which SDP would have to budget a large contingency in City Council approved EID funds to plan Parking District projects.
The City of Salem currently folds $56,680 in administrative expenses to run the EID into their operating budgets (urban renewal, general fund, etc.) The administrative services provided with this amount of money are minor and many activities incorporate things that certain staff positions did anyways before SDP was terminated.
The City also spends $40,000 on communication of which only the production of the website falls outside of the City's internal staff administration. I saw City employees collecting emails; and running Block Captain meetings really fits into Administrative Support category. Given this, I think its fair to say that EID dollars funded about $86,000 of City staff pay (minus $10,000 which is a generous estimate for their downtown website).
Also note, the City also gets to keep up to 5% of the EID assessment for taxation/admin purposes by law - currently close to $12,000 in funding according to the City's budget. These things held consistent - the City indirectly pockets around $98,000 in EID funding to support staff.
It also seems apparent that some of the activities under the Administrative section of the EID budget are over-budgeted. Many RFPs (which the City does all the time) are pretty boilerplate and should take more than a $3,000 to produce maximum.
See page 9.
Here is my idea for Downtown Salem:
Get rid of the EID. Keep the Clean Team, Flower Baskets, and Pressure Washing (and possibly year-round banners) for about $100,000 in Parking District funds. This can be done by teaching the Clean Team members to water the flower baskets and conduct pressure washing with equipment bought by SDP (a decision that the City once criticized). This will provide the services people like without the animosity of the EID and unnecessary waste. It might cost up to $120,000 maximum including admin support and cost overruns. They might have to give up some time spent cleaning up cigarette butts to make this happen - the end of the world I know.
When the City takes on the role of a downtown organization, it actually discourages a downtown organization from forming as people don't act when someone else is doing it for them. I don't know how the City expects to build the capacity to contract out the EID again in the future (in a manner that involves all business owners).
[Second update: another person familiar with this issue sent me an email with a few observations and corrections. Below is some of what this person said. I also was sent a recent piece in the Statesman Journal that shows how poorly the Linda Norris-managed EID is viewed. I'll attach it below.
Our City Councilor, Chuck Bennett, made a motion at council to change one word in the City EID ordinance. This changed "The City shall contract with an independent organization to manage the EID funds” to “The City may contract” That simple little word allowed the City Manager to take control of all our EID funds. It had nothing to do with Parking Tax funds - but the city took those also.
The EID collects $220,000 per year. The Parking Tax collected $435,000 this year and used to dedicate $85,000 to $100,000 of that each year to the downtown.
I think some Oregon EID’s are administered by the city - but that is clearly stated when the property owners are asked to vote in the EID. What our city did was tell the property owners the EID would be administered by the Salem Downtown Partnership then after one year, they terminated the organization and took all our money. That felt like a “bait and switch”.
The City has, over the past several years, moved money from the Urban Renewal into the Parking Fund to help cover costs of deferred maintenance on the three parking garages caused by misuse of Parking Tax funds.
The unfortunate result is that the City already plans to stop dedicating any Parking Tax to the downtown. The citizens of Salem voted in the Parking District and tax for TWO purposes only. A “program of downtown promotions and program of public parking”. It’s too bad the city is failing to honor what the citizens voted in. When the State, County or Federal Governments put restrictions on what money can be used for - the city only uses those funds on those specific purposes. Why doesn’t the city honor the vote of the public the same way?
I have attached the letter sent to all EID tax payers by Mayor Peterson and Chuck Bennett. You can see the thinly veiled threat in the last paragraph. They are threatening the property owners that if we don’t pass the EID, the city will stop dedicating any Parking Tax funds to downtown.]