As the 2022 general election cycle comes to an end, we’re seeing a variety of complaints, lawsuits, and judgments concerning violations of Oregon election laws. These cases are often included in campaign coverage as just a normal part of the business of elections. But these violations and their outcomes can have an outsized impact on who gets elected — it’s worth understanding who is actually facing repercussions for breaking election laws.
One campaign finance judgment caught Portland voters’ attention in September: The City of Portland’s Elections Office determined that Rene for Portland, Rene Gonzalez’s campaign for city commissioner, received a contribution over donation limits for a city-level campaign.
An investigation, a decision, an appeal, and a judgment
The donation that triggered the Election Office’s investigation came from Jordan Schnitzer, a real estate investor who owns a substantial chunk of downtown Portland, through Schnitzer Property Management LLC. Schnitzer provided office space to the Gonzalez campaign, starting May 2022, for a total amount of $4,740 for six months (including rent, utilities, maintenance, and janitorial services). The office space is located at 1010 Southwest 11th Avenue in downtown Portland.
Candidates running for office in the City of Portland face the following contribution limits:
- Individuals — $508
- Political Action Committees (PACs) $508
- Small Donor Committees — No Limits
- Other Entities (e.g., businesses, unions, etc.) — Prohibited from Contributing
The limits on individual and PAC donations are lower — maxing out at $250 — for candidates participating in the city’s Small Donor Elections program. Gonzalez is participating in the program and therefore is subject to the lower donation cap.
After determining that the donation exceeded the city’s donation cap, the Election Office informed Rene for Portland that the campaign needed to pay $33,250 to Schnitzer Property Management LLC (based on an estimated market value of $6,900 for renting the space) and pay a $43,890 fine. After some back and forth, the Gonzalez campaign requested a hearing on the matter and the City of Portland referred the matter to the Oregon Office of Administrative Hearings. Senior Administrative Law Judge Joe Allen was assigned to hear the case in October.
Who is an administrative law judge? ALJs typically decide administrative disputes for a given government. ALJs were initially intended to be experts, able to assess a Social Security appeal or a technical construction process because they focus on just that process. However, many states have created a centralized ALJ panel that handles a wide variety of cases, creating a system sometimes referred to as “the hidden judiciary“. The system is even less transparent than Oregon’s judiciary, given that few Oregon residents are even aware that ALJs exist. So where do Oregon’s ALJs come from?
Allen is an employee in the Oregon Office of Administrative Hearings. OAH is an office within the state’s executive branch, led by a chief administrative law judge who hires additional ALJs. The governor appoints the chief ALJ for a term of four years. An oversight committee can make recommendations to the state legislature for changes to the office; members of that committee are appointed by the governor, the attorney general, and the state legislature. The office hears cases related to more than 70 different state agencies. Allen, for instance, has overseen hearings for agencies ranging from the Department of Environmental Quality, the Oregon State Hospital, and the Oregon Health Authority. In theory, ALJs may be less subject to elections and therefore more willing to enforce campaign laws than a judge who must stand for election every six years. In reality, though, ALJs are only an additional step or two removed from the election process due to the controls both the executive and legislative branches have over OAH.
The City of Portland’s case against Gonzalez’s campaign hinged on the question of what is a fair rent for the office space in question. The city relied on one witness to testify to commercial real estate prices in the area, while Rene for Portland’s lawyers brought in four witnesses plus a representative of Schnitzer Property Management LLC. Arguments for allowing the contribution included a variety of points: that downtown buildings have higher vacancies right now due to crime and homelessness, that pop-up shops routinely get lower-than-listed rates, and that listed prices are a starting point for negotiations. Steven Roselli, Schnitzer Property Management LLC’s senior vice president, testified that the space rented to the campaign had been vacant since 2020 and that the company has offered other inexpensive short-term leases (including free space to the Beaverton Police Department). The campaign also provided evidence of paying $540 per month for utilities, janitorial services, and repair costs in addition to rent, arguing that those additional payments pushed their rent higher because the space was listed as ‘full service‘. Allen agreed with those arguments, saying that the City of Portland had failed to make its case.
Allen ordered that the City of Portland revoke its decision that Rene for Portland received an illegal donation. As a result of that order, the City of Portland determined that Schnitzer Property Management LLC was not in violation of campaign finance laws by making the donation, nor was the Gonzalez campaign in violation of campaign finance laws by failing to disclose that Schnitzer Property Management LLC is a major campaign contributor.
But Allen’s ruling oversimplifies a complex matter. While the city certainly failed to prove that the market rate for the space is $6,900 per month, none of the witnesses actually argued that $250 per month is a reasonable rate for the space. Instead, witnesses suggested that they’re offering discounts of up to 30% on list prices in their own businesses, setting the market rate for the space closer to $4,830 per month. It’s worth noting that:
- At the time of writing this article, the office space currently occupied by Rene for Portland is listed on a variety of commercial real estate sites for $26 per square foot annually (which works out to $6,900 per month). Per Roselli’s testimony, Schnitzer Property Management LLC has struggled to rent the space. If we assume, however, that a real estate team responsible for managing millions of square feet of commercial space knows how to price and market those commercial spaces, the company must believe that prospective tenants will be interested in the space while it’s listed at that price, however, because they haven’t lowered it. After all, Schnitzer and his staff are considered experts at renting commercial real estate.
- Real estate analysts have put the average cost of office space in the Portland metro area at $28.44 per square foot for the third quarter of 2022. Downtown Portland does have more vacancies than other parts of town, but prices are holding steady (or even trending upwards).
- The lease also included two parking spots. Prices for downtown parking spaces are rarely subject to negotiation. At a minimum rate of $225 per month per space, the two spots assigned to Rene for Portland are worth more than the campaign’s monthly rent on their own. Allen noted that the parking spots shouldn’t be assessed separately than the lease as a whole, while stating that the campaign’s additional payments for utilities, janitorial services, and repair costs could be considered evidence that the campaign was paying a reasonable amount for the space. Allen’s judgment doesn’t seem to take the full replacement cost of obtaining similar spaces into account.
- While the space in question is listed as a full service building, lumping costs for repairs and janitorial services in with utilities and maintenance is disingenuous. While some full service leases will include janitorial services, it’s not a given. And repairs for vandalism are not typically included in a commercial lease — most property owners prefer to be involved in repairs and insurance is expected to cover such costs. Over all, these are expenses the campaign would have had no matter where they located their offices.
- Per the many Portland residents who have contacted Schnitzer Property Management LLC about renting space from them for $250 per month, no one else seems to have been able to get office space downtown at that rate.
Ultimately, the City of Portland failed to make a case against the Gonzalez campaign. But that failure is due to the arcane nature of real estate leasing and a lack of effective witnesses. If the city’s election office had set the market rate for 1010 Southwest 11th Avenue at around $4,500 per month and brought a few more witnesses, Allen’s ruling might have been very different.
The nuances of both election law and commercial real estate management are complex. But the outcome of this decision is much clearer: this case sets a precedent. By ruling in favor of the Gonzalez campaign, Allen opened the door to large in-kind donations. While a business may not be able to donate to a candidate for city office, the owner can provide free office space or free printing or anything else they’d like to give to a candidate they support. It may make other campaign finance laws harder to enforce as well. The chair of the Portland Elections Commission, Amy Sample Ward, found Allen’s decision concerning, saying: “This ruling creates a loophole for donors to give enormous in-kind contributions, rendering useless the contribution limits in the program and penalizing those who play fair. In issuing the penalty, the Small Donor Elections Director followed the law which requires the use objective evidence when determining whether a candidate accepted an illegal contribution. This ruling overturns the City’s use of objective evidence.”
Other investigations so far this year
At the time of writing this article, the City of Portland’s Elections Office has completed two other investigations of potential violations of election law so far in 2022. One investigation looked at whether Dan Ryan’s primary campaign had failed to include a list of top donors in campaign materials. The investigation determined that Ryan’s campaign had not violated the law. The other investigation looked at concerns that the Portland United PAC did not properly disclose funding information on their website. The City of Portland’s investigation concluded that Portland United had committed one violation of the Portland City Charter and Code, resulting in a warning letter.
Another investigation is reportedly underway: a political lobbying group filed a complaint at both the city and state levels last week. The complaint says that the City of Portland is inappropriately advocating for the city charter ballot measure by providing voters with educational documents and information about the charter review commission. Given that all the city’s materials covering the charter reform ballot measure have been approved by the Oregon Secretary of State, this complaint is only likely to move forward if the lobbying group, Partnership for Common Sense Government, is willing to invest legal resources. That may happen — Vadim Mozyrsky cofounded the group explicitly to oppose the charter reform ballot measure after resigning his spot on the review commission. However, Mozyrsky’s press conferences about this and similar accusations against Portland United for Change could easily be part of a media strategy, rather than a legal strategy.
The Oregon Secretary of State’s office conducts similar investigations, but does not maintain a list of completed investigations and their outcomes. However, a variety of investigations are going on at any time, based on the office’s media releases. Reported investigations this year include:
- A decision that Nick Kristof did not meet residency requirements to run for governor in Oregon in 2022
- An investigation into whether People for Portland acted as a political action committee without registering as such
- A decision that Alek Skarlatos, the Republican candidate for Congressional District 4, did not violate campaign laws when transferring funds from a non-profit he founded to his campaign
- A complaint that Hai Pham, the Democratic candidate for State House District 36, may not live at the address listed on his voter registration or candidate filing
- A complaint that a voter’s guide produced by Democratic political allies, including public employees’ unions, may violate laws against circulating imitation voters’ pamphlets
- A complaint that Tina Kotek may have violated election laws by making promises to Oregon Progressive Party / Pacific Green Party candidate Nathalie Paravicini to pursue campaign finance reform in exchange for Paravicini dropping out of the gubernatorial race
The enforcement mechanisms are minimal
The methods of enforcing election law violations are part of the problem. Under the current system, there are few chances to hold candidates accountable for their actions in a meaningful way.
Enforcers are not independent: The offices responsible for enforcing these laws are not independent of the election process. The City Auditor of Portland is elected, as is the Oregon Secretary of State, and some of the judges who rule on election cases. (The other judges are administrative law judges, who are appointed by the Governor of Oregon and other elected officials).
The offices responsible for enforcement are also not independent of the candidates they must review, including for budgets. If, say, the City Auditor of Portland must impose a fine on a candidate who is already a city commissioner, the auditor must convince the city council to provide funds for an outside attorney to avoid potential conflicts of interest. That tends to go about as well as you might expect. When City Auditor Mary Hull Caballero attempted to issue fines to Ted Wheeler’s reelection campaign in 2020, for instance, the city council refused to provide funds, effectively preventing any enforcement of election laws against incumbent city commissioners.
Money affects the whole system: Finding a fair set of laws and enforcement mechanisms in the United States can be a difficult proposal at the best of times because money tilts the scales of justice. That holds true when looking at campaign laws, because election law enforcement relies primarily on complaints and lawsuits, with warnings and penalties as the main responses to violations. When a campaign faces a financial penalty for violating campaign donation limits, they’re expected to return the funds and pay a fine. When the penalty actually sticks, well-funded campaigns can treat those fines as merely fees — the cost of doing business.
Not only can a candidate with plenty of money to throw at lawyers can push back against penalties, they can use the system strategically. Many complaints focus on practices that have gone on for years, but that could impact an election’s outcome in a tight race. One example listed above is a voter’s guide shared by groups supporting Democratic candidates. That guide has been produced for years, although no one appears to have filed a complaint about it in the past — or about any of the similar guides produced by groups supporting Republican candidates. While a lack of complaints shouldn’t be interpreted as evidence of a lack of a problem, the timing of this complaint is concerning.
Campaigns can even send cease-and-desist letters to other campaigns for repeating the same information published in a variety of media. Doing so can pick them up media coverage, as well as cast their opponents in a negative light with little recourse.
Disinformation campaigns target the system: Investigators responsible for reviewing reported violations of election law are facing increasing threats to their safety, as well as other forms of pressure to make decisions that favor specific candidates, especially since the conclusion of the 2020 presidential election. The Oregon Secretary of State continues to face lawsuits over the integrity of the 2020 election, as well as over perceived flaws in the state election system.
Not everyone gets to break the rules, of course
Different campaigns play by different rules. I’d like to be able to say that some campaigns want to adhere to the various election rules because those campaigns value the process and want to play fair. That’s overly-optimistic, however. The reality is that breaking rules requires resources and not all campaigns have similar resources. When a campaign is well-funded, paying a fine is roughly the same as paying a fee — even a large fine is little more than the cost of doing business. To a campaign or an individual without resources, however, a fine can mean the end of a campaign.
Consider who gets to run in the first place: even candidates running for positions on utility boards or fire districts need a lot of time to campaign. That means either having full control over their own schedules or working for an employer willing to provide substantial flexibility. For many people, running for office just isn’t financially feasible. And some people are effectively banned from running: if you’re disabled and receive benefits, becoming a candidate (even for an unpaid office) means that you’ll likely lose your benefits.
Programs like the City of Portland’s Small Donors Elections program are supposed to help with ensuring candidates can run without personal wealth or institutional support. However, there are many ways for a participating candidate with access to more resources to bring them into play. Take the six-figure ad buy made by Portland Accountability PAC to support Gonzalez and Multnomah County Commissioner Sharon Meieran in her campaign for county chair. Portland Accountability was founded by Kevin Looper, a long-time political strategist who also cofounded People for Portland and a separate PAC specifically intended to support Gonzalez. PACs can spend unlimited amounts on campaigns both at the city and state-levels in Oregon, and many wealthy Oregon residents use PACs as a way to support specific candidates.
A candidate uninterested in a fair election isn’t going to suddenly decide to play by the rules once they’re in office. If U.S. voters learned anything from the 2020 presidential election, we hopefully learned that candidates don’t change the moment they swear an oath of office. Even if we agree with a politician’s take on the issues, we need to also evaluate whether they’re going to be able to work within the system we’ve got — or if they’re going to misuse their powers and damage the system’s long-term usefulness.
And Oregon’s campaign finance laws are especially lax
Kate Brown described the limited restrictions on campaign finances in Oregon as “the Wild West.” When looking over the complaints discussed above, we need to remember that plenty of things happen in elections here in Oregon that are illegal just across state lines. Election officials here are struggling to address issues that would be considered low-hanging fruit (like limiting donations from businesses to candidates) in other jurisdictions. When we expand the discussion to other issues in election law, like candidates sharing demonstrably false information, we’re in a similar boat.
And reforming the existing election system here in Oregon seems unlikely to happen in the near future. While we’re still waiting to see the outcome of Ballot Measure 26-228, the campaign against the city charter reform measure shows what we’re up against: Numerous individuals with power and privilege under the existing system are pushing to maintain their power, using strategies ranging from media blitzes to lawsuits.
Passing a serious campaign finance reform measure statewide will be even harder. Recent attempts show that reforming campaign finance doesn’t have a lot of support from people in power:
- A 2006 ballot measure to revise campaign finance laws on the state level was ruled unconstitutional in 2012
- A 2019 attempt to pass legislation to reform campaign finance laws failed
- In 2020, Oregon Secretary of State Bev Clarno ruled candidates could ignore donation limit caps
- A 2021 attempt to pass legislation to reform campaign finance laws failed
- A 2022 effort to put campaign finance reform measures on the ballot failed
A few legislative efforts to limit risks have been successful. Sherry Hall, Clackamas County’s incumbent Clerk, deserves a special mention here. Hall’s career is a list of investigations, scandals, and mistakes, to the point that her decisions have led to new state legislation — this election marks the first time Hall is legally banned from printing her name and title in multiple locations on voting materials. The Oregon State Legislature banned the practice after the 2018 election cycle, during which Hall’s efforts gave her a substantial advantage over challengers. We’ll see soon if the legislative change had an impact.
With the 2022 election cycle coming to an end, we’ll soon see the impact of certain candidates’ ability to outspend their competition. There will be plenty of analyses of whether one candidate was likable enough or whether the support of a certain union tipped the scales. We may even see a few more complaints and investigations. As you read those results and analyses, though, remember to ask yourself which candidates have to follow which election laws here in Oregon. Holding candidates and elected officials accountable under our current system is nearly impossible. Whether you believe in reform or revolution, creating that accountability is the only way we can build an equitable elections system.
