Portland withdraws lobbying violation against shelter operator Urban Alchemy

Portland has reversed a May ruling that Urban Alchemy, the California-based nonprofit hired to run many of its outdoor homeless shelters, violated city lobbying rules. According to the City Auditor’s Office, the decision was made to avoid an anticipated legal dispute from the nonprofit.

“We do not think it is in the public’s interest to elevate this dispute to litigation,” wrote Auditor Simone Rede in a letter sent to Urban Alchemy Tuesday afternoon.

Urban Alchemy currently operates three new outdoor shelters through city contracts, including Southeast Portland’s Clinton Triangle.

On May 1, Rede found that Urban Alchemy had not reported spending nearly $4,000 to send four employees from California to Portland in early December 2022, to pitch elected officials on hiring the nonprofit to run these new shelters. Four months later, the city approved a five-year, $50 million contract for Urban Alchemy to operate mass shelter sites across the city.

Related: Portland’s largest outdoor homeless shelter brings uncertainty for people seeking permanent housing

Because Urban Alchemy had not registered as a lobbyist with the city at the time of the visit, Rede said it violated city lobbying rules.

Rede’s May finding came with no financial penalty. But Urban Alchemy still challenged the decision, arguing that the city’s definitions around lobbying activity are too vague, and don’t appear to include activities that take place before the city issues a “request for proposal,” a process where the city formally announces a project and solicits bids from contractors to run it. The nonprofit staff had visited the city two weeks before Portland announced it was seeking proposals from organizations interested in running the new shelters.

Weeks after making this determination against Urban Alchemy, the Auditor’s Office proposed changes to the city’s lobbying rules. That included new language clarifying that any activities that occur before the city puts out a request for proposals are considered lobbying.

Lawyers representing Urban Alchemy accused Rede of trying to retroactively tidy up the code language to justify the May violating warning. City Commissioner Rene Gonzalez, who is running for mayor, agreed with the nonprofit.

“In this case the Auditor narrowed an exception to the city’s lobby rules in a way not supported by the rules as written,” said Gonzalez in a statement shared with OPB. “[She] then attempted to include a rewrite of the rules to support their decision.”

Related: Portland shelter operator Urban Alchemy accused of violating city lobbying rules

Rede, who is running unopposed for reelection this November, said that the code change was unrelated to the Urban Alchemy ruling. Yet the vote to advance the lobbying code changes was pulled from the council agenda during this late May debate.

Sensing a legal challenge, the Auditor’s Office chose to withdraw the May ruling against Urban Alchemy. Rede wrote that she was dropping the violation to avoid a “protracted dispute about the interpretation of the lobbying code.”

Portland City Council is expected to reconsider the changes to city lobby code in August.

Urban Alchemy is still not registered as a lobbyist with the city.