The Portland City Auditor determined California-based homelessness nonprofit Urban Alchemy violated city lobbying code as it sought a contract with the city of Portland worth up to $50 million over five years.
The Elections Office, part of the Portland City Auditor’s Office, received a June 28, 2023 complaint prompting an investigation into Urban Alchemy’s activities before the city took bids from organizations to run its Temporary Alternative Shelter, or TASS sites, in 2022. Portland City Auditor Simone Rede found Urban Alchemy failed to register as a lobbying entity and failed to file lobbying reports about its attempts to woo city officials — violating two local lobbying codes.
City code defines lobbying as time spent preparing emails, letters and oral communications attempting to influence city officials’ actions. Urban Alchemy had numerous unreported contacts with city officials beginning in April 2022, including a trip to meet with elected officials in Portland. It also provided draft budget documents for encampments nearly eight months before the city began accepting service providers' bids to run the camps, according to the auditor's investigation.
“The Elections Office investigated Urban Alchemy’s communications with City officials between April and December 2022 — when the City issued its request for proposals for an alternative shelter contract,” the auditor’s office said in a May 1 press release. “The investigation showed that for nearly nine months, Urban Alchemy communicated with the City and devoted substantial resources to convince City officials that it was best positioned to be awarded the alternative shelter contract.”
The city awarded the contract to Urban Alchemy in January 2023, according to the auditor’s office. City Council unanimously approved the contract despite significant criticism on March 9, 2023.
City code requires any entity lobbying city officials to register with the city auditor within three working days of spending more than $1,000 or more than eight hours in a quarter. The city auditor found Urban Alchemy passed the threshold for lobbying activity while communicating with city officials before the city opened a request for proposals, or RFP, on Dec. 20, 2022. As required by law, the city solicits bids from entities through a process outlined in state law and city code before awarding contracts for various projects.
Records show two weeks before the city opened the RFP — for which only one other organization, Simply Human Project out of Vancouver, Washington, applied — four Urban Alchemy staffers spent two days in Portland meeting with city officials. The auditor’s determination letter said city officials scheduled “several meetings on Urban Alchemy’s behalf.” The Dec. 7-8 visit to Portland cost Urban Alchemy nearly $4,000, well above the $1,000 threshold, according to the auditor’s office.
“For a nonprofit organization to spend thousands of dollars on travel and lodging for top officials to engage in these discussions is inconsistent with merely providing educational information to the city,” Rede wrote. “Instead, these actions align more with attempts to position Urban Alchemy favorably for award of the contract.”
Nearly two months before the city released the RFP, public records show city, county and state officials took a trip to visit an Urban Alchemy site in Los Angeles on Oct. 24, 2022.
The auditor determined Urban Alchemy provided draft budgets to the city as early as April 30, 2022 — nearly eight months before the city opened the RFP. The auditor said the organization was explicit that its regular meetings with city officials were intended to “keep things moving forward” before the city opened the RFP, quoting an Oct. 27, 2022 email from Jeff Kositsky, Urban Alchemy Chief Growth Officer, to city officials.
Records show Urban Alchemy also remained concerned that publicizing its involvement with the TASS sites could create tensions, the report noted.
Urban Alchemy-contracted law firm Tonkon Torp responded to the auditor’s warning denying any violation took place. The attorneys argued Urban Alchemy is not a lobbying organization, but a direct service provider, and stated its actions were in response to city requests related to a bid, despite the timeframe of the contacts happening before the city released an RFP.
“Urban Alchemy has not engaged in lobbying as defined by the Code, as it has not sought to influence the official action of City officials,” Tonkon Torp attorneys Danny Newman and Paul Balmer wrote in the response. “The meetings and communications identified in the Letter occurred at the request of City officials based on the City’s need for a contractor to manage government-sanctioned campsites for unhoused individuals.”
The auditor said the organization being a service provider has no bearing on its status as a lobbying entity under city code. The auditor also rebuffed the argument that communications were in response to requests relating to a bid.
“There was no competitive bid process in place and Urban Alchemy’s activities could not have been negotiations or information requested in responses to a bid submitted in a competitive process,” Rede wrote in the letter of determination.
Background
Mayor Ted Wheeler promotes the TASS sites as humane alternatives to sleeping on public property, saying they provide homeless Portlanders with access to case management and other community services. Urban Alchemy manages the sites — its stated mission is "to operate workforce programs in areas of civic engagement, urban street cleaning services, and reentry services," according to tax records.
Urban Alchemy has faced criticism from homeless Portlanders staying at the TASS sites, local residents and service providers. Some say the sites provide a sense of hope, while others say they are disappointed and the organization is not fully transparent about its practices. Street Roots covered the organizational structure, its history of lawsuits and how it interacts with local service providers in a three-part series published in December 2023 and January 2024.
The organization has faced at least six lawsuits since its founding in 2018.
On July 27, 2023, two days after the Clinton Triangle TASS opened in Portland, the organization settled a $1 million class action lawsuit brought forth by former employees in California. That lawsuit alleged the organization failed to pay overtime wages, did not provide breaks and failed to pay minimum wages, saying Urban Alchemy “systematically failed to correctly calculate and record overtime compensation for overtime worked.”
Another lawsuit filed Oct. 3 2023 alleges similar labor violations in San Francisco, accusing Urban Alchemy of violating unfair competition law.
Urban Alchemy is contracted to manage up to five total shelter sites, including Clinton Triangle, Reedway, Peninsula Crossing and is expected to run a new North Portland site for recreational vehicles. The city is currently working with DEQ at that site to remediate the contaminated land it occupies.
The Urban Alchemy warning is one of two determinations from the auditor in 2024 saying an entity violated city lobbying code. The auditor found Houston-based oil-by-rail company Zenith Energy violated lobbying code on March 26 after Street Roots revealed previously unreported meetings between local officials and the fossil fuel giant. The auditor declined to issue fines in either case, instead issuing a warning and letter of education.
The city of Portland and Simply Human Project declined to comment for this story.
Urban Alchemy did not respond to Street Roots’ request for comment at the time of publishing.
Correction: A previous version of this story incorrectly stated Portland Business Alliance, now Portland Metro Chamber, executives joined a trip to Los Angeles October 24, 2022. Executives in fact joined a separate trip with elected officials March 13, 2023.
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