On Nov. 20, when the Portland City Council agreed to pay $350,000 in attorneys’ fees, it marked a final defeat for the city’s approach to regulating older brick buildings.

The order to pay legal fees came after the city lost a federal lawsuit brought by landlords who challenged a city ordinance requiring them to post warning signs on unreinforced masonry buildings, which are considered particularly vulnerable during a sizable earthquake.

The placard ordinance itself was a significant retreat from earlier recommendations. The notification policy was a compromise after the council faced a chorus of protests to requiring seismic retrofits – an expensive process that involves girding masonry buildings with a steel skeleton.

Commercial building owners, along with affordable-housing providers, churches and others, fought back. So the council settled on requiring masonry building owners to post a placard with a simple 19-word message: “This is an unreinforced masonry building. Unreinforced masonry buildings may be unsafe in the event of a major earthquake.”

On May 30, federal district Judge John Acosta struck down the council-approved ordinance, writing that it was unconstitutional because it compelled speech from building owners in violation of the First Amendment.

“The more they tried to make it better, the worse it got,” said John DiLorenzo, a Portland attorney who brought the lawsuit on behalf of the building owners. “It became a shadow of its former self. Even then, what was left couldn’t survive First Amendment scrutiny. It was just a total disaster for the city.”

Acosta wrote that the ordinance was “unduly burdensome” and based on a database riddled with inaccuracies. The database of unreinforced masonry (URM) buildings was compiled by city officials and Portland State University engineering students, typically based on a visual inspection of the building exterior and permit records.

In his ruling, Acosta painted a detailed picture of a failure in government regulation. The judge wrote that the city “lacked the political will or public support to achieve its desired goal: mandatory retrofits for URM buildings.”

Now, more than five years after the city began formulating a seismic retrofit policy, city officials are essentially restarting the process from scratch with yet another committee.

The city’s attempts to regulate URM buildings began in 2015, when a committee formed by the Bureau of Emergency Management recommended a mandatory program to strengthen all but the smallest buildings. Scientific advances and national publicity deepened the understanding of the risks posed by a large-scale Cascadia subduction zone quake and lent urgency to regulation. However, city commissioners were unable to agree on a seismic retrofit policy.

Instead, they settled on the placarding requirement – a measure meant to pressure private building owners to pay for the retrofits. The Masonry Building Owners of Oregon responded by launching a lawsuit with DiLorenzo, a Davis Wright Tremaine attorney and lobbyist who often takes on complex business cases.

DiLorenzo found sympathetic plaintiffs. One, John Beardsley, a longtime local real estate developer and investor, owned the Western Rooms building at Southwest Second Avenue and Ankeny Street. The 113-year-old building in 1979 was reinforced via a seismic retrofit. Nevertheless, it did not meet the city’s standards, and the building was placed on the city’s URM database.

Beardsley told the court that the city’s placarding language would make him “a liar.” Acosta’s ruling criticized the city for placing the burden of proving a building did not belong on the URM list on property owners.

Another building owner who testified was Walter McMonies, a retired real estate lawyer who owns several Portland buildings and became president of the Masonry Building Owners. McMonies testified that he spent $1.1 million to upgrade a 36-unit multifamily building in Northwest Portland, but that it still did not meet the city’s standards for seismic reinforcement.

“I’m pushing $2 million to finish it,” McMonies said in an interview. “That’s not a scare story. That’s what it costs.”

In its defense, the city pointed to Berkeley, California, where the number of URM buildings had been cut from 587 in 1991 to six by 2007. Unlike Portland, however, Berkeley made seismic retrofits mandatory and offered a “suite of options for financing retrofits,” Acosta wrote.

Portland’s seismic policies went through a series of committees that included building engineers, owners, city officials and others. Meanwhile, the city’s leadership changed. Steve Novick, who had originally pushed for mandatory seismic retrofits while overseeing the Bureau of Emergency Management, lost his bid for re-election. In ensuing years, the BEM would change hands to commissioners Dan Saltzman, Ted Wheeler and now Jo Ann Hardesty. Hardesty’s office referred questions to the BEM.

DiLorenzo criticized the role of the city’s staff in pushing the seismic retrofits.

“We have a few city employees who have driven this process,” he said. “It is obvious that the City Council was being manipulated by its staff. … I think this is a real failure of governance, and it was eye-opening to me.”

DiLorenzo said the city’s first committee was packed with engineers.

“It would have been a financial bonanza for those guys,” he said.

A report shows the 2015 eight-member Retrofit Standards Committee included five engineers.

BDS spokesman Alex Cousins said there was no undue influence by professional engineers or city staff on seismic retrofit policy. Cousins noted the final policy committee, which made recommendations to city staff, had 18 members – only one of whom was an engineer.

“It is a mischaracterization to say that the committees were stacked with engineers or that the process was predetermined,” Cousins stated in an email. “The fact remains that seismic retrofits make buildings safer in the event of an earthquake, and structural engineers are best able to understand how buildings perform during these events. They needed to be part of the URM policy-making process as did the rest of the stakeholders involved.”

The BEM is now forming a new committee that will look at possible financing for seismic retrofits, including options such as tax breaks and a revolving loan fund. The URM Work Group will meet for the first time on Dec. 17.

“The focus of this will not be a mandatory program,” BEM spokesman Dan Douthit said.

The city has been conscientious in its desire to regulate URM buildings, McMonies said.

“I don’t think anybody’s a bad actor,” he said. “It’s a difficult problem.”

McMonies was skeptical that the committee will come up with a new solution.

“The new committee is fine, although we feel we really looked under every rock,” he said. “There isn’t any spare money in the city’s budget, with the homeless and the housing crises.”

The work group is expected to examine financing options over a year before reporting back to the City Council.

“A lot of specifics aren’t known,” Douthit said.

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The Portland City Council is preparing to consider a policy that would require owners of unreinforced brick buildings to retrofit them, and building owners are urging the city to provide financing.

Portland has 1,644 unreinforced masonry buildings, according to a city inventory. They are 88 years old on average.

Portland officials have anticipated the need to retrofit the city’s unreinforced masonry (URM) buildings for years. The city’s first retrofit requirements were adopted in the mid-1990s. But increasing awareness of Portland’s risk for a potentially devastating Cascadia subduction zone earthquake has added urgency to the efforts.

Even landlords now recognize that seismic retrofit requirements are coming.

“At the end of the day, it’s how can it be done, not should it be done,” said Gwenn Baldwin, a lobbyist who represents the Masonry Building Owners of Oregon.

The URM Policy Committee will meet for the final time on Oct. 4. The City Council will then perform its first review of the policy Oct. 19. The council is not expected to vote on the policy at that meeting.

The policy’s creation is overseen by the city’s Bureau of Emergency Management, which is overseen by Mayor Ted Wheeler. His office is monitoring the URM Policy Committee’s work, spokesman Michael Cox said.

“We’ve been working closely with them on refining their proposal,” he said.

The policy has been years in the making, in part because building upgrade mandates often face resistance from property owners. Seismic retrofits are a particularly costly upgrade, often requiring landlords to evict or temporarily relocate tenants for months while work proceeds.

Adding to the difficulties is the city’s new relocation assistance ordinance that requires landlords to compensate tenants upon issuing a no-cause eviction. The relocation assistance varies by the size of unit, ranging from $2,900 to vacate a studio apartment to $4,500 for a unit with at least three bedrooms.

Those costs add up. Last spring, Urban Development + Partners evicted tenants from 65 units at the Fairmount Hotel to make way for a major renovation. The fees cost the Portland developer $199,800.

In concept, seismic retrofits could hardly be simpler: add steel. Typically, steel bars are added to reinforce masonry walls. Parapets and other features are tied down into more durable structures.

The construction is straightforward, but the costs can be high, particularly for the owners of small buildings that generate modest leasing income.

And not all unreinforced masonry buildings are for-profit operations. The city’s inventory lists approximately 45 schools and 35 churches. Central City Concern, one of the city’s largest nonprofit owners of affordable housing, owns several unreinforced masonry buildings.

URM buildings were built in Portland between about 1870 and 1960, according to the city’s draft summary. Many of the buildings are located downtown, in Old Town Chinatown and in the Central Eastside Industrial District.

Government officials have known of Portland’s seismic risks for years, but a story in the Portland Mercury in 2012 shed light on the scale of the problem. Former Commissioner Steve Novick drew attention to the issue, and then a 2015 article in The New Yorker added alarm with scenarios of widespread death, displacement and structural failures from the inevitable earthquake.

A draft of the city’s policy was released in April, and changes may still be made. The draft policy takes a tiered approach to regulating URM retrofits.

The URM committee process has helped make the draft policy workable for building owners, Baldwin said.

“The process has actually accomplished what you hope from the Portland process,” she said. “It has become more practical, more grounded.”

In the tiered approach, the vast majority of unreinforced masonry buildings is in class 3, designated for buildings with more than 10 occupants but no critical infrastructure. Draft retrofit standards for those buildings call for bracing unreinforced masonry parapets, cornices and chimneys, anchoring walls to floors and roofs, attaching a diaphragm to vertical elements to transfer in plane shear and out-of-plane wall bracing for taller walls.

Owners of class 3 buildings would have five years to assess needed seismic upgrades, 10 years to brace parapets and attach walls to the roof, 20 years to complete wall-to-floor attachments and wall strengthening and 25 years to complete all work. A five-year extension could be provided for hardship.

Class 1 buildings – critical ones such as hospitals and fire stations that must be occupied after an earthquake – have much tighter timelines. Owners of these buildings are given three years to assess and 10 years to complete a retrofit.

Class 2 buildings include schools and churches. Owners of those buildings are given three years for assessment, 10 years for bracing and 20 years to complete a retrofit.

Class 4 buildings are one- to two-story buildings with up to 10 occupants. Owners of those are given 10 years to complete a seismic retrofit.

Affordable housing providers are working to make sure the policy doesn’t result in the closure of any buildings. Central City Concern has been in contact with the Portland Housing Bureau to devise an exception for affordable housing.

The amendment, if adopted by the URM Policy Committee and City Council, would allow an extended timeline for owners of affordable housing to evaluate and conduct retrofits of their buildings, said Sean Hubert, chief housing and employment officer for Central City Concern.

“We feel in terms of the affordable housing piece that that is a good compromise,” he said.

If the amendment is not adopted, Central City Concern would oppose the URM policy, Hubert said.

City codes beginning in the 1970s resulted in the closure of thousands of single-room occupancy units, which share kitchens and bathrooms and serve as housing of last resort for many impoverished individuals, Hubert said. The closure of those units coincided with a rise in homelessness, he said.

“A lot of that loss was due to the city getting more tough on code enforcement and new codes,” he said.

Seismic retrofits for multistory apartment buildings are costlier than similar upgrades for buildings with open floor plans, Hubert said.

“What we have found – in order to do a full seismic retrofit – you have to shore up the diaphragm at each level, which means you have to tear up everything,” he said. “It’s a very costly prospect.”

For many owners of small URM buildings, the property serves as their retirement income, said Susan Steward, executive director of the Building Owners and Managers Association of Oregon. It’s critical the city provide financing for the seismic retrofits, she said.

“I’m still concerned at the end of the day they’re going to pass this with nothing in place (for financial assistance),” she said.

Few buildings have sufficient equity to finance costly retrofits, she said.

A program called PropertyFit aims to close the financial gap. It’s operated by Prosper Portland, Multnomah County and the Energy Trust of Oregon, with outside capital partners. The program offers financing beginning at $200,000 with terms of up to 30 years. The loans are secured by a property lien.

The program has yet to be tested, however.

City officials appear to be sympathetic to building owners’ concerns, Steward said.

“They seem to get it,” she said.

City officials are aware of the financing challenges, but also hesitant to hand out dollars to private property owners. A property-tax abatement may be part of the answer.

The policy is on the right track – as long as financing comes together, Baldwin said.

“We’re close,” she said. “But don’t get things out of order. Don’t pass (the policy) and then figure out financing.”

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