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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Commissioner Jo Ann Hardesty has ordered Portland Fire & Rescue to delay enforcing a requirement for unreinforced masonry buildings to display a warning placard.

Hardesty, who oversees the fire bureau, announced the move Thursday.

“No one is interested in putting our residents at risk, but we need to look at ways to better support businesses and nonprofits in seismically upgrading their buildings,” Hardesty said in a prepared statement. “A placard is a Band-Aid for a much larger problem. Until we have better support in place, especially in the form of funding assistance for these projects, I want placarding enforcement on hold for businesses and nonprofit organizations.”

Multifamily property owners and leaders of many of Portland’s historically black churches had criticized the ordinance, saying it does nothing to help them perform seismic retrofits. Such projects can cost millions of dollars for large buildings.

The placarding requirement is scheduled to take effect March 1 for commercial businesses. Nonprofit groups have until November 2020.

Hardesty’s order puts on hold a major policy initiative of Mayor Ted Wheeler. In a prepared statement issued Friday, he noted the requirement remains on the books.

“I stand by City Council’s decision to pass an ordinance requiring the placement of placarding on unreinforced masonry buildings,” Wheeler stated. “We voted to take a small but important step to be transparent about identifying buildings that are at risk in an earthquake. These signs share basic information to the public about the safety of a building.”

Wheeler noted “the requirement to put earthquake warning signs is still the law. I will continue to work with Commissioner Hardesty and building owners to ensure the safety of all Portlanders.”

During a heated battle last year, the City Council struggled to settle on a policy that would encourage building owners to seismically strengthen vulnerable buildings. A city inventory identified 1,631 unreinforced masonry buildings, mostly in close-in historic neighborhoods.

Former Commissioner Dan Saltzman and others had pushed for requiring building owners to perform retrofits.

Multifamily landlords have advocated for financial incentives to conduct retrofits. The placarding policy makes little sense as public policy, said Greg Frick, founder and partner at HFO Investment Real Estate.

“It’s an example of the city rushing in with something that looks good that doesn’t solve the problem,” he said.

Geologists have said Western Oregon is overdue for a potentially devastating Cascadia subduction quake. Worldwide, unreinforced masonry buildings have proved to be dangerous in earthquakes.

The text of the required placards reads: “This is an Unreinforced Masonry Building. Unreinforced Masonry Buildings may be unsafe in an event of a Major Earthquake.”

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Owners of unreinforced masonry buildings may be required to place placards on their properties warning tenants and visitors of seismic risk after the Portland City Council on Wednesday directed staff to come up with a notification policy.

The policy will return before the council in three months for a vote. The notification requirement appears to be the most likely seismic measure to be adopted after years of committee meetings yielded little agreement on whether to mandate expensive seismic retrofits of hundreds of aging brick buildings.

The City Council delayed enacting any seismic retrofit mandates for a year, when a newly formed working group will report back to commissioners. Even then, a draft of seismic retrofit requirements would give building owners 20 years to complete the upgrades.

Commissioner Dan Saltzman said the council was giving property owners too much leeway to complete safety improvements.

“The problem with 20 years is 20 years is so far over the horizon that I don’t believe people will take it seriously,” he said.

A city inventory has identified 1,631 unreinforced masonry (URM) buildings. Most are commercial structures. Scientists say a major earthquake in Portland is inevitable when a tectonic plate that runs along Oregon’s coastline and is locked against North America slips underneath the continent. Unreinforced masonry buildings are likely to collapse in a significant earthquake.

The notion of requiring seismic retrofits drew fierce opposition from a broad coalition of building owners, historic preservationists, affordable housing advocates and churches. Many argued they simply would not be able to pay for seismic retrofits, which can cost millions of dollars for large buildings. The projects typically involve steel bracing, tying down parapets and tying walls to flooring.

The placard requirement gained unanimous support from commissioners. Mayor Ted Wheeler on Wednesday displayed a draft version of the placard’s text. It read: “This is an unreinforced masonry building. Unreinforced masonry buildings may be unsafe in the event of a major earthquake.”

Renters would also have to be notified if they live in a URM building.

“This is the clearest issue for me,” Commissioner Chloe Eudaly said. “Every tenant and occupant has the right to make an informed decision as to whether they want to live in a URM (building), and denying that information to them is not reasonable.”

Portland resident Kathy Rogers testified against the requirement.

“I think the placarding has potential unintended consequences, primarily for the small businesses,” she said.

Nonprofits pose a particular thorny problem for the city’s URM policy. A 15-year property tax exemption was identified by the city’s URM policy committee as a key method of paying for seismic retrofits. That does nothing to address the needs of churches and other nonprofits, which do not pay property taxes.

Several African-American clergymen pleaded with commissioners Wednesday to not require seismic retrofits without providing funding.

“We fully understand the importance of the lifesaving issues of the earthquake-proofing, but the lack of communication to churches, in particular African-American churches and others, and a lack of steps to ameliorate the special needs of institutions, is very troublesome,” said the Rev. Leroy Haynes Jr., pastor of Allen Temple Church in Northeast Portland.

Commissioners directed staff to add seismic retrofit funding to the city’s lobbying priorities for the 2019 legislative session. But it’s far from clear that more funding for seismic retrofits will be forthcoming from the Legislature.

“We won’t necessarily come up with any more resources,” Saltzman said. “And then what? We’re just going to turn a blind eye to the major seismic threats that face this area?”

Wheeler led the commissioners who sought to push back the requirements for at least another year.

“It is worth the miniscule risk that by delaying this for one year we will actually put people in life-safety danger,” he said. “It is a very small statistical possibility – although it is a real possibility.”

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