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Portland ombudsman says lack of city oversight led to multiple contract violations and billing discrepancies, costing vandalized businesses thousands.

by Courtney Vaughn

A company hired by the city of Portland to board up burglarized and vandalized businesses violated its contract and over-charged property and business owners numerous times, city auditors found.

The city’s ombudsman, which operates under Portland’s Audit Services Division, found that 1-800-BoardUp–a company hired to board up buildings with plywood during emergencies–inappropriately profited by skirting its city contract and directly billing business owners and companies at much higher rates than it was supposed to. Findings from the ombudsman’s investigation were outlined in a report released Wednesday.

Investigators concluded a lack of oversight of the city contract resulted in multiple instances of wrongful billing and overcharging of Portland businesses, sometimes by hundreds of dollars.

The company was hired by the city to board up properties with broken windows or entryways, in cases of break-ins or other damage when the business or property owner couldn’t immediately be reached by a 911 dispatcher. 

The ombudsman’s report noted repeat discrepancies in police request for services and invoices, but cited a lack of evidence to suggest police were involved in the contractor’s tactics.

After receiving a complaint from a nonprofit organization questioning a $541 invoice from 1-800-BoardUp, the ombudsman’s office investigated the company’s billing practices spanning 2019 through 2021. Investigators reviewed invoices, police records, and records from Portland’s Bureau of Emergency Communications (BOEC) dispatch system and determined the company either mistakenly or knowingly over-billed for its plywood placement services 982 times. In the nonprofit’s case, the $541 bill should have been $391. When the nonprofit organization didn’t pay the bill, 1-800-BoardUp threatened to send them to a collection agency. Eventually, the company billed the city, as contractually required.

A convenience store is boarded up while closed. Suzette Smith

Investigators couldn’t pinpoint an exact amount of wrongful billing, but estimated the company likely pocketed anywhere from $21,000 to $131,000 more than it should have due to the discrepancies.

The ombudsman’s office recommended the city either hire an outside audit firm to further review the practices of 1-800-BoardUp, or end the contract. The company is owned by Kennedy Restoration Services. 

 

How it’s supposed to work

According to the report, when police respond to a burglary or vandalism incident that leaves a business with a broken window or door, police will ask emergency dispatchers to try to contact the property owner or business owner. If they can’t reach them, dispatchers will request 1-800-BoardUp to cover any exposed areas with plywood. The company is then supposed to send a bill to the city, which then bills the business and adds a 15 percent administrative fee.

The city’s contract with 1-800-BoardUp included discounted materials costs that the city passed on to business owners, meaning invoices from the city would be cheaper than invoices directly billed to business owners from the contractor. 

But many times, that billing process wasn’t followed, and 1-800-BoardUp billed clients directly, at an inflated rate.

“Specifically, the Contractor was directly billing and overcharging community members for City-initiated emergency board-up requests, in violation of its City contract, and the City was not providing sufficient oversight of the contract,” the report notes. 

Company representatives refute the ombudsman’s findings, claiming they have two contracts with the city of Portland, one of which allows them to bill clients if the client prefers that.

“If in the morning, in the light of day, when the business owner shows up and sees they’ve had a break-in, they see the card and say ‘Hey, can I send this in to my insurance company?’ We say ‘yes’ and end up invoicing their insurance company,” Matthew Steimle, sales manager for Kennedy Restoration, told the Mercury.

“Our understanding is that right now there are two separate contracts that have two separate sets of rules and even within the city, there is confusion about the rules that govern our police department contract,” Steimle added, noting his company has responded to more than 4,000 requests for board-up services from police. 

Investigators, who consulted with city attorneys, say the contract language is clear, and doesn’t allow for direct billing. The contract includes language that specifies all invoices need to be printed, numbered, and sent to the city within 90 days of services being rendered.

Portland business owners given false information by contractor and police

In some cases, 1-800-BoardUp would tell businesses that it was cheaper to pay them directly, rather than pay the city’s 15 percent administrative fee. Police also repeated that false information to business owners. It’s unclear whether BoardUp staff or police knew they were misinforming businesses, but the ombudsman’s report notes that 61 percent of BOEC dispatch calls for board up services weren’t invoiced to the city and at least 39 percent of calls reflected in police reports weren’t billed to the city as required. 

The discrepancies raise questions about whether police knew about 1-800-BoardUp’s tactics.

Investigators noted one business owner said police officers who initiated the board-up request told her she may want to handle the bill directly through the contractor, rather than the city, because it would be more cost effective.

“This guidance contradicts the Police Directive, which states that, after ordering board-up services, Police Bureau members will ‘advise the recipient that the City will bill them for services rendered’,” investigators noted.

Investigators said they didn’t look into the possibility of any scheme or kickback system between 1-800-BoardUp and police, and had no reason to.

“Our investigation followed the evidence, which showed that 1-800 BOARDUP was directly billing property owners in violation of its contract with the City. We found no evidence to suggest anything beyond that,” Elizabeth Martinez, deputy ombudsman, told the Mercury. 

The report also questioned the legality of charging for services that were not requested or authorized by business owners. In a memo, city staff cited directives in city code that authorize the city to request services on a business or property owner’s behalf. 

In a joint letter from Mayor Ted Wheeler, Community Safety Transition Director Mike Meyers, and Chief Administrative Officer Michael Jordan, city leaders acknowledged the report and agreed with its findings, but stopped short of committing to any further audits or ending the contract. The 1-800-BoardUp contract with the city is active and up for renewal soon.

“The Community Safety Division is working with the City Attorney and public safety bureaus to advise everyone of the appropriate protocol when requesting board-up services and with Procurement to ensure appropriate conduct from this vendor,” the letter states. “Furthermore, the Community Safety Division will work with public safety bureaus on a combined policy and code provisions to provide clarity and meet the collective goals of keeping our community safe.”