PORTLAND, Ore. (KOIN) — The campaign for Rene Gonzalez, who is challenging Jo Ann Hardesty in the Portland City Council race, is facing a $77,000 fine for a campaign violation.

The Small Donor Elections program with the city sent a letter to the Rene for Portland campaign on Tuesday, saying the campaign was given a 96% discount on a downtown office space and did not report it.

The letter was first reported by Oregon Public Broadcasting.

The letter states the more than 3,000-square-foot office space, which is owned by Portland developer Jordan Schnitzer, is advertised online at nearly $7,000 per month, but the campaign is paying $250 plus utilities. Records with the Oregon Secretary of State’s Office show Schnitzer contributed $250 in May 2022 to Gonzalez’s campaign.

Schnitzer told KOIN 6 News when he offered Gonzalez a discount for the space, the office had been unused for two years. But according to the city, the deal violates the rules of their Small Donor Elections program which Gonzalez is a part of.

“I would have done the same thing for any other candidate I was supporting or any non-profit,” Schnitzer said.

While Schnitzer said he supports Gonzalez’s campaign for city council, he told KOIN 6 News that’s not the only reason he struck a generous deal on the lease for their downtown office space.

“There are a hundred and twenty vacancies in downtown Portland on first floor space. I think any landlord would be delighted if someone comes along and would pay the commonary expenses,” Schnitzer said.

After struggling to find a tenant for two years, Schnitzer said he was happy to grant Gonzalez a discount on the first floor space as long he agreed to cover costs to keep the building running.

In the letter, Small Donor Elections program director Susan Mottet said Gonzalez’s campaign “received prohibited contributions of discounted office space, valued at $33,250” between May and September of 2022.

The letter went on to state “though campaigns may accept discounts that are available to the general public, accepting a discount that is not constitutes contribution of the difference between the fair market value and the amount paid.”

Schnitzer told KOIN 6 News “in terms of what the space is worth, I could say it’s worth $50,000 a month or a dollar a month, but until I have a customer that wants to rent the space it has zero value.”

In a statement to KOIN 6 News, a spokesperson for Gonzalez’s campaign defended the lease, saying the campaign “strongly” disagrees about the low price of the rent “given the dismal state of downtown” and adding the campaign intends to appeal the Small Donor Elections program’s finding.

Read the full Gonzalez campaign statement below:

We evaluated OAE rules when we entered into the lease and strongly disagree that the rent is too low given the dismal state of downtown.

Downtown is in shambles because of policies advocated by my opponent, Jo Ann Hardesty – defunding the police and obstructing cleaning up unsanctioned camps. Landlords are desperate to get any kind of compensation for their space because of the city’s failures to address crime and homelessness has made downtown inhospitable to tenants, landlords and visitors.

In this case, the landlord has continued to market the property and can remove us on 30-days notice, but has been unable to lease the property to others despite continued efforts to do so. We took the space ‘as is’ despite homeless encampments around the location, extensive vacancies in the area, and required no tenant improvements prior to leasing.

We stayed despite our office being vandalized.

There is a man smoking fentanyl in front of our building as we write this.

Landlords are having to offer substantial amounts of free rent months, secured parking and invest in tenant improvements to get tenants to even consider renting downtown right now.

Our compliance team is reviewing the complaint and we definitely intend to appeal this initial finding.

Mottet told KOIN 6 News the campaign has yet to file an appeal as of Wednesday afternoon.

Meanwhile, Hardesty’s re-election campaign told KOIN 6 News this shows Gonzalez is supported by those who “profited by making housing in Portland unaffordable and unavailable to working people.”

In response to Gonzalez “trying to shift blame” to Hardesty, her re-election campaign manager Rev. Joseph Santos-Lyons says Gonzalez “is just deflecting responsibility for the largest campaign finance violation in the history of Portland’s small donor program.”

Read the full statement from Hardesty’s campaign below:

“This just proves that my opponent is supported by the same wealthy developers who profited by making housing in Portland unaffordable and unavailable to working people, and has directly led to an increase in our homeless population.

Those same developers are sitting on thousands of vacant units that could house people tomorrow. Voters can trust that I will always put everyday Portlanders first by fighting to build more affordable housing faster, emergency shelter, and real solutions for community safety.”