The record · Transcript
Council Session — 2025-05-12
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Session summaryEditor-reviewed
The Portland City Council Finance Committee met on Monday, May 12, 2025, with roll call establishing the presence of the body's members. The committee approved minutes from February through April by unanimous consent, then heard budget overview presentations covering the City Administrator's Office, Assistant City Administrator, City Operations, and Budget and Finance. Discussion centered on a "core service realignment" initiative targeting 20% expenditure reductions across seven business systems, including human resources, technology, and communications, to be phased in through the fiscal year. Topics included Portland Solutions programs (shelter services, Bybee Lakes funding, outreach staffing), decommissioning of the Peninsula Crossing and Sunderland RV sites, ADA-related staffing reductions within the Office of Equity and Human Rights, Civic Life budget cuts including District Coalition Offices, City Operations funding shifts, and Budget and Finance reductions including an excess earthquake insurance policy and small donor election program funding. Figures describing savings targets and staffing counts were at times stated inconsistently. The committee also considered a renewal ordinance granting Comcast of Oregon a ten-year cable franchise agreement, including discussion of PEG fee percentages, franchise negotiations, and public benefit considerations, with one member of the public providing testimony. A vote occurred on referring the franchise ordinance to full Council with a recommendation to pass; outcomes are recorded in the vote ledger. The meeting adjourned at 1:54 p.m.
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0 Good afternoon. I'm gonna call the meeting of the finance committee to order. It's Monday, may 12th at 1202. Clerk, can you please call the roll? Thanks,
1 Pirtle-guiney here. Novick here. Green. Here.
2 Present.
3 Zimmerman. Here.
Procedural episode · turns 4–12
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4 Christopher, if you could please read the statement of conduct. Thank you.
5 Welcome to the meeting of the finance committee to testify before this committee in person or virtually. You must sign up in advance on the committee agenda at e-gov. Agenda finance committee, or by calling 311. Information on engaging with the committee can be found at this link. Registration for virtual testimony closes one hour prior to the meeting. In person, testifiers must sign up before the agenda item is heard. If public testimony will be taken on an item. Individuals may testify for three minutes unless the chair states otherwise. Your microphone will be muted when your time is over. The chair preserves order disruptive conduct such as shouting, refusing to conclude your testimony when your time is up, or interrupting others testimony or committee deliberations will not be allowed. If you cause a disruption, a warning will be given. Further disruption will result in ejection from the meeting. Anyone who fails to leave once ejected is subject to arrest for trespass. Additionally, the committee may take a short recess and reconvene virtually. Your testimony should address the matter being considered. When testifying, state your name for the record. If you are a lobbyist, identify the organization you represent. Virtual testifier should unmute themself when the clerk calls your name. Thank you.
6 Great colleagues. We're going to have a discussion of the city administrator, the assistant city administrator, city operations and budget and finance as it relates to their budget. And then we'll also have consideration of a renewal ordinance for a comcast franchise agreement. And with that, if we could read item number one. Thank you.
7 Chair. Sorry to interrupt. There. We have a new item on the agenda. It's the minutes approval. And this is all of the minutes from February through the end of April. And minutes are approved by unanimous consent. So I think as long as there's no objection.
8 Great. Okay, colleagues, we're going to approve minutes. If you have an objection on any of those, you should make yourself known right now. Okay, then they're approved by unanimous consent.
9 Great. Thank you. Okay. Item two. Budget overviews city administrator and assistant city administrator office, city operations and budget and finance.
10 Go right ahead and start.
11 Good morning. For the record, my name is mike jordan. I'm the city city administrator. And I'm here today just to introduce the sections of. You'll be hearing from today. And to talk a little bit about what we're calling a core service realignment. Next slide please. So these are the sections you'll hear from today in stated enough. We have a lot of ground to cover and not a lot of time to do it. So my comments will be brief and I know there will be time for questions at the end. So I'm here really to talk about this core services realignment. Many of you have heard about this. We briefed it to all the councilors before the mayor's. The mayor's budget came out. Next slide please. To set context. We have restructured once again, moving into this upcoming budget year, have moved from the six service areas that we had before to four, along with pulling the chief financial officer and some core financial functions up with the chief financial officer in the city administrator's office. The. And as you can see, city operations has an expanded role also. And that blue bar, dark blue bar across the middle was really meant to meant to illustrate that many of the internal services that we have at the city will be operated from city operations. They will have embedded staff within service areas, but the accountability for those service delivery processes will be in city operations. Next slide please. When we refer to core services. And I realize that there's some there's some, I guess, discussion about the fact that core services may be considered things like public safety, streets, parks. We have used them for this discussion in terms of services that support all of those things and cut across the entire organization. You can see the seven there. Those are the seven that we are looking at realigning, the one that I'll hold for just a second is technology, and I'll come back to that in just a moment. Next slide please. So you all are aware that back in the last calendar year seems like a millennia ago, the mayor, then mayor gave instructions to all bureaus to look at 8% cuts to budgets. The bureaus submitted ideas about how to get that 8%, and we accumulated all those. And many of those are incorporated into the mayor's proposed. What I'm speaking of today is a different phase two, what we're calling realignment. And that is those seven service delivery systems that we have on the list are we are taking a look at all of those. And I have given the leaders of those systems a 20% target to ultimately look at 20% lower expenditures. That does not necessarily mean 20% fewer people, but it does mean lower expenditures. And it's worth noting that those business systems, except for technology, have overwhelmingly are personnel, their cost structure. So just wanted that to be clear that we're talking about all costs, not just personnel costs. We are looking at because those I'm asking those leaders to not just water down those current systems and cut 20% of the money out of them. I'm asking them to redesign them from an enterprise perspective. We are looking to implement over the course of the fiscal year. First implementation would be September 30th or end of first quarter. Likely that would be communications. They're the first out of the blocks. The bulk of the list, likely sometime around the middle of the fiscal year around December 31st, and saving hr to probably the fourth quarter of the year, because they will be heavily involved in all the rest of the changes that have to happen in the other business process systems. Next slide please. The goals here are relatively straightforward for a big change process. But the big kicker for us, and the difference in these at this point in time in our history, is asking for the 20% reduction in cost. And that presents obviously a challenge, but also the fact that these are redesigns give us an opportunity actually to think about how can we deliver those services in a more efficient way, with fewer costs to the organization? Next slide. This is a generic timeline. As I mentioned earlier, each business process is kind of on its own actual dated time, but this is the process we intend to go through. We've already kicked off, been doing the inventory and current state assessment in all of those business systems up until now. Some of them have already done significant engagement with both staff and leadership. Communications comes to mind, and then developing the strategies for the new system and bringing those proposals together. Obviously, working with all of the leadership in bureaus and service areas, along with council and this commission, this committee and probably governance also at different touch points. And then ultimately, as I mentioned, during the fiscal year, ultimate implementation. Next slide. You've seen this slide in briefings before. It basically sets out the service delivery systems, how much savings we are targeting for those systems in the next fiscal. The 2526 fiscal, which ultimately ends up being about half, about 10% of the 20% target we would try to experience in the upcoming fiscal. And then if we're successful, the roll up would be in the next year, the fiscal year 27, we would see the full savings, the one I excuse me, the one I really want to mention now is technology. You don't see it on the list for savings for this year. We may very well get some, but I didn't want to count it in. The mayor's proposed because we are taking a much harder look at technology regarding the way we invest in our technology and the way we govern our technology in a much different way for the future. We believe that there are savings to be had, but we also know that there are systems that need reinvestment. And so we really want to take a look at the balance between just accruing savings and how much of those savings would be smart for us to reinvest in the system. So you'll see an ongoing conversation about technology as we move forward. Next slide. And with that, I'm going to turn it over to my colleagues, both left and right to go through their parts. And I will be here obviously for questions when we're done. Thank you. I don't know who's first up. I'll go first.
12 All right. Thank you so much. Chair and councilors. I'm annie von berg, assistant city administrator, and I'll be going over the city administrator's budget for you today. The city administrator's office. We see ourselves as the hub of running the executive branch and delivering citywide services. Next slide please. As you can see, our office includes a broad array of programs and revenue sources. The overall budget shows a marginal increase next year, primarily due to the investments addressing unsheltered homelessness through Portland solutions. Beneath these aggregate numbers are cuts across the programs in our office, and we'll be unpacking those a little bit as we go slide by slide. We do have a lot to get through, so I'll go really quickly. If there's anything else you'd like to dig in, we're happy to pause. Next slide. So we'll start here with portland's solutions. It's the largest and most complex element of the city administrator's budget. While the program took the shared 8% administrative cut, we also worked hard to replace expiring one-time funds advanced by mayor wilson's critical initiative to address unsheltered homelessness in Portland. The chart shows how the program's nest underneath portland's solutions and work together to provide a cohesive suite of services with the alternative shelter overnight shelter accounting for the largest bucket of those funds. You'll also notice the enhanced service district program is moving to Portland. Solutions coming from the community and economic services area. Next slide. Taking a closer look at the shelter services. The shelter services is split into two buckets. The alternative shelters, which are the 24 over seven pods program and the mayor's overnight shelter program. I want to call out a few things in the budgeting for both of these programs. First, the. Supplemental part of the alternative shelter program and all of the overnight shelter program is covered by one time. Thank you. One time. In non city resources there is some carryover dollars and an ask for $4 million in one-time general fund monies. As a policy set aside, I should say we anticipate underspending from this year's budget and intend to request that to carry over in the fall budget adjustment. Second, there are some operational changes for the alternative shelters in the budget that are different than the 2425 budget, including decommissioning the peninsula crossing site, as well as the preplanned decommissioning of the center inland rv safe park, in particular, center island rv site was not continued in the proposed budget. We want to make sure we point that out. I will also note that the city is working through its contracting process for all of our sites, which are looking to trim budgets responsibly. Based on the lessons learned we have gained throughout the operations now of over several years. As a member of the councils have asked, we are anticipating $9.9 million from state revenue sources, state revenue due to the different budgetary timelines, though we are confident that that will go through. But it has not been voted on just yet. Finally, as a part of this package in the proposed budget, asking for a little under $1 million from the opioid settlement fund to support 50 beds at the bybee lakes and for recovery focused. Next slide. In this slide, we can look at the other programs within Portland solutions, including the public environment management office or pmo, the street services coordination center, or scc, and the impact reduction program, commonly referred to as irp. The proposed budget for scc asks for an additional ten outreach efforts to assist with connecting with our most vulnerable to services and support. In particular, this would expand the team's capacity to respond to 311 outreach requests, work with irp to provide outreach and high impact camps, manage alternative shelter referrals, and engage around overnight shelters to minimize neighborhood impacts and to encourage shelter utilization. The pmo budget there's an ad package for sidewalk cleaning around shelters. High impact neighborhoods throughout Portland, which is 2.5 million. And lastly, irp budget could increase depending on ODOT revenue, which is based on cleaning, removal and abatement on the ODOT properties. Next slide. Here we have government relations. Government relations plays an essential role at our city for managing the city's response to federal policy changes, all the way to working with our partners to address local challenges like fentanyl and homelessness. They took the standard 8% cut by eliminating one position and reducing their operating budget. The main decision making driver here was to make sure that we retained ogr programing. Next slide. Next we'll move to the city attorney's office. As you can see here, the city attorney's office took the standard 8% cut, also eliminating three attorney positions and reducing their materials and service budget. The driver here for making this decision was to focus on eliminating vacancies where possible and minimizing impacts to support staff. Next slide. In the small core team of the city administrator. We also took the 8% cut. This is for the team that I share with city administrator and myself, which comprised of citywide projects and programs. The cut here was primarily to those support and the travel miscellaneous expenses. You'll see an increase in the overall budget. That's primarily due to the transfer of resources from the budget office and civic life to meet citywide needs. The proposed budget includes the leadership position from performance management that will be working on here in the next fiscal year, as well as a position to support policy and project management. Next slide. The proposed budget officially transitions the city's chief sustainability officer and one support staff to the city administrator's office to play that key citywide leadership role directed by the council last year. As you know, we're in the process of standing up the new sustainability and climate commission and advancing the city's vital work to address climate change. Next, slide on to central communications. The cuts here reflect a reduction in operating budget. And for the six person central communications team, the group that manages citywide communication strategies, resources channels such as Portland dot, gov and the media accounts such as rose city connection and the newsletter. The team prioritized keeping their staff on board as we develop a citywide communications strategy to serve portlanders in our new form of government and reorganize the city's 70 plus communications staff through a realignment project, communications is on track to implement their new structure and staffing model early this fall. Next slide, please. On to civic life for the office of community and civic life. As you can see, we met the 8% cut target with a reduction to the district coalition offices or dco offices, cutting their operating budgets by a little over $122,000, which is equivalent to 7.7% of their total budgets. We cut funding for the dco small grant program as well, and we cut the diversity and civic life. I'm sorry. The diversity and civic leadership program, or dcl program, just under 180,000, which is equivalent to about a quarter of their annual funding. There were a couple decision drivers in making and approaching these cuts. First, we prioritized preserving staff while we conduct a broader analysis of engagement and staffing strategies across the city. Right now, we know there will be additional cuts that come with that. Second, we reevaluate. We need to reevaluate our grant programs as we reevaluate our excuse me, as we reevaluate our engagement and equity practices across the city. This presents a good opportunity to step back, evaluate the opportunities for capacity building among community based organizations. For example, while we're still very committed to our organizational and goals with the dcl program, the program has been operating for almost two decades. For much of that time, we're providing the same five organizations annual funding. This is a good time to reevaluate, reach out to a broad set of partners and ensure that we're meeting leadership development, capacity building needs in this changing environment. This also presents a good opportunity to better coordinate with many other city areas that also issue community based grants. Some areas very similar goals attached to those grants are. Realignment project for evaluating the city's approach to equity and engagement is in its early stage, and we look forward to engaging you with how the city delivers those core practices. On to the next here. Last but not least, we have equity and human rights, which also took the 8% target cut. The team is shifting administrative support duties to other staff so we can prioritize compliance with civil rights, language access and ADA requirements. However, these cuts in the office will reduce capacity to serve disabled portlanders in our work with ADA compliance like communications and engagement, equity is also in the midst of a realignment project closely integrated with the engagement project. Thank you for that time, and I'll pass it over to sarah for the next.
13 So before you start, miss morrissey, I'm going to actually go ahead and ask for this section councilors in the queue questions. So with that councilor Brain, why don't you go first? Thank you, mr. Chair.
14 Thank you, mr. Jordan. On slide nine, I did have a question about the. There it is targeted savings for fiscal year 2526. I think that's still.
15 We're not quite there yet okay.
16 Well as that's coming up I'll just sort of describe.
17 So yeah I think I know the slide.
18 So yeah. Yeah. You know the slides. So this is really a would you say it's fair to say that this is really a two year efficiency curve as part of what you're designing. So we'll realize what's in the table in year one which is the ensuing fiscal year. And then it seems like there's a follow on into the following fiscal. Is that right?
19 Correct. We intend to implement all of them this year by the end of the fiscal. So all of the savings would roll up for the next fiscal. And you'd get hopefully to the 20% target.
20 Okay. So my takeaway from that is you can't snap your fingers and change an organization on a, on a dime. And so there's a certain amount of deliberate intentionality that's into play here. Is that right?
21 Yeah. If in fact it was 2019 and we were doing this exercise, we would likely because we wouldn't have realigned the whole organization and wouldn't have changed a form of government. We would have likely said, get me 20%, and everybody would have watered the soup, and we would have kept doing things the way we did them, but we'd probably save 20%. What I'm asking here because of the point in time we're in, and because of the attempt to realign service delivery at an enterprise scale, that it does take time to implement those kinds of changes. There were redesigning delivery systems. And so that's the intention.
22 Thank you. And then the second part of my question is so that this looks like it's just being presented in terms of the city administrator service area. Or is this is this enterprise.
23 This is enterprise wide. The and let me say the expenditures both for employees and for contracts or maps exist across the entire organization. They are not all solely within these internal service departments. And so we will be looking at all of the employees at all of the expenditures within those systems and looking at redesigning all of them. And at the end of the day, all of those employees and the accountability for those expenditures will roll back to the leaders in either city operations or in my office or in jonas's office. Excuse me.
24 Okay. Thank you. So just as I look at the numbers, a two year level would be about $8 million in general fund discretionary savings.
25 That that's correct. That we when we look at the system as it exists today. And if you were, let's say, to proportionately cut it, you would many of the savings would accrue to non-general fund funds, because those employees or expenditures exist in those funds. So, for instance, I used to run environmental services, and we had a half $1 billion sloshing around in environmental services. No offense to anybody listening, but but I had the flexibility to make things happen within my bureau because of that level of funding. And so I had a full com shop. I had people who were assisting managers with their recruiting work and those kinds of things. So we're we're looking at all of those folks. But if we were to say cut the service supporting managers of ease, that savings would accrue to the utility. It wouldn't accrue to the general fund. So that that's the meaning of this chart, is that the savings accrue to different places.
26 And I appreciate that distinction. I'll just close by saying, you know, I would hope that as we go through this, and I do want to stress that it takes time to do it right, that we can realize more than $8 million in general fund savings by reorganizing our enterprise, because it's a big it's $1 billion almost in general fund.
27 So correct.
28 That's that's it for me.
29 Councilor Novick.
30 My apologies if you explained this already and I missed it, but where did the 20% figure come from?
31 I thought 25 was too much. I literally councilor Thank you for the question. It's a good question. Looking at the scale of cutbacks that we've experienced in the past here at the city and looking at the fact that we're not watering the soup, we're looking at redesigning this system. I thought 20% was a pretty aggressive look at how to reduce expenditures in these business processes. We may find on redesign that we can get more than 20% in some of them, and maybe some of them slightly less. But it was it is a target for people to work toward it.
32 Is it based on like looking at the comparable expenditures of other cities or something, or is it just kind of a target?
33 I think more looking at the expenditure pattern at the enterprise scale for these business processes. I'll give you an example. Human resources has about 112 fte in the bureau of human resources, approximately. Don't quote me exactly, but it's close to that. And in the bureaus across the city, there are approximately 113 fte doing human resource work. When I look at that 225 ish folks, I and I look at the scale of work here. I want to believe that we could do that work with 20% fewer. And that was kind of my guide and not scientific. This is more based on just your feel for the organization and what would be an aggressive target to try and get to.
34 I just out of curiosity, I would be interested if we had sort of information from other cities that was of any possible comparable relevance, but a couple of other more specific things on ADA. Are we actually cutting ADA positions?
35 We are cutting two. Yes.
36 Out of how many.
37 There total. We can go back to that slide. Ada specific or staff within office of equity and human rights.
38 Ada specific.
39 One one left sorry jeff selby director, office of equity and human rights.
40 I am jeff selby. He him pronouns interim director of the office of equity and human rights. For the record, we have in the 8% cut. We have one position specifically for ADA being cut.
41 Out of how many.
42 Out of a team of. Four.
43 And are there how many ADA specialists are there in the bureaus, and are any of them being cut?
44 It is because of the current or the legacy form of government that we have. It's hard to have an inventory of how many people are doing ADA work across the city. Hopefully in the realignment process. Well, definitely the realignment process will have firm knowledge of who's doing what throughout the bureaus.
45 I mean, obviously, well, one worry with cutting ADA positions is that we're not doing right by people with disabilities. Another worry is that might increase the odds that we'll get sued for noncompliance. What what are your thoughts on the likelihood of the of the second that the fewer positions we have, the more likely we are to get sued for noncompliance on something.
46 Well, you know, compliance is certainly an important issue. It's also doing right by our communities with disabilities. We would just it's that shared sacrifice of having to really focus on the core responsibilities we have around ADA. It's a big hit, but we think we can. Try to get by without that position.
47 Councilor if I may, I think we run some risks, and one of the reasons for the realignment, and including equity and human rights in the realignment project, is that we have a fairly substantial human resource deployed across the city in bureaus dealing with equity and human rights issues. We have a relatively smaller core of folks in the office of equity and human rights. As we look at this particular realignment, I think it's incumbent on us as the administration, but also incumbent on interacting with council and the mayor about your goals regarding these efforts. I, as your administrator, would say that one of the core things we need to do is be compliant and manage our risk when it comes to ADA, when it comes to civil rights issues, we have formal requirements that we have to meet. I would start there as the core. That's just me. I again, we need to interact, but I'd start with those core things that this city should would be held accountable for. And then I would start to talk about what are the other things that we are trying to accomplish at an enterprise scale and be able to redeploy the entire human resource, not just those at the office of equity and human rights, to try and meet those needs. So that's what we're attempting to do with the realignment. It is not I appreciate the question about the staffing for ADA, but please know that the realignment is trying to look at all resources and try to figure out how we best deploy those resources to meet the city's obligations and our and our needs.
48 But does that mean that we're sort of we're cutting one of four ADA office of equity staff without really knowing what impact the overall realignment efforts might have on ADA compliance?
49 It's possible. Yes. We hopefully will know, you know, through the summer as to what we would like to do regarding redeployments, it should be noted that the request for these cuts came back in October, and they were due to be submitted to the budget office by December, I believe, and so they predate the realignment discussion at all.
50 Okay, finally, just a civic life question. We've heard from the neighborhood associations that they're concerned about the loss of $80,000 for paying insurance costs. Is that part of the dco operating item.
51 Or because we're kind of in this unique situation of the transition of former governments last year, they consolidated from seven dco offices to four. So there was one time fund allocated to cover those insurance claims that were going to be adjusted as some got more neighborhood associations, some got less. So with those claims that went through, there was cost savings as part of that. That is enough to cover the next year anticipated. So. So going forward that will be negotiated within the dco agreements we're getting. Hopefully this year will reevaluate how we're going to approach those RFP processes. But for this coming year, it's anticipated the cost savings as a result of the claims from last year would roll into and cover the insurance policies for this upcoming fiscal year.
52 Okay. Do the district coalitions know that.
53 We're communicating? We're in an awkward space of our previous interim director going on leave and coming on with our new engagement officer. So we're making sure that all the dots are being connected, but we'll make sure that they're very clear on that.
54 Okay. Thank you.
55 Vice chair.
56 Thank you. I want to go back to slide nine that councilor Green was looking at. I had just one more question there. I guess. Two, the cuts that you're looking at are those proportional to the size of the current budget of those entities? Or when you talk about a 20% cut, is that actually varied across entities? And some will be cutting more and some will be cutting less.
57 The 20% should be from. And I'll turn to ruth who put the chart together, but the 20% should be all encompassing, at least of our estimate of the costs across all bureaus. So that's where we came up with the general fund discretionary versus the other funds cuts.
58 Okay. But the not not looking across bureaus. But what I'm asking about is there's a $3 million cut from finance and accounting, a $0.87 million cut from community engagement. Is that because finance and accounting is three and a half times bigger, or is finance and accounting potentially being asked to take more than the 20% and community engagement less? Or maybe actually the opposite even.
59 It would be more reflective of the size of the budgets, because the 20% was not adjusted across business systems.
60 Okay. And I've heard you say a few times that you are trying to get to structural change, not just thinning the soup. Do you think that it's possible to get to meaningful changes, as opposed to thinning the soup on a faster timeline than you've proposed? And I don't mean everybody on July 1st, but could we be looking at October? Could we be it? Could we squish things a little bit? I'm asking not for a cost savings reason, but because I know that when you are, as an employee, sitting and looking at a layoff coming up, it is hard. It is understandably hard to be doing your best work. And are we actually better off for the enterprise, but also for our employees to do things as quickly as possible?
61 Well, that's a great question. I'm trying to put myself in the employees seat and think about the fact that I might have three months less pay from the city, or and I'll know about it sooner, or I might know about it a little later and it will be three months more pay or or so the hypothetically I don't know which is better.
62 Is it possible to do it faster and do it well?
63 I think anything is possible to do. And the question is the unintended consequences and collateral impacts of going faster than one would consider to be deliberate and thoughtful about redesigning a system and trying to understand how it will work in the new state, and engaging with both managers and with line staff in those business systems to be able to thoughtfully redesign them. And that's that's really what we're trying to do. And, and, and I mean, schedules can be pushed. There's no question. I think there's collateral damage by going faster.
64 Very different question. There was an analyst cut in government relations. I'm just wondering which position that is and what we will not be doing in government relations moving forward.
65 So that was administrative services position a support person. What we'll be doing is consolidating those services. That position would previously done into a business model. So more of a centralized model. A lot of teams have already adopted this. Government relations had not yet but that position, the vast majority of those duties have now been sent over to a centralized team that can administer those same duties.
66 Okay, this is not one of the positions that has been doing outreach with some of our partner organizations at all.
67 That's correct. And that was the decision to for this position was to maintain as much of the service delivery we had for those programs, especially with the outreach to our government partners.
68 I will, when you come before council, have a number of questions about Portland solutions, but I'll hold those for today. Okay.
69 Thanks. In terms of with important solutions, you noted sunderland and peninsula crossing closing. Peninsula crossing is one of our test sites. Yes. No. I'm getting a weird nod from the back of the room.
70 It's 60 units.
71 60 units. Thank you. And that is. Who's that run by? Or I guess. Can you help me out with the decision making around that?
72 High chair? Councilor Kanal director, Portland solutions. So yes, that site was actually scheduled for decommissioning because it's going to be housing through habitat for humanity. So that was always planned to kind of turn over basically to become housing units. So that's about 60 units of pod village. Basically those units are now going to be slated to expand a couple other sites. And so we've begun that decommissioning process. All the folks who've been on that site have actually moved out. We're closing it this week, so that'll be transitioning over to habitat for humanity. It was run by urban alchemy previously.
73 And so are we losing any capacity in the reconsolidation at other sites?
74 15 units.
75 Okay. 15. Thanks. Yeah. Going on to there are a couple of terms that were said, both in the central communications slide and as well as the civic life slide that we prioritized staff and. I'm having a tough time swallowing that in the comms department. I think you you mentioned 70 plus. I think it's been talked about that perhaps there are 80 some odd communications professionals in the city. It's something that I've talked about. I've seen at least a draft of a plan, but that is a lot of comms. Folks across 26 bureaus. And it kind of gets to the point that vice chair was speaking about. And in civic life, I would say as well, we preserve staff while cutting kind of the other things that these departments do to make them good at it. So one of the one of the statements I entered in the budget with, and this whole year with, was, don't tell me what we're going to do poorly. Tell me what line of business we're not going to do anymore. This seems like a presentation of a whole lot of what we're going to do more poorly, because we've reduced some of the other areas. So I'm having a tough time with that. And I say that with respect for the fact that our our glide path for this transformation seems very present right now at a foot to June 30th coming up. But we as a city under mayor wheeler on July 1st of last year, so we're a year into it. I think I was willing to give some time up to maybe October 1st, and probably could be talked into up until January 1st. But I will go back to and I said it for a reason. I thought that the aggressive restructuring and transformation of this city's workforce was kind of your last duty, mr. Jordan, because I don't know that a new city administrator gets to do this type of reduction in their first few months on board at a location after the new year and being effective at it, or do it in a way where they can survive that culturally, leadership wise. So. I will be, you know, proposing some amendments when we go into the into the budget work session that are in in these areas. What I would ask is that if those teams have some more aggressive plans on the back of a napkin somewhere, that those are helpful, instead of instead of coming in with a more of a blunt force object, they. My amendment can be crafted with a scalpel that was already part of the plan, but it feels like I may have to do this without the information that that you all are working from in terms of your plan. So. So that's my statement. And then ongoing cuts. There was one thing, miss, you did not address, which was realign the position under civic life, realign the position to assistant city administrator. I'm just trying to understand what that bullet point meant in terms of the civic life cuts.
76 Yeah. So that is a position that we are pulling over to the city administrator's office, and that one will assist in this realignment process, along with project management duties of the city administrator's office. But that will be they'll be in close consultation and helping us navigate the three month process that we'll be doing for that realignment, for engagement across the city.
77 Okay. With regard to the duties of civic life, in reviewing all the documents, I'm having a heck of a time truly understanding what the role of the bureau is anymore. I understand the neighborhood coalitions, and in fact, in this transformation, they've become quite a direct line of communication for us as council. But across the board, I I'm having a tough time articulating the reasons why the bureau exists. And am certainly looking at it overall as what what can be reallocated, what can be directly. Assigned to different parts. But there's a lot of pass through money here that goes to the coalitions, goes to Multnomah county for our youth commission, goes to diversity and civic leadership. But the overall role in what engagement looks like does not come off the page in the preliminary budget documents that are reviewed. And I'm wondering if you can help us out with the narrative a little bit.
78 Absolutely. Chair, I think you point out to something really important, and I don't think it's through lack of articulating it in the budget. I think that's just a fundamental kind of situation. We're dealing with this office. This office represents a legacy of many different priorities over many different commissioners over decades. Right now, it doesn't have the focus that it needs, and that will be a core piece. When we look at reimagining, re-envisioning what engagement looks like for the city, that's not just for all of the bureaus and service areas and how we're working with portlanders and inviting them into the policymaking process and all of our services. That's really looking from the ground up. What does civic life do as an office? How do they provide services? What do those services look like? Is it appropriate for them to be doing the work that they're currently doing? What how do they serve this new form of government? So we will really be looking at foundational level of what the purpose of that office is moving forward.
79 Thank you for that, I appreciate it. I think for me, the question is, am I am I willing to fund a thought exercise or do I want to hear a here's our goal of what this is. And I'm not sure the right answer. Right. But that's I'm I'm being transparent in terms of my own decision making about support for this. And then lastly in. So within pmo or within Portland solutions I guess is a better way to say it. But within pmo earp. Right. We have it looks like cobbled together a more ongoing package versus some of the funding sources that really started those programs. And those were all started in the heat of the pandemic. And the response to all the problems we faced with cleanups and other issues. Are there any changes afoot within the Portland solutions model relative to the positions, the people, the, the, the organizational structure? The reason I'm asking this is that we brought in a lot of heavy hitters, people with broad experience in other parts of the city, because they were the people who can cut right through the red tape and go across bureau and know exactly where all the bad things are buried, and they've been incredibly effective. I've said it time and time again, this is the most effective, most responsive group out there for us. I am worried a little bit as we as we get them more standardized. If we are going to worry in an area where we've talked about span of control, we've talked about levels of managers versus levels of administrators. And but this is an area where I think I'm more open to. There might be some folks who work for somebody that maybe make less or make more than them, and that the normal structure of the top down doesn't necessarily work. But as but I've seen this before, where we start to make a group come together and start to look like an office, we start to lose some of the heavy hitters that we brought in to shape the program. And I'm just curious if there are any fte classification changes that could have ripple effects within this model that I'm looking at, because there's a lot of boxes on here and a lot of numbers that aren't exactly described, but going from an impromptu to a permanent, I worry here.
80 I think it's a great observation. One might talk about Portland solutions as a startup, and almost any organization in startup mode. You know, people are scrambling, they're hungry, they're out there making what they need to do to get the thing going. And it's usually a pretty steep curve to make that happen at some point in, in over time. And we're now five years ish into this, you know, you start to get to the top of the wave. And organizationally, particularly in government, we start to put organizational structure around these things. And the world of bureaucracy begins to creep in. And you start to think about how would we make this a permanent part of the organization, and do you lose your edge and do you lose those really start up people because they don't want to do that. They want to go start something new, you know? And so I think you both have touched on an organizational and cultural issue that we need to need to keep in mind. Also, the dark blue boxes on the chart tell you that we still have a fiscal cliff problem with this organization. And so we have we have a double kind of thing to be thinking about as it evolves over time. And then don't get started about the interjurisdictional questions and who should be doing what when. And, you know, there's just a huge number of questions in this line of business that we've created, really.
81 So I appreciate that. And I think you have hit you're sensing my concern here, right, that Portland solutions works because it's a startup, and it was built because bureaucracy in this government was so bad it couldn't it couldn't take care of its own thing. And so we created this blanket organization with authority, heavy handedness, bullheadedness. And I really, really worry that if we over bureaucratize Portland solutions that we rename it Portland dissolution in the next budget. So please god, do not do anything that makes us lose any of the leaders of this organization, lose their ability to cross cut across barriers. Government's turf wars, authorities because otherwise it's just another bureau to me, right? I don't want that, but I but I do monitor that. And I think having you be aware of the of what the second and third order effects of some of these changes can be would be very helpful for us moving forward. That's all my questions. I'm going to go to councilor Avalos.
82 Thank you. Some of these questions might be relevant to you. Sky, if you want to come back up. My first question is around the rationale for cutting sunderland and what the plan is. I know we've had some discussion in the past. It was originally slated to be closed earlier and, you know, we worked around it. But I guess what is the new plan now that this is cut again?
83 Yeah. No great question. Councilor director Portland I don't know if to say that again for sunderland, it was the mayor's intention to have us extend it basically until September so that decommissioning could happen in July, should this council not want to fund it. But we would have that lead time basically to be able to decommission it through August and September. It'll be up to this council whether you want to fund it or not. The cost for one year of operations through from September through the rest of the fiscal year will be $2 million. In addition. So what I understand from what the mayor has described and why he didn't put it in his proposed budget, is he wanted this to be a discussion for and a decision point for the council. I think the mayor's met with all of you many times and probably described his views of the rv safe park. I think he would much prefer to spend money on overnight shelters, a more economical shelter setting. The congregate setting is what he is asking us to stand up. So I think that's his personal view and he didn't fund it in his proposed budget. However, he did want it to be a decision point for the council, so we're happy to provide information briefing tours of that site. I think the provider would welcome continuing it, should you all decide to continue that site. We I will just flag we also have the north Portland road site, which has significant amount of rv spaces as well as pods. So it's not the only rv park that we have in our continuum. And I will say the north Portland road site also has more utilities, and it's kind of more built out than the sunderland rv park.
84 So are these folks getting moved there?
85 So that will be a decision point depending on how the budget goes. So if it's being decommissioned, yes, that would be one option. If we have spaces at the north Portland road site, I think we would also talk to that provider about moving different folks into permanent housing situations, trying to connect them with any and any other resource that we possibly can. We stopped intake, so it's not completely full right now with an eye to not knowing whether we were going to decommission or keep it going.
86 All right. I have a lot more questions on that, but maybe we can talk tomorrow on homelessness and housing committee. While you're up here, let me ask you about the bybee lakes, the about 1 million for bybee lakes. I guess I'm just confused what the difference is between this budget amount and whatever we have. Well, no, I guess nobody approved. The mayor did a few months ago because it was my understanding that what I'm reading in the narrative, it's like it's for 50 more beds. But that's what I heard a few months ago. So is this a new amount or.
87 Same operations? So it's a little strange with how the grant process works. But basically money was appropriated in the last budget with the last council to for opioid settlement dollars that were in an account that the mayor then chose to use. For this bybee lakes a portion of the bybee lakes operations just to the end of this fiscal year. And then this.
88 Mayor you're talking about, the last mayor did.
89 That, the current mayor. Wilson. Sorry. So it was appropriated by the last council last July 1st, basically in their budget process. Then this current mayor, mayor wilson, chose to use those dollars for one of the allowable uses under the opioid settlement settlement. And so those dollars 331,000, I believe it was, were given as a grant for the operations of those 50 beds, 24 seven at bybee lakes for the rest of this fiscal year. So until June 30th and then what the proposed budget decision package is, is about $1 million for kind of the rest of so like this fiscal, the rest of the fiscal year. So July 1st to July 1st, basically of the same bed. So it's not new beds, it's those it's a continuation of operations of those same 50 beds. Okay. Does that make sense.
90 It does. Thank you. Yeah. And then lastly for you just as it relates to the additional ten fte for outreach staff, I guess I was just curious, am I understanding correctly. There are currently four staff, so this would be bringing it up to 14 right?
91 There's one vacancy so it's 15 total. But yes okay.
92 And then are they doing the same kind of work. Is there a new scope of work that these new folks are having, or is it just increasing capacity for existing scopes?
93 Yeah, it's a great question, counselor, and I can dive in a little bit more tomorrow at the homelessness and housing committee about this as well. But just so you all are aware, we are losing the capacity of about 25 fte that the county and the city have shared, historically called the navigation outreach team. So this is will take on basically a lot of the work that the navigation outreach team did. So some of that will be expanding this current outreach team with their current scope of work. We actually met yesterday. Our team was gaming out what the other needs are for outreach workers and what they could do, what we're seeing, and how we can move quickly to kind of reassign those different individuals. So, for example, we're seeing a deep need for housing, navigation and placement and retention. So that's something the city doesn't historically do. But we're just seeing a deep need of folks calling our outreach team when they are having trouble once placed. And so we want to look at maybe having 1 or 2 fte that also engage in that work as well. We're going to need some additional help for our impact reduction program, because that navigation outreach team that had 25 fte through three different nonprofit organizations worked directly with our impact reduction program, and they were able to direct their work to go to large encampment sites, basically to do outreach before we would do a removal. So it'll be various different functions, and I'm happy to dive into that more. But that's kind of what we're looking at right now.
94 Thank you. Thank you. My last question is more general, which is, as I'm looking at all of these slides that talk about positions that get removed, it's unclear if there are people who are being laid off or if their vacant positions. So how am I supposed to navigate understanding? Like, is there a place where I can see that? Exactly.
95 There are general approaches to look at vacancies. First, I don't know. You can see those on a bureau by bureau basis when they when they're proposing cuts for the realignments. It is unknown yet how many of those will be vacancies taken and how many of them will be folks in positions.
96 Okay. And then part, part of where this question came from, because I was responding to the comments around the person and how it was going to be folded into something else. So I think that's why I'm confused. It's like, are some of these positions getting folded in or their positions are technically changing and they're staying on versus they're getting laid off versus it was never filled. So I guess my request for follow up is I would like to better see, because I want to understand if we're approving a cut, if that's a person that we're cutting or if that's an empty position, because that's going to affect my decisions. So if we could talk offline about how I could get that clear information. Thank you.
97 Yes.
98 Great. Okay. We'll go to miss morrissey. I think we're ready for the rest of it. And colleagues, we were scheduled to 115 for this item. I think I can let it go until 125, and then we'll get on to the franchise. If this one has a lot of questions as well, please go ahead.
99 All right. So good afternoon councilors. My name is sarah morrissey. I use she her pronouns and I'm currently serving as the interim deputy city administrator for city operations. City operations is the internal engine that propels the city of Portland. So we work with trucks, technology, purchasing, professional development, and community customer service. Next slide please. For this presentation per direction we received, the charts are going to be showing both the old fy 2425 alignment to facilitate year over year comparisons. Starting July 1st, we will be adding to the city operations portfolio with the new city organizational chart and will be welcoming central communications grants, special appropriations, small donor elections, fire and police, disability and retirement business operations, and the city budget office, which means that in fy 2526 and the new configuration, the total budget of city operations will be approximately 1.02 billion and will have 743 employees. So what you're seeing here is the old alignment. So I'll be speaking to that in this presentation. Next slide please. City operations is funded through a variety of methodologies which is shown on these pie charts. The funding sources include internal service fund rates, the city overhead model, direct general fund allocations, health insurance, operating funds, and more. The total budget resources aligned to the 2425 bucket of programs and bureaus within the city operations service area decreased from past the current fiscal year we're in to the proposed fiscal year by about 19 million due to facilities fund capital activity during on cash balances and capital asset replacement associated with the cutter garage. So, for example, the cost to remodel city hall, which was approximately a little over 13 million, was primarily reflected in the fy 2425 budget. Next slide please. The year over year bar charts here show how funding is split among the bureaus and programs within city operations. They are broken out by expense categories such as external material and services or capital. The largest bars are in human resources, driven primarily by the health fund, fleet and facilities driven by capital and technology services. Next slide please. As noted during the pandemic, as the city took on new programing, the core service teams within city operations did not grow in concert. Thus, the service demand has continued to outpace current appropriation levels for these business functions, and we continue to be strained to maintain basic services while trying to comply with updated policies, state and federal laws, as well as evolving bureau needs in developing the proposed decision packages. I worked with our city operations leadership team to evaluate business needs and work to ensure that critical programing could continue, while proposing reductions in areas that would have less of an impact on our overall functionality to provide services to bureaus. The majority of our reductions are within the office of city operations, so that is the reduction of the strategic projects and opportunities team due to the completion of the transition project, fleet and facilities. Fleet reduction on vehicles used less than 1000 miles within a year and technology services through system reductions that two ads I wanted to highlight for the proposed is one, and we have to upgrade the city's sap system for employee central and time rule for time and payroll. So that's our enterprise resource planning software. It's beginning to end. Support for human capital management module. We have started the work to transition to the new platform by 2027, and are now in phase two of the project, but do need additional resource to complete that. And then also we are recognizing the pcf grant award for the Portland clean energy fund project that will be used to support capital improvement improvements for fleet electrification in the new cutter garage. Also, that funding will be used to upgrade systems across city facilities with improved hvac and lighting. And then also there's a partnership for workforce development with Portland community college. Next slide please. Oh, we're missing a slide. We go back okay. Go back a slide. So in one of the hidden slides I think you'll see it on your presentation. It is an incredibly small font. However, I did want to make sure that you could see all of the decision packages for city operations that were included in the mayor's proposed. It's easier to review it on the printed material rather than screen. These are primarily the same reductions that were presented at the work session a few months ago in April. Second, the one ad is the enterprise efficiency reductions that kate jordan spoke about, also known as the core services realignment project. So I'm not going to go into more detail, but we'll pause if there are any questions before turning it over to cfo. Barry.
100 Yeah. Councilor Green.
101 Thank you. Chair. So there's a slide. I don't see a number on it, but it is the slide that had the bar chart bureau funding budget by. That's the one. Thank you. Can you remind me what I a is for the revenue. Is that the internal okay.
102 Yeah. The interagency agreements okay.
103 And so what I'm seeing here is a pretty dramatic reduction in expenditures for fleet and facilities in the proposed relative to.
104 And that's primarily in the capital. So that's primarily in the capital due to so the fleet and facilities, the ias that's going to be in that fleet reduction that I spoke about. So both that's if vehicles have been driven less than 1000 miles or they're past end of life. We worked with the other bureaus, identified those vehicles. So the savings for the reduction of those vehicles actually goes to the bureau. But then we save on the fleet side by not servicing those vehicles as well. For the capital piece, which is that largest decrease. That's what I spoke to in terms of what was booked this year versus what's being proposed next year.
105 So when we when we make the decision to reduce expenditures in that category, we save the other bureaus money.
106 Depending on what the activity is.
107 Okay, because some of it's current year, some of it's a multiyear thing. And.
108 Well, it would also just depend on your ia, right? The level of service provided, what the service is. And then how do we actually account for the cost. So we're doing also a very large internal service fund project, where we are looking at all of the different rate making models that we have. And then with that, we are having conversations across the bureaus and service areas about what do we want that to look like in the future. So that's a that will affect eis in the future as well.
109 And I imagine that's some work that will happen in the next fiscal year.
110 It is ongoing right now.
111 Great. Yeah. Last comment here. It looks like you expanded contingency. So help me understand this. Is this saying in year 2526 $88.2 million we are. Putting it in the contingency bucket or are we drawing down the contingency bucket? I'm having a hard time parsing that.
112 I might ask aaron rivera for that one.
113 Because I see those as expenses. And so that would mean you would be putting it in the contingency, but who knows?
114 Well.
115 Thank you. Aaron rivera business operations division manager yeah, what you're seeing in the next fiscal year is ultimately that it is going to build we're going to build asset replacement and other activity in a contingency. So it's a it's for multi years of activity okay.
116 Thanks.
117 All right. Well I'm going to follow up. So nobody else is in the queue okay. So given that aaron's day. You had 56.5 million in the previous year for contingency in that bucket that the councilor is talking about. And this next upcoming year, you're asking for us to approve 88.2 it how much of the contingency of that 56 was used in the current fiscal year? I guess what I'm really saying is, is it about a $30 million add that we're trying to grow that account, or did we use a bunch of it? And now we're allocating another 88 to it.
118 We did use a lot of it this year. And ultimately that when I think some of the assets are being constructed out of garage, for example, there's an effort to look at replacement of assets. And so that's one of the areas that they're looking at right year in the current fiscal year. And so next year it's going to continue on. And ultimately trying to build reserves for outyear activities okay. And it's also contingent upon, you know, the activities that are requested from the bureaus. The largest portion of this is bureau asset replacement, major maintenance reserves.
119 Great. I'm a fan of contingencies and reserves. Appreciate it. Any other questions in this section? Doesn't look like it. We can probably go over to mr. Barry.
120 Great. Thank you. Good afternoon, chair and committee. Jonas barry, deputy city administrator, budget, finance and chief financial officer. As you know from prior discussions, the budget finance team includes smart and committed business professionals providing financial services citywide. We are leaning into the multiple organizational realignment efforts to get tighter and to support citywide efficiency efforts. Next slide please. As d.o.j. Morrissey mentioned, the data here as presented in the old or current fiscal 2425 alignment to facilitate comparison year over year, under the new alignment with the office of the cfo, as described in the org chart at the top of the presentation, the future group will include only accounting, public finance and treasury risk management and revenue, with a total budget under that new alignment of approximately 276 million. In just over 200 employees, approximately 75% of which will be located in the revenue division. Next slide please. So, as morrissey showed, here's the pie chart showing the major funding sources for our service area, including debt proceeds and interagency charges. I will note that the beginning fund balance. I. Includes fund balance and contingency in five different kind of funds or sub funds, general fund, fpd grants, risk and worker's comp. So kind of buckets all of those into one slice of the pie. Here on this chart, the total budget resources under the budget and finance service area alignment increases by about 26 million year over year, and largely that is due to increased interagency revenues collected from our customers throughout the city and importantly, largely through increased collection of taxes for the fpd in our system. Next slide please. The bar charts here show how funding is split among the major bureaus and programs. Not surprisingly, the largest bars are for the fpd and our program and the revenue division, as those reflect a much larger kind of monetary collection and processing parts of the service area. I would also note that the bar chart bar on the left of each of these tables, the cfo and finance orgs, includes the city budget office, business operations, grants, and small donor elections, all of which are moving to city operations and the accounting and public finance and treasury functions, which will remain in the office of the cfo. As you've seen for the city administrator and city ops, these are broken out by expense categories similar to city operations. A little bit unusual due to due to both the inner agencies due to some collection of contingency and fund balance. And I also wanted to note in this service area, particularly in revenue division and in fpd, there are transfers in and out. And I just wanted to flag particularly for those reflected as ems here. So it looks like there's a massive amount of ems. What that actually is. Are the payments going out to fpd and our members. So I wanted to flag that that uniqueness here, with the exception of inflationary increases, all services within the service area are either unchanged or only experiencing normal inflationary increases or are reduced. And we'll talk about the cuts in in just a moment. I did just want to say, as I've flagged previously, reductions to funding for financial services limits our ability to be proactive, to be transparent, and to be responsive to requests and risks, and potentially adds risk of financial inefficiencies, which impacts folks citywide. I think the efficiency efforts afoot notwithstanding, obviously, we're going to anticipate some further tightening as a result of that. I'm hopeful that what that actually does is allows us to get a little more robust output out of these systems so that we can continue to provide those those meet those expectations and protect the city against financial risks. Next slide please. So again just a reminder for 2526 the direction that was provided to budget and finance managers in the fall in response to the mayor, mayor wheeler's 8% reduction guidance is I requested not working directly towards an 8% limit, but reimagining how we could deliver and show me how deeply we could actually cut and then use those deep cuts to sort of build back. And so we had discussions at that point about the near-term and long term impacts, including potential equity related impacts. We developed a list of suggestions, all of which moved forward into the city administrator's preliminary recommendations and ultimately carried forward into the mayor's proposed budget. What you see listed here are some of the key key ones. Exactly the same reductions as we presented previously at council work session. So I don't intend to go through them here just in the interest of time. But but happy to take any questions about anything in there.
121 Thank you. I'm going to go to vice chair first.
122 Thank you councilor. Thank you for the presentation. I'm just looking at the cuts that you didn't want to run through. I apologize, but as we have that slide up, there's two pieces here that I just want to understand what it is that we're doing and what the impact is. The reduction of community grants, which grants that we send out from the city. Are those.
123 Yeah. It's a great question. I don't have the details at the top of my head, but I think we've got them listed in the decision package, and I'm happy to separately provide you that info. So there are a package of grants that are managed through the grants division. I believe it's a couple of dozen. And so there are some of those grants that are not the agreements don't allow reductions to those. And then there are a handful that are allowed to have reductions. So this was, I believe, a 5% reduction to all of those.
124 That we're not getting rid of any grants, we're just reducing how much is available.
125 Yeah.
126 Okay. I wasn't sure. When we talk about lines of business we're getting out of if there were some things that we should know we're not doing anymore.
127 Yeah. Great. Great question. And the other sort of it's they're very each one is unique. And there are I would just flag some of those grants. It actually realigns a little bit more, the grant delivery amount to the amount that actually is expended on those grants. And so it may not feel like a functional cut, but it is a cut to the amount that the city will be giving to those organizations.
128 Councilor before you go, if I could just for the panel, as we get up on time, the more brief you can be, if you've got a brief answer would be welcomed. Thank you.
129 For the reductions to the small donor elections program. Is that a reduction from last year, when there were twice as many seats up as will normally see, and a whole lot of candidates running? Or is that a what is this reduction compared to, and how does that affect the effectiveness of the program?
130 Yeah, it is a reduction from the prior year. So a reduction over last year that funding for that program actually accumulates over a couple of years to sort of be available for the election cycle. So it's a little tbd. Obviously, we don't know how that participation level would look. So if there's lower participation, then that lower amount could align with with a lower participation rate.
131 What is the expenditure amount. So that we can understand what proportional reduction this is?
132 I believe that is an 8% reduction. If I remember correctly.
133 Thank you.
134 Okay. Councilor Novick.
135 I will ask about the item in between the two items that the council president just asked about. What is the impact of reducing the city's excess earthquake insurance policy limits? Do they reduce from what to what?
136 Yeah. Good question. I don't recall the details councilor, but it's essentially a it reads it's an excess policy. So we have insurance coverage. And then there's an additional policy that we have on top of that that exceeds that amount. I think this is an additional 15 million, if I remember correctly, of coverage. We did have the risk team do a full assessment of all of our policies and identify what what we thought was reasonable to reduce without meaningful, meaningfully increasing risk. And this was the one policy that was identified as potentially superfluous and unnecessary.
137 So you think it's about 15 million in excess coverage that we're dropping?
138 I believe that's the amount I can come back to confirm that.
139 Okay. I'm curious about the size of the central or the city's budget office in terms of fte and how that compares to the budget. And I'll be broad in my description, budget, budget related, business related ops that exist in some of our bureaus.
140 That is a fantastic question. I know we have the data, because that's some of the information that fed into the enterprise efficiencies. It's complicated. And I would say that and I'll respect the need to be as brief as possible. But we have lots of folks who play multiple different roles, particularly once you get outside of that central function. So, you know, someone who works in a bureau that maybe spends 5% of their time doing a budget function during budget season, that what you've just asked councilor is, to my eye, the exact reason why we need to do that. Thoughtful look at where those functions are being performed citywide, and how we can deliver that same output in a much more efficient manner that isn't replicating sort of the centralized function and then recurring multiple times throughout the organization in a, you know, low, low value manner.
141 Yeah, because I'm noticing that the central budget office took a cut, and I think that I can be supportive of that cut, but I am certainly not supportive of continuing in this disjointed. I think power seems to exist at the lower level in this budget. At the bureau level, those business ops over the centralized one. And in my now several weeks of being here, I am certainly starting to identify some huge power gaps, information gaps, cultural gaps about what has been allowed to occur in the past and now is not providing us, I think, standardized documents, standardized decision making packages and standardized information. So what was not on my list of consolidation at the front is probably now in my list of consolidation at the front when we talk about transformation, because I think we have an inverse pyramid here in terms of the way things should probably be be aligned. And I'm a little concerned in that. But noting the noting the cut in the budget office, I think would not be palatable to me if there wasn't also a realignment where I think some people paid for by bureaus are going to be sitting in the cbo. Any other questions from my colleagues? Okay, I'm not seeing any. I think we have a few due outs from folks, and I'll just remind people that, you know, not not every councilor is going to get this brief. And so there is an aspect of carrying this information to our colleagues as we go forward for the service area work sessions that I think I would just remind people it's a unique system we are in. It's a first time we've all done this that we're in. So I appreciate the dive. And if there are detailed questions that we weren't able to quite answer today, I would just encourage staff to come with those ready at your at your service area presentation so that we can get into those. Thank you. And we will have the call item number three.
142 Grant a cable franchise agreement to comcast of Oregon to continue access to the right of way and operate a cable system for a period of ten years.
143 Great.
144 Good to see you both. And with that, I'll let you introduce yourselves and take it away.
145 Awesome. Thank you so much. Good afternoon, finance committee. My name is seema kumar. I am the chief of community technology at the bureau of planning and sustainability. Today, mic check staff, the commission, the mount hood cable regulatory commission staff are going to bring forth to you the comcast franchise renewal agreement ordinance for your consideration virtually. We have julia degraw, who's the chair of commission with us. And I would like to introduce my colleague andrew spear, who is our franchise utility program manager with andrew. Thanks.
146 Hi. Good afternoon, chair and council members. My name is andrew spear and I'm the franchise utility program manager and also split my time staffing the mount hood regulatory cable commission. And I have a short presentation and I'll get that slide deck up here. All right. Thank you. I have about five, ten minute presentation to run you through some specifics of the cable franchise agreement negotiations and a little bit about what the commission does and how we staff it here as part of our role at the city. The cable commission is made up of member jurisdictions of city of Portland, cities of fairview, wood village, Gresham and troutdale, and then the Multnomah county itself for the unincorporated portions of Multnomah county that receive cable services. This list here provides an overview of the topics that we, as staff and the commission undertake as part of our work. I'd just like to call out the public benefits piece the which is oversees the community technology grants. We provide grant making out to community to record and access via the peg channels. The community media, public programing. And then the last item on the agenda is what we're here, what we're here to talk about, which is the negotiation of franchise agreements. My group negotiates those agreements with cable providers, and then also we perform the regulation or compliance aspects of those agreements also. Next, I just wanted to spend a little bit of time on what a franchise agreement is, and then I'll get into the nuances of what a cable franchise and how it deviates from a normal franchise agreement. I do want to note that as a city of Portland, we've gone away from a franchise negotiation model. We now have a right of way code which basically memorializes in code all of the specific sections for access and operations in the right of way. But cable is a unique, unique provider in that there's federal law that require us to have a franchise agreement and not fall under the city's new right of way code. But in general, the left hand column under purpose identifies the items that are unique to every or excuse me, that are across every franchise agreement. So they tend to be focused in on how operators engage and get access to the right of way. I view it as a legal contract between a jurisdiction and a provider, I.e, you know, we think of the large utility providers most readily right northwest, natural pge as our electric and natural gas providers, and then it ensures the compliance of those aspects which are, you know, if there's a violation of construction work in the right of way and how PBOT might enforce certain aspects of compliance in both the legal access and in the operational access under pbot's jurisdiction. And then duration tend to be 10 to 20 years in duration. The length of franchise agreements has been decreasing over time, so that there used to be 30 year agreements. So we're just starting to see there be a need to come back to the table by jurisdictions and companies alike. And then when you get into the specifics of what distinguishes a cable franchise from a normal franchise agreement, it really falls around the peg. The public, educational and government, which are that's then also a service that cable provides. But then it's also specifics on how, in our cases, city of Portland opensignal engages with those cable providers to broadcast programing onto the channels. And so a cable franchise includes sections that relate to how the operator must engage, deliver and provide services around peg. But in general, it's very similar in terms of access to the right of way. And then there's additions with from any other franchise agreement and any other user. But those specifics on how and what fees are paid are somewhat nuanced, and I'll get into that in the next slide. Next slide here shows those fees breakouts for cable franchises. So cable franchises have both fees. Franchise fees are just a standard fee that give a company access to the right of way, and they pay for that access. Traditionally, it's a 5% of gross revenues fee, which is assessed quarterly. In most cases there is there are some other pricing or fee structures, but in general, most fall under a 5% of gross revenues. And in most cases, jurisdictions that revenues goes to jurisdictions. General fund for peg fees. There's again a number of ways that can be assessed, could be assessed on a per subscriber basis, or it could be assessed on a percentage of gross revenues as well. In our case, for our contract, we have a percentage of gross revenues. And I'll get into the specifics of where we're at with regards to this franchise agreements coming before you today. But I do want to call out a few specifics on peg. Those peg dollars are unique in that they must be spent on capital infrastructure related to peg programing in some form. This next slide is showing the trend on both revenue the city receives and the other east county jurisdictions. And then I also see it as just a reflection of the subscribership decline year over year. Right. We've been hearing for decades now cord cutting. And this example just reflects it from a revenue perspective. If you go back to 2010, 2011, the number of subscribers that we had countywide under the jurisdiction was 180,000 to today. The most recent report we just got two weeks ago for calendar year 2024 had subscribers under at or under slightly 70,000. So huge decline over relatively short amount of years. And it's something I think we need to be mindful of as jurisdictions and how we plan for and think about cable as a service in our city and what it how do we transform into meeting the needs of community? Next, I'll provide a little bit of background on the specifics of the franchise agreement. That's before you today in exhibit a, this list of items provides a kind of the specifics of what are some key areas that were of note. The first two are probably the areas that have had the most engagement in terms of public comment and engagement from our community media centers. First of all, the peg fee. So our current peg fee that we're operating under today is at 3% of gross revenues. And that, I just want to note, is one of the highest in the country across all jurisdictions. So we have a really great deal in terms of what we're getting. I will note right, you saw from the graph on the franchise fees, peg fees have been declining with that same rate as well. So regardless of what we do, we will see a decline in both peg and franchise revenues. But in terms of the negotiations of the contract, I'm the lead negotiator with comcast in this example on behalf of the commission staff. And we got to a settlement of 2.5%. I will just say that is still one of the highest peg percentages in the nation, and definitely on the west coast from minneapolis west. Order 621, fcc order 621. In 2019, the fcc passed that order, and it afforded cable companies the opportunity to recover marginal or incremental costs of certain service delivery. An example of that being cable providers and comcast currently give gratis service to public buildings across the city, both for the city and other institutions, and so they, under order 621, they would be allowed to pass on any marginal cost from that free service delivery. They've not taken any analysis or passed on any of those costs to us currently. And under the current agreement, they're afforded the opportunity to because any agreement must comply with current and federal state law. So, you know, I just want to provide that context. As we think about I know there's been outreach to council members across all the member jurisdictions on a concern that somehow this agreement that we're bringing before jurisdictions goes above and beyond the intent and direction of order 621. It does not. And also we have, as part of our crc commission, a specific legal contract for services with a legal firm that specializes in franchise agreements and cable franchise agreements, specifically who I've been working with during this process. So a very conservative, large legal firm that has been reviewing and giving recommendations to me on all the language provided in the agreement before you on the gap changes, I think it's important to note we really tightened up the language on what refers to in an audit and how that's how gross revenues are defined. I think that's just a helpful business practice to ensure that when we perform an audit, we are both have clear alignment, and then we have something to evaluate from in the course of an audit. The remainder, maybe the other item I do want to note is the init. The institutional network was a network provided over time by comcast that served traditionally the school districts across the city, and that has gone away. And there was a side letter agreement back a few years that to decommission that. And so that is a key thing that was removed a lot of language in the previous agreement included references and net citations that are removed. And all of those providers that were received or excuse me, all those government institutions that were receiving net services transitioned to either comcast business services or actually here at the city. Our bts provides services with example of city of troutdale. Get full internet services from bts. Public input. So from October of this past year through January, we've received public input. We had a commission meeting on October where we heard public comment from over 25 folks. In total, we've received 31 public comments, either written or verbal. And then we held a meeting in December and took additional public comment on the on the item. And then the commission met in January to provide the to take the vote on recommendation for approval of the agreement to the member jurisdictions. Those two themes that you see there on the slide that was really centered in on the last, and I kind of covered those items on the last slide. You know, again, I just want to be clear that we, as decline of cable subscribers has been happening, jurisdictions have continued to kind of lose their leverage points in how we negotiate and what we're able to get out of it. And so to be able to get to where we got to on our peg from a, you know, a 2.5% peg with this agreement is a really huge accomplishment. I think it shouldn't be underscored. And then fcc order 621, we are complying with the intent and legal language of that order. And that's been reviewed both by the attorney specializing in cable franchise work. And then I've been working with our cable or excuse me, our general counsel's office to review the current agreement going for you and then also ensure that it's complying with all of our city and local state laws. On this slide. This is my last slide. Just want to highlight what we're approving and where we're at today with the other member jurisdictions. So I've presented to fairview, Gresham, troutdale and wood village over the last month. All four cities have adopted the agreement as presented to their city councils. And then we also have Thursday. I'll be presenting to Multnomah county for that agreement. And so, you know, we've we've gotten a lot of engagement from cities and councils. And then we've been able to, you know, provide some updates and information along the way. All the city managers have been made aware of the status of this process along the way. So it's been a it's been a good transition. Not to say there hasn't been some public comment and some areas of communication to improve, but what we're seeking before you today is a recommendation from this committee to the full council for approval and adoption of the comcast franchise agreement for a ten year term. That term includes the or excuse me, exhibit a includes the franchise agreement in full, along with the attached exhibits to the franchise agreement as well.
147 Great. I appreciate the very, very thorough background. I think it's important for councils. First time franchises can be a little wonky for folks, so thanks for that. With that, I've got a couple questions. Councilor Green, you're up.
148 Thank you chair. Good to see you andrew. So I have a couple questions here. So is this is this restricted just to the cable service that comcast delivers or does it extend to broadband as well.
149 Yeah it's exclusive to the cable service.
150 And when you're and I can respect that it takes a lot to negotiate and get to a point. So I guess I'm curious about what what specific maybe deal breakers as part of that discussion in the negotiation. Like suppose council were to amend this, would it blow the whole plan apart? Were there specific pieces of that that were just sort of non-negotiable for the other party? Like for instance, I'm wondering about term of length. I showed 5 to 20 years as being kind of the range of. Franchise lengths, and then that lengths are getting shorter as we move through time was was a was a five year term contemplated?
151 No I it wasn't contemplated. Kind of the standard across the region is ten years for us. And you know I think ten years allows us space to plan and think through with our community media providers. Opensignal right. What, what direction we need to go and how to proceed. It also gives us certainty as a city.
152 Councilor. Green, julie degraw has raised her hand, I think, to respond, are you comfortable with that?
153 Yeah. I was actually going to ask if julie wanted to weigh in on my questions.
154 There you go, mr. Gray.
155 Thank you so much. It looks like I froze there. Okay, my name is for the record. My name is julia degraw. I'm the chair of the mount hood cable regulatory commission, or crc, and I. I just want to speak to give a little bit more background about how we got to where we are. This franchise negotiation took, I believe, over five years. I've not been here for that entire amount of time on the commission or as chair, but I have witnessed the last, you know, the last many months of those negotiations. And I know as a member of the crc and as the chair, I witnessed the entire process of our the commission really pushing andrew specifically very, very hard in these negotiations to get the highest pay fee possible. And we genuinely extended this process. Well over an additional year, frankly, in order to get the highest fee possible. And I think after we extended a huge amount of our our leverage and capital to get the best pay fee possible, because that's where we see the biggest public benefit, right, is get as much money as we possibly can from comcast. And after that negotiation, it got to a place where it was very hard to for us to eke out any additional concessions. Right. And we really the biggest, most important thing was to bump up the starting point, I believe, was about 1.25 for a payg fee. So we really fought our way back up to a much higher community benefit in terms of the fee we landed on. So I think that's really important to keep in mind that the negotiations were extremely intense and the majority of the energy went into pushing for the highest paid fee possible for the public benefit. So I just want to be really clear about that. I think because of how far we pushed the limit in terms of negotiating the franchise agreement with comcast, it's really important to know that they we sought legal counsel on this. And our concern, if jurisdictions were to choose to go their own way and try to negotiate a different contract for their jurisdiction, that the comcast would be within their rights to, to litigate over that, and that would make us, I mean, as, as the chair of the commission. To me, the most important thing is for every jurisdiction, that's that's part of the you know, the crc gets the best possible deal they can and that we stand collectively together and getting the best possible deal, you know, for this moving forward. And my concern if a jurisdiction goes it alone, you might end up incurring a lot more additional potential expense and risk. So if you do choose to go your own way, I would definitely encourage seeking, you know, legal advice on that before you were to do it. But I also want to assure you that this this contract was negotiated to within an inch of its life. I don't think we're getting something better than this. And members of the mount hood cable regulatory commission fought incredibly hard and pushed staff very hard to get the deal. That's before you today, and I do hope you accept it.
156 Thank you. Julia. That's exactly what I was trying to get an understanding of that context. So with that, I'll just yield my I'll yield the mic.
157 Vice chair.
158 Thank you. And I appreciate julia. The context there about the negotiations. From where I'm sitting, I hear that we clawed back to that higher number to that 2.5. But I'm looking at as subscribers go down the fee going down actually from 3 to 2.5. And I worry about what that does to our community media partners. I understand that we may not be able to do any better this time around, but we're talking about a private entity, a private entity that continues, although subscribership is going down to control a vast portion of the market where portlanders don't have much ability to have any influence over what happens. And so I guess I'm wondering if this decrease in the fees in the peg, is that what we're seeing across the country? Are we seeing pegs go down, and how does our 2.5 relate to what we're seeing in other places?
159 Yeah, our 2.5% is still one of the highest in the west or equal to from from minneapolis westward. And so I think that's a good indication. I will just note the cable regulatory commission that's just west of us here that covers Washington county. They're trying to get to where we're at. They're on a per subscriber basis, and they're trying to go to a percentage of gross revenues model. We are sitting really well financially. I think, where it impacts us within the commission's budget and then the jurisdictions is the availability to deliver grant funding as part of the grant process with community. And so that's something that the, you know, both the crc needs to evaluate and think through strategically and then also hear comment from the member jurisdictions. But I believe we are sitting great nationwide with regards to our peg percentage. And then one of the top and if not the top in the west.
160 And if I may sorry, julie. Is that okay? Cable television is declining across the country, across the world. And I think it's an opportunity for us to reengage with our community media centers. It's an opportunity for us to reengage within our city about how we're going to how are we going to collect revenues as technology changes, as we as we subscribe to different entertainment services? And I think it's it behooves us as the office of community technology within bts to start exploring some of those options. So I view this as an opportunity to embrace changing technology with the recognition that cable television is basically a dying source of entertainment.
161 Yeah, I appreciate the context and also the forward looking approach.
162 I'm going to go to councilor Novick.
163 Mostly academic question, but I assume the negotiation is basically over. Here's the fees we want. And they have the comcast just decide to stop doing business in Portland. Are there places where like a jurisdiction is pushed to have higher fees and comcast has just pulled out?
164 Not that I'm aware of.
165 But is that the discussion is are they saying, well, if it's too high, we're just going to pull out.
166 We never got to that point.
167 So what is there? I mean, what leverage do they have to prevent us from sticking with the 3% other than we'll pull out?
168 I mean, I can't speak for comcast, I councilor I don't know what their logic or what their response would be.
169 Okay, now I'm just kind.
170 Of I just I don't want to I don't want to game play here and live, you know, public forum what, what they may or may not do. I will just say we got we nailed down all of the key regulatory and compliance items. We came to a very meaningful outcome on the financial side. And what I think is important to note is on the franchise fee side, cities are seeing no hit to right. That percentage that that's that remains. So on the franchise fee, the 5% of gross revenues which actually hits city's general fund, there's no change in revenue there.
171 Okay. Thank you.
172 I would add one one detail to that answer, if I may.
173 Go ahead julia.
174 Thank you I appreciate it. I do think it's important to note that that comcast has within their rights, the ability to go formal, which would be a legal process that would be very expensive and time consuming to the jurisdictions and the crc. And that was definitely consideration about why to take the deal. And I understand that maybe andrew didn't want to speculate about that. But I think for me, as chair of the commission, part of the reason I went forward with encouraging support for this franchise agreement is I am very wary about jurisdictions and mic check taking on any kind of legal, expensive legal risks. And I think that's a really important thing for everyone to have in mind when they think about challenging comcast in that way. So I just, you know, I didn't join the crc because I was I'll put it this way, everyone wanted a better deal than what we got. But we did get the best deal that we could. And we did want to avoid those potential legal risks by continuing to dig in our heels. So I just would like to put that out there. And I also would like to say that the commission has publicly stated we haven't made any official moves in this direction. It will come out in the strategic planning process, which is another reason why I think it's so important that we be forward looking, because we have a strategic planning process to be doing with all of the jurisdictions. I'm excited to be driving to that, into that with all of you. But we have collectively stated numerous times in public meetings that the, the community media centers are our number one priority. And with the declining funds that we're going down, whether or not the fee went down because they pay, because cable usage is declining and the fcc doesn't allow us to have jurisdiction over broadband, given all of that, we have decided the community media centers are paramount and making sure that they have as many resources as possible as they have to make this transition to a world where there's less and less money coming from this source, which is going to be, again, part of our strategic planning process that I'm looking forward to doing with all of you. So thank you so much for the opportunity to speak, I appreciate it.
175 Thanks. Clerk. Do we have any public testimony signed up for this item?
176 We have one person signed up.
177 Okay. In the interest of time, let's go ahead and bring them up. And if there continue to be questions we'll go there.
178 Courtney. Ray. Courtney. Ray. Here.
179 Okay. I have a question. Given that I'm one of these declining enrollees, and it makes me think I probably haven't seen some of the community channels that I remember growing up in this community, and I haven't seen them for quite a long time. Where does one access them if they don't have them? If you don't have, like, cable, the old idea of like going through the channels. I guess I'm trying to understand. Julia is making an important point about these are for these communities, media centers. But I'm also trying to understand how we reach people, how they are reaching people. From that perspective, given such low enrollment now.
180 I'm happy to jump in with a response to that. This is what would be nice if courtney was here, because she could definitely dive into answering that question. But as when we do the grants program at crc, we review all these grants for all these community organizations that are doing incredible work, a lot of them creating content that's going to be shared on the community media center channels. They almost a huge portion of that content also gets posted elsewhere. They posted on facebook or social media. They're actually really increasing their short film format, because I don't know if you all have heard of this little trend called tiktok and reels. So they're really getting the community. Media centers have been very nimble and kind of adjusting to creating content that's more kind of in alignment with how people do receive information, right? So they are they are, you know, making that transition. So I think I'm not and I and I believe that is true for, for a huge amount of the content. And again, I can't give a super specific answer because I'm not from the cmc's. But I do know that that there's a lot of crossover of things being posted on, on youtube and social media, and they're increasing that as, as this transition is happening.
181 And chair zimmermann I in preparation just with coming here this morning or excuse me this afternoon, I was looking on opensignal's website and they have on their website a link where you can go to any of the five channels that they broadcast on to. So there's that modality. And then right as part of our city. Right. The other part of peg is the government piece, which is the broadcasting of committees like this or the city council meetings. Those can be accessed right through youtube. So there's many different tentacles as the chair was outlining. And then for that programing piece that's maybe outside of government, you can access through their website.
182 Thanks, colleagues. Not seeing any other questions at this point. I certainly would entertain an ordinance to grant a cable franchise agreement to comcast of Oregon to continue access to the right of way and operate a cable system for a period of ten years to be sent to the full council with a recommendation that it be passed.
183 So moved.
184 Thank you.
185 Sometimes we really got to lead a horse to water, so that was moved by councilor Pirtle-guiney. Do I have a second? Second by councilor Novick? Any further discussion with my colleagues? Okay. With that clerk? If you could call the roll.
186 Pirtle-guiney I.
187 Novick I Green.
188 I.
189 Zimmerman I the motion carries and will be referred to the full council with recommendation to pass. Okay colleagues, that brings us to 154 in the afternoon. Clerk you're giving me a look. Am I missing something? Okay. All right. 154 in the afternoon, with no further business, we are adjourned.