The record · Transcript
Council Session — 2025-10-20
Transcript from the session's official auto-captions (16,935 words), shown in readable case and split into speaker turns. Speakers are not yet identified (colors just separate consecutive turns). Auto-captions can contain errors — check the recording for anything that matters.
Session summaryEditor-reviewed
A Portland City Council Finance Committee session, dated 2025-10-20 in the transcript, opened with public testimony. Speakers raised concerns about repaving and safety-stripe projects near Halsey and 122nd, questioned an $8.1 million transfer error and encumbrance practices, and advocated for funding enhanced service districts in Gateway and Parkrose, citing business closures and disinvestment in outer East Portland. The committee then received a City Budget Office presentation on the Fall Technical Adjustment Ordinance (TAO), covering reconciliation of beginning and ending fund balances, business license tax revenue coming in below forecast, encumbrance carryover requests, a Prosper Portland invoicing correction, discretionary general fund draws including a public safety set-aside, non-general-fund adjustments, personnel authority corrections, and a multi-year Health Fund reserve rebuild proposal. Discussion addressed how figures were categorized and whether next fiscal year's budget gap would be larger; some figures were described inconsistently across speakers. The committee voted to postpone action on the TAO pending a council work session. The committee also heard presentations on revenue bonds for a new fleet maintenance facility and on acquiring property rights via negotiation or eminent domain for a water line project; votes occurred on both items, with outcomes recorded in the vote ledger.
AI-drafted from the session's auto-captions, reviewed by an editor — describes the discussion only; recorded votes live in the vote ledger. Captions contain errors.
0 Recommended adjustments. What are those adjustments for, and where did the money come from for the 52 million? I believe the city administrator issued directives last spring, perhaps as early as February, telling us to stop spending funds due to budget projects if the bureau constrained spending. A few months before the end of last year. Why does the tao contain so many encumbrances and carryovers? It has no contracts available for us to look at to see what that looks like. Thank you so much, finance committee, for allowing me to speak today.
1 Thank you. Councilor. We appreciate hearing that.
2 Thank you.
3 Please go right ahead.
4 Thank you. Ready?
5 We are ready. Go right ahead.
6 Thank you for allowing me to address you. Point out a few things that as a constituent, I'm a homeowner. I live at the neighborhood around the intersection of halsey and 122nd. I have experience in budgeting and more so in the fulfillment of projects that are budgeted. And I see some problems. I have seen problems that I'd like to bring to your attention. Several years ago, a couple of years ago, halsey, a stretch of halsey was re blacktopped repaved and new safety stripes and road paintings done for safety purposes. Not long after that project was completed, the city sent out a crew that tore up the safety strips at the intersection closest to where I live and reapplied new safety strips. They were only about 12in or so different from the original stripes that were put down. I understand that highways roadways have lives. Put down a good blacktop, put it down properly and you can get 20 years of service out of it. Well, it's only been a couple of years, and the areas that were ripped up by the safety stripes in order to move them 12in are now without a surface and are now deteriorating to the point where they're causing potholes in the road surface. So this error, whoever was in charge of this project, whoever was the supervisor for this project, somehow should be held accountable for shortening the life of ten, 15, 20 year blacktop to five years. It's starting to fall apart. Last week, the exact same situation happened a block away on 122nd street, where the safety stripes were ripped off and new stripes applied. Once again, short distance, just just 12in 18in away from where the original stripes were put. That was a brand new blacktop. Now it's got a five year life cycle where it's going to have potholes where the surface was ripped off. I understand that a year or so ago that an intersection down halsey was improved, made safety for pedestrians and bicyclists or handicapped or something, and found out that not long afterwards, after it was a success, that it was the wrong intersection. That's a lot of money. If that's the way projects are handled, then we're in trouble and it's your job to fix it, to monitor it. Thank you very much, I appreciate that.
7 Thank you. Okay. Madam vice chair, appreciate you getting us started. While I sat in the middle of one of those projects. Apologies to everybody for my tardiness. Is there any other public testimony? Clerk.
8 Yes. Next up we have lynn felton, followed by erin manning. Thank you. You may both come up to the dais.
9 Please come here.
10 I don't have any more comments today.
11 Okay.
12 You can go ahead and get started. Just introduce yourself. Sure. You have three minutes. Thank you.
13 Chair Zimmerman. Madam vice chair and councilors lynn felton, district one resident. I'm before you today to advocate for councilor Smith's intended proposal of funding enhanced service districts in gateway and park rose. When traveling gateway and park rose, I often think of that pretenders song. You know that hey ho, where'd you go? Ohio. Instead, park rose gateway. That fred myers closing at gateway is just the latest. Longtime residents will tell you the safeway left. Target left keno's thriftway small insurance businesses, family restaurants, bakeries, even the chapel where we might go to bury our dead. All gone and shuttered, never to come back. Repeatedly, choices have been made by previous city councils on the economic makeup of outer east Portland. Somehow we became that closet in your home where you really hope the neighbors don't open as you escort them into the living room that you've spent like three days cleaning within a half mile of gateway shopping center. So many solutions. Cascadia health mental health clinic for a health treatment center. Central city concerned blackburn central city concern. River haven do good Multnomah roseway veterans shelter join day center. Cherry hill hotel day center, another 82nd and halsey day center by Multnomah county, Portland rescue mission, the harbor and shepherd's door last budget cycle 1 million for four health treatment center in gateway. Over the last 20 years, hundreds of 0 to 60% ami rental units built. All while we watched the pearl boom slap town flourish. Multiple city agencies work on the montgomery park action plan in the omni district plan as they rose and came to fruition. I look at the beautiful $2 billion rebuild at pdx, then drive park rose and I wonder where's the shared prosperity? The Portland development commission's urban renewal area of airport way cascade station for years lined the city coffers as businesses and park rose and gateway withered. Parker's gateway should be the start of the Portland experience for travelers, not some mystery stop on max. It should be a place for portlanders to come visit. Not that Portland they travel through when going to the airport or costco. The shrugging and pretending that it is just that Portland needs to stop. We heard loud and clear when the gateway fred meyer closed that. Thank goodness it wasn't the stadium. Fred meyer's. I know the money is tight and it is only going to get tighter, but outer east Portland has to be part of portland's economic recovery story. Please consider supporting councilor Smith's sd funding proposal. It would be a start. Thank you.
14 Thank you.
15 The other two people who originally were signed up have decided not to testify. So that ends public testimony.
16 Thank you. Okay. Thank you for all those that came today. We appreciate it. With that clerk, can we go to item number one?
17 We've already completed.
18 We already do that okay.
19 We're in the middle of item number two okay.
20 There we go. If we could go ahead and bring the staff up for the presentation, that would be great. Thanks.
21 Sorry.
22 All right. Jonas, help me get on task here and on time. Great. Thank you. I can fake it a little bit later. Great.
23 We'll try to get get back on schedule here. Thank you. Committee for the for the time mostly today you're going to hear from ruth and folks in the city budget office about the fall tao. This item is sort of the moment that we come to committee so we can get on to council agenda. I do want to just quickly acknowledge councilors questions, and thank you for highlighting those. The fall technical adjustment ordinance is a very technical document that does a lot of things. That is, it is a lot. And so appreciate that. The memo that's published has a lot of information, does produce a lot of questions. We're here today to start to answer those questions. And I think you'll hear from ruth on at least a couple of the items that were specifically acknowledged in the testimony. Also, as I think was noted, we will have a full work session with council on Wednesday where we will continue this discussion, and then we do still have two weeks to have additional briefings and educational moments. Whatever's necessary. Cbo and myself are happy to facilitate any of those conversations so that before the item comes to council on November 5th, we have maximum opportunity to share that information. So just wanted to tee that up real quick. I think we've only got a few minutes and a quick presentation recognizing we're going to go through this again in two days with full council. So with that, I'll hand to ruth to talk about what the tao is and what it does.
24 Great. Ruth levine, today's budget director, and anthony is here with me. We'll take some of the presentation. So I'm going to try to go through this fairly quickly. Leave time for questions. So what is the fall tao. Why are we here? So the main purpose of the fall tao is to reconcile the beginning budgeted beginning fund balances with the audited ending fund balance of the prior fiscal year. What is that? We budget a certain amount of beginning fund balance, the amount that carries from one year into the next in the adopted budget. And then we sort of know we are going to be wrong for various reasons that I'll talk a little bit about. And so we have to true those up. You can't use ending fund balance for anything. So in order for it to be usable council needs to appropriate it. So that's the main purpose of of why we're here. In addition, there are some a series of technical adjustments that have to happen. And then there are also some policy decisions that are are that council will have to make as part of this process. And I do just want to recognize, first of all, until this year, we had this process was known as the budget monitoring process, the fall bump. We've changed that in part due to sort of changing circumstances and to try to convey that this is a largely technical process. So this is now the technical adjustment ordinance, and we are not going to be allocating money. Unfortunately, as we were able to do the prior during the prior fiscal years. And I'll talk a bit about why that is. But I did just want to recognize for folks who are familiar with the old process, that this is a bit different, but the underlying purpose is fundamentally the same is to make those technical adjustments. So I think the main reason why this year's fall technical adjustment ordinance does is the resources are lower than anticipated, is due to business license tax. So you can see on this slide this is the business license tax revenue. And on Wednesday at the full council work session peter the city economist, will spend a long time on business license tax. So he's here to answer questions today. But we're not going to go into depth on it just for time here today. But we have lots of time set aside on Wednesday for that. So this basically is just to say that business license tax came in $12.7 million below the April forecast. And the memo does talk a little bit about why that was and essentially boils down to a lot of uncertainty around tariffs that were introduced in April of this year. The other piece of ending fund balance. So the ending fund balance, I think of it as like a bucket that catches all the bits and pieces that are left at the end of the budget year. The revenue is part of that. The difference between what we thought the revenue would be and what the revenue turns out to be, and then the other side of it is expenditures. And so there are certain underspend. There's underspending between what was budgeted even in the spring revised budget and what the actuals ended up being. Much of that is due to encumbrances, which we will talk more about in this process. But this graphic just shows you what underspending has been in the prior years. You can see that it was particularly large in the post-pandemic years, and that's, you know, there was a lot of one time moving through the system. And so folks didn't spend through it all the way. I will note also on this last year that there were a couple of new things that were stood up in the first year, that one of the big ones is the office of community based police accountability. So that alone had some underspending. So if you took those out, it would be below the prior year. So that's just to kind of situate you as we move into this. So I'm going to we're going to step through now the different adjustments that that can be made in the fall, how some of them essentially have to be made. Some of them again are more discretionary. So this first one has to be made. This is just taking the ending fund balance and subtracting out the beginning fund balance we had already budgeted. This just avoids double counting. So and then there's a little tracker at the bottom of the slides that attempts to track. Like after you do this thing, what is the available fund balance. And that that's going to be cumulative as we go. So that one is pretty straightforward. And then this next slide just shows you again another view of the same trend. We've been seeing that the the yellow is the prior year's ending fund balance. The blue is the beginning fund balance the budgeted beginning fund balance. And so that difference is what we're truing up. And so you can see that difference is smaller this year than it has been. All right. Now we're getting into some more of the other adjustments. So this is a list of pretty technical adjustments that have to be made. The first one is really reflects an error. It's essentially $8.1 million. That should not have shown up in the ending fund balance, because it was a transfer that didn't get made correctly, and then going down the line, there's some there's an amount that per there's an ordinance and there's a follow on resolution from 2015 that directs excess funding from short term rental revenue taxes to go to the housing investment fund. So it lands in the general fund. We just have to move it to the housing investment fund. There was a budgeting error in arts and then some minor true ups for for labor bargaining contracts that were decided in the spring. So that's that for encumbrance carryovers. I'm going to hand it over to anthony, who's more in the weeds on these in a second here. But just as a general for folks who are following along what these are, it's the amount, their amounts that were encumbered in the prior fiscal year that are were essentially tied up in a contract or a purchase order in at the end of the fiscal year, and that work was not complete at the end of the fiscal year. And essentially, because it's tied up, the money has to stay with the contract in the prior fiscal year. And so it closes out the fiscal year with that contract, because you might get a bill on June 29th, and then it falls to balance. So it ends up in that bucket of ending fund balance. And then in the fall, we, the city budget office, runs a process where bureaus submit their encumbrance carryover requests and we go through them line by line. We check the purchase orders. We make sure it was in fact encumbered last year. We don't let them, you know, have many multi-year encumbrances. We check that they are proposing to do the same work that was originally intended with that money. And so we collect that list and we vet it pretty closely. I will also note these are just in the general fund.
25 Okay. Before we do that, I want to go because you're making a significant slide difference between incumbents encumbrances, which to me sound like contracts have already been executed. But on the previous slide these were used the words technical and have to be made. These both to me sound like have to be mades. So if we could go back before we go into anthony's portion, I just want to check in with council on this sheet. If there are questions up to this point yet. Councilor Green.
26 Thank you. Thank you director. I'm just I'm sort of following along with this presentation and also the memo that was published and sent to us on Thursday on page seven. It describes the encumbrance, carryover requests. And the last sentence says if city council does not approve these encumbrance carryover requests, the programs would have to reduce services, possibly including terminating contracts. So to me, that seems like there are potentially some encumbrances that would involve a termination of a contract. But the way it's being described here seems like they're all they all implicate a termination of contract. Can you clarify that?
27 That's right. Yeah. I mean, the I think there are probably cases you could pick out where they could potentially substitute a bureau, could potentially substitute other funding. It may require coming back to council to move money around in order to do that. I just didn't want to say in every case, it will certainly result in terminating a contract because I don't I can't 100% tell you that that's true. So I think bureaus would say, yeah, we'll have to end this contract if if we don't have the funding that supports the contract, could council choose to move money around to fund it in a different way? In some cases, yes.
28 So I just wanted to get clarity on that because I'm what I'm trying to manage in my mind as we walk through this is is $18 million, $18.5 million encumbrance carryovers. And then towards the end of the presentation, roughly about the same number in terms of a deficit that needs to be reconciled. Yep. That's it for now. Thanks.
29 Okay. Going back on the previous slide. So I want to be clear. These particularly well all of them. They all represent something that occurred before June 30th. But in the budget that was passed prior to June 30th, for for what reason or not, they were not they were not accounted for or they came in too late in the fiscal year to be accounted for. What? The commission. Excuse me, the council voted on a couple of weeks prior. Is that a layman's way of reading what you're presenting here, in particular the the short term rental fund for the housing investment fund? I'm trying to understand that one, since it's a regular order of business for the last decade.
30 Yeah, yeah. So that one actually is. So they all have a little bit of their own flavor to them. That one in particular is actually the resolution was written that way to say in the fall of each year, the way we do this is we calculate the difference between what was forecast for short term rental revenue and what in fact came in. And we said we want the general fund to send it over to the housing investment fund. It was essentially like they passed the initial ordinance. I'm not remembering which year the initial ordinance was. And then it was a, hey, we need more affordable housing. We want to do this by taking this delta and every fall bump, essentially send it over to housing investment fund. So it just was designed that way.
31 So. Am I reading it that the short term rental fees that are coming in. Are benefiting the housing investment fund by 2.4 then? And the way we account for that by ordinance from previous council is to do it in fall, correct? Okay. And the reason it's it's has to be decided here is because it goes from a general fund into a specific restricted fund.
32 That's right. So it came into the general fund fell to balance. And we have to now pick it up and move it okay.
33 Thanks. All right. I think that's it for me if we want to move, unless there are other questions we're going to move to anthony's portion then. Thanks.
34 Great.
35 All right. My name is anthony lock, supplemental budget coordinator in the city budget office. I'm going to walk through the next couple of slides relatively quickly, happy to stop and answer questions. Much of what we're going to cover is crosswalk in exhibit seven, which is the fall town memo. So as ruth mentioned, our office and our analysts apply three, three lenses, three criteria as we look at encumbrance, carryover. Number one, as ruth mentioned, the purchase order was opened in the previous fiscal year. Number two, the carryover supports the work, the same work in the previous fiscal year. And number three, I think is important to highlight is that the bureau's general fund, underspending, needs to correspond to the total amount requested. So like if a bureau had $400,000 in underspending, they can't request $600,000 of carryover. So so part of what this process does is it allows bureaus to take underspending in the previous year's budget and carry it into the current fiscal year to help pay for work that was established and committed to in the previous fiscal year. So, as you can see here, at a high level, the total amount of encumbrance carryovers that our bureau recommended through those lenses is $18.5 million. And you see there that kind of the higher amounts ranked in size order. And there is a corresponding narrative and exhibit seven. So prosper Portland comment briefly is it's largely a technical issue resolving or involving when invoices came into prosper for costs that they've incurred over the last couple fiscal years, and because of the timing of a number of those transactions, we need to move $4.2 million into prosper's budget. Portland solutions this.
36 Can you go into a little bit more about what. That's a pretty significant number. Can you go into what those were that came in after June 30th?
37 Do you want to do it?
38 Go ahead. Yeah.
39 I'll start and you can weigh in. It's a multiyear issue involving so prosper Portland because they're a separate entity invoices us the city budget office for the city's general fund contributions to prosper through an iga and they there was an invoicing error in that they had they get general fund and recreational cannabis tax fund and significant amounts of recreational cannabis tax funds. And they essentially invoiced the general fund for the recreational cannabis tax fund. We fixed that in last year's fall bump, but we didn't fix it quite correctly. And they hit a hard stop on their appropriations essentially in the general fund. And and so they didn't get reimbursed for all of the work that they did last fiscal year. So it's like a legacy of an error that happened two years ago that's continuing into that continued into last year. We think we have finally corrected it and finally cleaned up the invoicing. And this just essentially makes them whole for that work that didn't get paid for last fiscal year. So it's a bit of an odd one.
40 Vice chair.
41 As I remember the conversation during the budget process in the spring, and maybe I'm remembering it wrong, there were a number of funds that we encumbered where we moved the money, knowing that there would be invoices that would need to be paid in the next year. So if we knew well, backing up, if there had been an issue with the flavor of money that we sent them, and we needed to fix that, and we did fix that last year, why was there not $4.2 million that in the spring? We said, we know that they won't be billing us for this on time, so we need to move that to next year's budget to cover. Why are we just being hit with this bill now?
42 So a couple of things. One, clarification what we do in the spring with the with the this is somewhat tangential, but I think important to clarify the policy, what we call policy carryovers in the spring is not those are not encumbered funds because the money has to stay with the encumbrance. That being said to your question, we didn't figure this out until July this year. So it.
43 But did they.
44 Get the funds last year and overspend?
45 I'm no.
46 Trying to think from a broader accounting perspective. If we fix this last year, what happened to the $4.2 million in last year's budget and where did it go?
47 We did not fix it last year. We fixed it in the summer. So in the current fiscal year, we fixed it and it it did not get paid because. The essentially and I can we can get you a fuller description. Honestly I yeah I we it did not get paid because they have an appropriation. We have an appropriation limit for how much we spend up to that council sets. And because essentially they had prior year's expenses that were we we did not adjust up their appropriation limit last fiscal year because with this, the fix that we did last year, we didn't adjust the appropriation limit. We just sent the money to the correct fund. It was an oversight. And there so they were essentially like, they're spending last fiscal year was contributing to their appropriations, but it was really like two years of spending that were contributing to their appropriations. So in the spring, they hit that appropriations limit. We did not. We the city budget office did not know that until summer. So that's why we have to fix it now is we couldn't we didn't know about it in spring to fix it. But yeah, essentially we moved the money to the correct fund for in 24, 25. We just didn't also adjust their appropriations so that they could continue to spend up above that initial limit.
48 But I'm trying to understand and I appreciate that explanation. And that all makes sense. What I'm still trying to understand. And if this is information you need to get me between now and when we hear this at full council and that's okay. It sounds like at some point there was $4.2 million, I'm going to say, in cash available, and we had to do things on paper around what fund is it, what year is it, where is it? Yeah, but now we have to come up with another $4.2 million in cash, if you will, to give to them. And what I'm trying to understand is where, not on paper. Where did it go? Because I understand that sometimes those mistakes happen and we've got to fix it all. Where did the actual dollars go and how come we're having to find not just reappropriate, but find an additional bucket of $4.2 million for them? So the piece I'm missing.
49 Yeah. So it did. It was functionally underspent in 25, 26. We could not send it to them. So it is the cash fell to balance in in 2425, in the same way that, you know, pick another encumbrance that the cash fell to balance in the same in the same way. So that cash is sitting there in ending fund balance. And that's why we're calling it an encumbrance carryover. Because technically we encumber the money we send to prosper. So it is works the same way as all the others. The money fell to balance. Now we're saying, hey, this was really owed to you. Prosper under your iga. And so it's an encumbrance carryover in that same way. Does that help?
50 I think so it may be that just because of the order things are in on the slides, it's not making a direct line for me. What I'm seeing here is that these are a whole bunch of things we need money for that are putting us into the red on the chart at the bottom of the page. What you're saying is that actually, functionally, that 4.2 million is not part of what drives us into the red. If we go back a few slides to the general fund balance, what is it? Is it slide 7 or 5 that this is actually part of what was shifted forward as the ending fund balance. And we're just repurposing.
51 Yeah. Thank you for that question. I think I forgot to say something which is so normally, normally there's underspent like normally because these are encumbrance carryovers. They fell to balance that money is there. And the reason it's it's not there functionally is because the revenues came in below budget. So definitionally all of these things have underspending associated with them. It's just that a functionally like, we would have not had enough money last fiscal year to pay all of these things if the bills had all come due by June 30th. So like the.
52 Because some of the revenue collection that we lost was actually last fiscal year, not this fiscal year.
53 It was all last. Fiscal year's revenue. Until now, correct? Yeah, it's all last fiscal year's revenue. So I think that's another good clarification. Here is the revenue shortfall. We're talking about only only bears on fy 2425. It peter will talk more on Wednesday about like what does that mean in a broader sense for 2526. But like we I the hard thing about these two moments is that we're really talking about what happened last fiscal year, and we're just talking about what our budget was for 2425 compared to what we actually collected from taxpayers in 24, 25. And the problem is just we're just dealing with that problem now.
54 Got it. We're at like 95% making sense. I'll ask more questions next time. Thank you.
55 Great. Anthony, as you continue, if you could, you know you're using this slide and you've noted the 18.5 million and you've listed the large ones. If you could, I know that it's impossible to get everything on a screen. If you could speak to how you're telling this story to get to that bottom 19.5 and the 14.7 so that we can really bring this picture home on on your slides. You guys have a lot of documents. And being able to to understand, you know, some of the last year's fiscal things requires you making some connections to your graphics that you're using here as well. Okay. Thanks.
56 Great. All right. So. On page six of exhibit seven, you can see the total amount of the encumbrance carryovers that was requested and that we are recommending to council for approval of $18.4 million in encumbrance carryovers. So again, we listed the I think the six highest amounts here. And there's more explanation in on pages seven and eight about the different purchase orders and the different services that are are contained in them. And, you know, encumbrance carryovers can can, can serve a lot of different purposes. Sometimes they're contracts. For example, in the office of the public safety dca, it represents like grant ability for programs like pccep and ceasefire for parks. They have the they have the ability to retain their their general fund. Underspending. So that's one. So there's different flavors of some of it. But all of this represents general fund underspending in the previous years in those respective bureaus. And and no bureau is requesting more than their previous year. Underspending. And so what we see here in total is there's $18.5 million of, of commitments that did not go out the door by June 30th of fiscal year 2425 of underspending that we are recommending being carried over. So and then and then, as you see here, just briefly, there's $1 million in policy carryover. So these don't represent like these don't represent contracts or firm commitments but but represent different policy initiatives that say any whatever the ending fund balance is for these particular programs should be eligible to be carried over into the previous year per previous agreement. So that's what the clean air construction agreement highlights. That's what the fire wellness funds highlights as well. So when you add the $18.5 million across city wide encumbrances, plus the about $1 million in policy carryover that our office is recommending, that totals to $19.5 million. And then so you can see there on the bottom right of this slide, contributes to the $14.7 million deficit that gets us to kind of the starting point before we think about. So encumbrance and policy activities do represent discretionary decisions because what what this represents is the bureaus ability to carry over previous year. Underspending represents the ability to to pay for these things. Doesn't mean like these things cannot be done. It doesn't mean they can't be funded. It doesn't mean that these this work cannot be absorbed by the bureau. It just means that they're able to carry over previous year budget authority to help pay for the things that were committed in the previous year.
57 I want to just ask a clarifying question, and that gets a little bit to my philosophy of, for me, the answer to the question about encumbrances changes based on. If the xyz corporation has provided a service before June 30th to the parks bureau, and they didn't bill the parks bureau for that service until the current fiscal year, to me, that's an easy one to pay. If the parks bureau had $1 million to spend with xyz corporation, but they didn't spend 400,000 of that, I have a very different answer in allowing a carryover into July 1st, because while we authorize all the bureaus to spend up to a point, there's also in my mind a contract that says we're not then authorizing you 1.4 million the next year just because you were very stingy in the first year. So if you can clarify for me which one of these items falls into the. We already have the good we paid for. In fact, we're using it or somebody got trained on it or it's mowing the grass right now. We just haven't paid the bill. And there's somebody out there who's like, the city of Portland is stiff in me. That one. Easy. But a few points that have been made. There are a few areas where I can't quite tell if this is encompassing both, or just one of those scenarios. I hope those make sense.
58 Yeah, I would say and I'll let you weigh in. Like I think the police example is the best one. I don't I don't think by and large, I don't think we're stiffing people. So. But I do think the while there are some cases, I think where for some reason the billing was delayed, I think by and large it is these represent things that we are continuing to buy in the fiscal year. One caveat to that is it's now almost November. So there may have been there. There probably cases where the bureau has spent it between July and now. And so that if they didn't get this money in the fall, they would run short on the money on what they have bought between July and right now.
59 So I want to pause. Just if that was the case, why would the normal financial policies of the city not dictate that that action be considered part of their current year budget?
60 Yeah, I mean, I think the policy that this, that, that councils have taken in the past on encumbrance carryovers is a choice. I think the choice is and I'm happy to have jonah's come. On. The choice is, you know. Essentially it's saying, like, we recognize that the fiscal year is a construct and that work doesn't happen between July 1st and June 30th, and that it would be sort of administratively burdensome to end everything we're doing on June 30th and then restarted on July 1st, that, you know, things things are going to cross fiscal years. We we in the general fund, we constrain that. Right. It's supposed to be just it's just things that were open in the prior fiscal year. We don't like let this drag on. But also, you know, there is I think part of it is there's if the revenues come in as forecast, there is underspending to support the cost in the next fiscal year. And so this situation has not come up in recent years. And so I think, you know, so it would it would be a case if you were to tell me like okay, what if we just disallowed all. 18.5 million of these. It we would have to go kind of line by line and tell you like the prosper one would be a big problem. You know, the parks one would mean they would draw more that $2 million more from the levy. And they might not make it through this fiscal year. There's different answers to each of those. The police one, I think they did receive a thing. So, you know, I think it is if council wants to dive deeper and say we want to cut this by something, it would just take more analysis to get back to you on.
61 Thanks. So I'm going to highlight this portion just for the committee is that I do think that this is highlighting a package of financial policies that we probably owe the city that have been kind of bubbling in the offices for a while. I think that a significant amount of what we see in practice right now, I would put into the category of it probably passed legal muster, but was mostly a gentlemen and gentlemen's agreement between bureaus in the old system. Ordering. I'm going to use this as an example, ordering furniture that is back ordered, that is delivered in October but was ordered in may. It's a simple answer for me, choosing not to order it because you saved some money, but you didn't have council authorize you to keep it for me. Gets much shadier in terms of practice and what comes forward, and I think we have a little bit of both, because I remember plenty of of carryovers that were addressed in the budget. But then it always seems like there are more. I want them more to be fewer and far between. And examples of supply chain issues or workload issues, capacity issues and not we just chose not to execute until later. And I think we we owe some guidance moving forward in terms of how bureaus can expect to be received at this body. And then at the full council. I'd make a request that when we go into the work session, is that we do have the ability to go into the details of these, of the variety of these, so we can make that judgment about where we just need to pay our bills and where we've made a choice, maybe not to execute in one year, but do it in the next. Okay. That's it for my question.
62 Okay.
63 Great. Great. All right. So this slide highlights key general fund decision points. So items that are where there's a level of discretion where council has the opportunity to to make a choice on how the resources are being used. This is what our office is recommending. And so there are a couple items here. There are a couple general fund returns of sorts. So you have a so that means that there would be this would lower the deficit in the general fund. So we are we're recommending that these returns be used to help lower the deficit that we're looking at in the general fund in the fall. Tao. Then you have a number of draws on general fund. So we have the Green 13 public safety policy set aside $2.2 million. Public safety has a number of requests for requests across the service area that highlight different actions that the bureau wants to take in line with the kind of the parameters that commissioner Green set up in the adopted budget. We have $450,000 set aside for a disparity study. We have a $3.25 million reimbursement to the insurance and claims fund, and then we have $226,000 kind of of kind of committed draws from that state refund that you see in the return above. So those represent kind of discretionary decision points in the general fund for for council.
64 Questions now or keep going.
65 Thank you, mr. Chair on the slide. So thanks for calling out the Green 13. I just want to confirm, in terms of the other draws, that one seems to be the only one that is a direct reference back to the budget that we passed for 2526, because the mechanistically it said, okay, we're going to move $2.2 million in the general fund contingency to then be held for dca bob cozzie to present council with a spending plan for recruitment, training, capacity expansion. So this this then is that next step. This is that sort of presentation correct.
66 Yeah. So this $2.2 million is the only amount that was planned for that was that we knew about coming into this fiscal year.
67 And then the other three pieces are responsive to how conditions have changed from the perspective of of the city budget office since we passed. The budget we might need to fund. Is that fair?
68 Mostly, yeah, the insurance and claims fund reimbursement we also knew about. But yeah.
69 Yeah that's true.
70 Yes. Otherwise yes.
71 Okay. All right. That's it for me. Thanks.
72 Vice chair.
73 Chair.
74 Not a question on the slide, but just a note, because you were talking about policies that we might want to change. I'm struggling with the fact that we have something that we budgeted for that was accounted for in the previous budget, alongside things that have come up, some of them as recently as a week or two ago, categorized the same way. And maybe that doesn't. Maybe that's not hard for others, but I do think that we should be mulling over how we how we categorize things that were part of a balanced budget. And of course, receipts have come in lower. Our budget is a bit out of balance because of that. But how do we account for a balanced budget and the adjustments that we need to make to appropriate things out of money that was set aside into expenditures from what was a balanced budget? And how do we account for, hey, some things have come up over the last few months that were unexpected and weren't part of the budget, and we need to figure out in this technical adjustment how to budget for those.
75 A similar question, I don't know. Do you want a chance to respond or talk through that a little bit?
76 Go for it. You can ask yours. And then.
77 I know I don't have 1000 move on to councilor.
78 Sure. Yeah. No, I, I think it's a good point, a good flag and might just be my budget brain that lumped them together. But the it's just it's solely because we have to move that money out of contingency in order. Council would have to move money out of contingency in order for the bureaus to spend the money that was put there by Green 13. So it just it requires a technical action that does draw from contingency. That's the only reason it's there. But you're right that it is sort of different in kind.
79 Councilor Green.
80 Yeah, I just wanted to pick up on what? So you're highlighting something that I've been worried about a little bit with this slide and talked to some of my colleagues because it, because it does suggest these are all things that are I mean, of course, it's always discretionary every time we meet to set a budget or adjusted budget. But this would sort of gloss over the idea that we had some pretty robust debate around Green 13, and it was part of the plan. So maybe going forward, you know, a different part of the slide or something else that says, look, this is really just a moving money between buckets to effectuate the main budget versus the other things. Thanks.
81 Yeah, we we can certainly split it out. In the past, we've distinguished kind of distinct policies, set aside types of things. And this would be a policy set aside amount. We could separate from the slide.
82 Right. So we would say look here's a contingency fund. That was a policy set aside. It didn't really have an answer. But we indicated now it has an answer and we need to appropriate it. Right. That I think to councilor Green's point and others, I think that the again, I'll go back to the narrative is really important as we go through these numbers, because when there's not a narrative, there's a whole host of grabby hands who want to do other things with it. But we've already decided what this was. We just needed some meat on the bones, I think. And I think that that is helpful in this. And I've seen that in some previous presentations where we can see those set asides and what they were heading toward. Okay, there are no further questions up here if you want to keep on going.
83 All right. So this slide highlights some adjustments that are outside of the general fund. Typically when we talk to. Talk to council we have we highlight discretion. We we highlight general fund impacts and general fund opportunities. But here are a number of other adjustments contained in the fall tau that are not that don't directly. Well yeah they don't.
84 Or their net zero.
85 The net zero or they. Yeah. Or they yeah. They're not directly tied to the general fund I would say.
86 So. Just so just really quickly the, the on the net zero piece, the shelter services budget adjustment is net zero because it reduces revenue, external revenue that was expected that did not come in. And it reduces expenses by the same amount. So it doesn't affect the general fund in that way. And then the communications enterprise efficiencies are somewhat similar in that the budget was already reduced in the adopted budget by that 10% amount. And this just kind of effectuates that there were essentially placeholder amounts there for that. And this reduces the fte, the position authority in certain bureaus based on those reductions. But it doesn't reduce the budget because that was already done. And so the doesn't have a net impact on the budget. It also moves some positions from one place to another. So those are the the kind of net zero changes here. Any questions.
87 Yeah. So continuing on the communications piece there. So that is part of the administrator's plan that he briefed in the spring. Was that that reduction in force would occur later in the year. And so they started with those fte. But now that we're to the fall, those fte are leaving. Do you know, off the top of your head the number of fte reduction that communications took?
88 Yeah, it's a net reduction of six positions. Yeah. Six positions. Thank you. Some vacant some filled okay.
89 And then on the top one, this reduction in expenditures because we didn't receive the 11 million from the state legislature as the mayor had anticipated. Is there anywhere else in this technical adjustment ordinance that backfills or adds any funding to the shelter services budget?
90 So I don't know if I would necessarily describing it as describe it as backfill. But the there is an encumbrance, a general fund, both general fund encumbrance carry over for $2.6 million for sheltering. There is also carryover of funding.
91 Yes.
92 And so that functionally adds budget in this fiscal year for those amounts to the sheltering program.
93 But there's nothing new outside of carryover that's intended to backfill the $11 million.
94 Okay. So it would be an inaccurate statement that while we got 11 million less in revenue, our. Spending is only reducing by 8.4. Is that an inaccurate statement or are we actually reducing the spending and and our authorization of 11.
95 I think the the shannon and skye aren't here, but I would say I mean, I, I think neither of those is totally incorrect. It depends what your baseline is that you're working from. Right. What was your assumption about the amount you would have in the next fiscal year? I think the the reality is that because they budgeted before they had taken over those contracts from the county, it was, you know, based on their best estimate at the time of what the spending would be. So compared to that estimate, it is $11 million lower total across overnight. And and alternative shelters. If. Yeah.
96 But go ahead and and put on that list for wednesday's work session. A deep dive by the Portland solutions team so we can best understand the 2.6. It's not surprising that the two we've talked most about are the two largest ones. Obviously, I think that, you know, the state legislature failing to fund the Portland issue is notable. And and I think that the mayor worked really hard at it. But what we haven't seen really hard at getting them to fund this, but we haven't seen then, is the the new narrative and the new true up of what does the sheltering program look like, save for the planned at $11 million? We haven't received that yet in a in a robust conversation the way we did when the 11 was part of that solution. So I think before this council passes a tor, we need to understand those two things as they relate to each other. Thank you.
97 All right. Finally, there are a few personnel adjustments in the fall tor, many of which are technical in nature. When a position moves from one area to another, it requires one business area to reduce position and another one to increase position. So we can track position authority across the city. So on the top here, you'll see most of the kind of the bureau realignments that were, that were, that were recommending in the tor. And then you see a few of the kind of adjustments, some adjustments here that represent some decisions. So within the Green 13 public safety set aside, there is a request for three limited term positions. As I mentioned earlier, the communications realignment has a net reduction of six positions. And then there are a couple of other small small items that are tied to non-general fund funding. So the the adopted budget troops are tied to money that was received in the fiscal year 2526 budget, and there should have been personnel authority added to those. But for for a number of reasons, there wasn't, personnel authority added. So that the money is already there. For example, like for for staff resources to support summer works and bhr. So we're adding the position authority here. While the money has already been allocated in the fiscal year 2526 budget.
98 Is it fair to call that a scrivener's error if they budgeted for ten fte, but they only had authorization for nine. But how did that happen? Because that's usually a a big thing for a budget professional is how many fte have I budgeted toward what I'm being funded for. Or and this is where I'm a little concerned, is that the number actually trues up that they can squeeze in another fte now because the budget was large enough. What are we experiencing in this situation.
99 So so for example, for bhr they there was a couple iterations in the proposed where they received money to support a program, and initially the support for that program was going to be in money that would go out to the community. But I think there was an additional amount added kind of at the last second. And then where we should have added the position authority in addition to the to the funding to support that program. But yeah, scrivener's error is a source like the intent was for a position to be added to be supported by the funding, and that was the intent of the decision package. But for whatever reason the the position authority was not added. So we're adding it now in the fall.
100 Okay. I am switching topics a little bit. I am surprised, given the briefings that I've received, not to see anything in here about urban forestry changes over to ppe. And given the budget constraints that the administration made me aware of, some, I think 6 or 8 weeks ago. Is that for me to assume that everything as it was presented in the budget has moved successfully over?
101 Let's get back to you. I'm not. I can't remember if there was a package in there and we just didn't have it on the slide or not. I'll get back to you.
102 Okay?
103 Yeah. We have I'm not as involved. I know there's a number of packages to resolve things. On the technical side. And again, yeah, we can get you more information on that. But yes, we do have there are highly technical decision packages kind of resolving things on the back end related to urban forestry.
104 Great. Thank you I appreciate that. Going to the health fund.
105 Yes.
106 All right. So a little bit different topic. But also part of the tao cbo and bhr did briefings with each of the council offices on this. But essentially the tao as filed contains an directive to add an assumption around additional reserve funding for the for the health fund to build up the health fund reserves. This was aligned with a three year plan for building up that reserve back to the recommended levels. So it's about $10 million a year for three years citywide. This directive is focused on the general fund as part of the current appropriation level process. So it directs us to make an assumption about that general fund portion of the $10 million, which is about $4.5 million. That just says, in addition to the status quo benefit renewal assumption that you're building into the base budget, also build in an amount for the reserve funding. So it leaves that 15% is from the the budget note called, I think, protecting workers from future health benefit increases that was adopted in the budget that stays. There's sort of no action there because council already adopted that budget. Note. And so this is adding on top of that the reserve funding amount.
107 Okay. I keep looking to see if there comments. So I'm going to jump in. Since there are none I will just flag colleagues that we've all received the reserve fund briefing from staff. I've indicated some pretty significant concern about extending this over three years. I think that two years was more appropriate, but even one year is most appropriate. I say that fully acknowledging the. Impact that filling that hole will make. But I also say that in response to by the summer of next year, we will have been in a transition to this new form of government for two years. And I don't think that this government has truly rightsized in any meaningful fashion. And so by extending the health fund, backfill by three years, I think we are allowing the city administration to continue to keep this organization improperly sized. Given the transition to the new form of government. And we've barely scratched the surface. I think that by going to a 2 or 1 year would be somewhat of a forcing function. And I say that with very serious concern that we will ask that truing up of the workforce and of the bureaus of our new city administrator. And having worked in that world a little bit, the idea of asking a brand new city administrator to immediately have to consider reductions in force when the current administrator and the current council and the current mayor had one year for us, but frankly, two years for the city administrator to do. Significant and very unfortunate, but required downsizing and rightsizing would be a terrible beginning quarter for that new city administrator. So I'm flagging that for you all, because I think it will be important in our work session that we have in an area that this slide is interesting, but the slide in the brief from hr and budget about the hole which our reserve fund is in relative to the health fund is, for me, incredibly alarming, more than I've ever seen it. So I wanted to bring that point up before we go into the work session later this week. Counselor Green.
108 Thank you, mr. Chair. Just want to confirm for the slide. So the $4.5 million in reserve funding, that's just for the 2627 fiscal.
109 Year, correct?
110 Yeah.
111 Okay. So the expectation is you need to do that same amount for roughly three years to get to a a healthy level per hour, generally accepted. I forget the exact nomenclature, but to have the appropriate self-funded plan risk reserves we would need that. Right.
112 That's. Yes. That's correct.
113 Okay. I mean, I appreciate the comments on the right sizing exercise. Two years in, it's like pretty soon it's like, okay, who's holding the bag for this thing, right? I do note though, it looks like if you read to the end of the package, this sort of pre-funding does come at the expense of the compensation set aside contingency balances, right? Because that's how we're balancing everything at the end of the day is more or less we're drawing that down.
114 That's correct. Good flag though this. So this is just an assumption. This is the one piece of this ordinance that is forward looking. So this one is about 2627. So it does nothing to our current fiscal year budget. It does however essentially mean more cuts would be required in 2627 by loading in more expense up front. Right. We're saying the same work we're doing right now is going to cost that much more extra next year. And so in order to balance next year's budget, we will have to find that somewhere. And so council will have to find that somewhere. And so that's that's what that does. But on that specific on this specific piece it does not affect current year compensation set aside or any other contingency.
115 So this is like the an analog to the sort of a budget note.
116 Yes.
117 Functionally. Yeah.
118 All right thanks.
119 Yeah I actually have a question for you, mr. Chair. Are you saying that you think that we should force a rebuild, a build up of the health fund in just one year in order to force the current administration to fire a bunch of people in the next year?
120 I think that two years is the most reasonable. And I think that. You know, using the six fte reduction in communications from the 85 that were advertised when this government got started, I think is an example of unless you truly use a forcing function, this administration has not shown itself to be able to put itself workforce wise into this current form of government. I am saying that. So I think two years to build up that reserve fund. And I'll just say the importance of a reserve fund is do we pay people's insurance claims? It is a significant, significantly important part. So yes, there is an aspect to it that is talking about the workforce. Right. And we have seen very little from the administration in the last budget that reduced the administration and management workforce and other areas. What we haven't seen yet is what line of business are we no longer going to be in? What are our core services that we're going to fund? So that's where my brain is going. I think that that's a reasonable conversation for an administration and a council to have. But I have very significant reservations about placing this burden on a new city administrator. In fact, it was in my comments when I voted to approve the current city administrator is that this needed to happen before long. And what I see is a continued kicking of the can counselor.
121 I would note that the main lines of business that we're in, at least as far as the general fund is concerned, are police, fire, parks and homeless services. And I assume that you're not suggesting we get any of those lines of business. As far as what the administration, I think somewhat inelegantly is called core services or sort of central service support services. I think they made a commitment to do a 20% reduction in the next year or two. So I think that they there has been an indication that they are planning to handle personnel. So anyway, I just wanted to say that.
122 I think we heard today that there was maybe a 10% or less in just one area. And I think continually we see that the 20% is actually not being met, even though that's what was advertised.
123 Just picking up on that last comment about the 20% or 10% reduction I want to note, because it's come up here, that we all should be getting information about the specifics of that reduction in communication staff over the next few days. Ruth, I have a question not about this slide, but broadly. Obviously, we'll have some decisions to make about what we do with this deficit that you've brought to us this -$18.8 million, I presume that there will be a few different ways that we can address that. I've heard from the mayor that he has already started to take some actions. What is the health of our city reserves right now? And where do we sit compared to what you consider an ideal or a responsible or healthy place?
124 Yeah, so I'll.
125 Ask that without jonas here to answer as well.
126 But it's okay. A couple of things. So one, I just want to note we're really just focused on the general fund here. And so, you know that that's kind of separate from any restricted funding reserve balances. So that's kind of a separate conversation because yeah as we see with the health fund there may be issues of areas of concern, but that's kind of a mostly a separate issue. So within the general fund. So we have to make that $8.1 million transfer to maintain the 10% requirement for the general fund reserve. The. And I want to make a distinction here between reserves like formal reserves and contingencies, which are used a bit differently. So that reserve will be there. You know, I think there's obviously a lot happening in the world that could acetate some larger action by council. I think, you know, I won't go down that path. But so I think it is prudent and and important for our financial health as a city to have that 10% reserve within the contingency bucket. Sorry, I was trying to pull up a slide. So. The general fund contingency is budgeted. Contingency is about 25.6 million. This is on page 15 to 16 of the the memo that's in exhibit seven after if if council were to adopt all of the tor as you know filed which obviously you don't have to but if you were it would leave about $6.8 million in contingency. That includes $3 million of unrestricted contingency that our city financial policy directs us to put in every year. And that is for, you know, things that come up at the end of the fiscal year. You know, like last year, we talked about, you know, may day protests and things that happened towards the end of the year that could have, you know, unknown fiscal impacts. So I, I think with the 16, if again, if council were to adopt this package, the the main thing that the administration has talked about in terms of cost reductions is the hiring freeze, which is in place now. I think there will be there will have to be continued conversation with council, both about the effectiveness of the hiring freeze as a cost saving measure and about what you want to do about it, because, you know, money. If the savings from that will accumulate where it's budgeted, council can choose to pick that, pick up those savings and move them around, which is sort of what a contingency is. Functions as. Right. So I guess all of that together, I would say, you know, I'm. Sort of nervously comfortable with where the contingency level is if, if council were to approve this ordinance, I think there will be continued conversation that will have to be had this year, I think. The sort of as we're thinking about policies going forward, peter's going to talk again more about blt on Wednesday. Blt is a very volatile revenue source in terms of when we get in money, you know, and again, peter will go into this in depth. The county actually has a contingency just for their business tax revenue or reserve. Rather we we're sort of using compensation set aside like that in this case. Right. Like it is helping us to smooth. We're not it's not like we're we're saying council has to make expenditure cuts right now next week or whatever. It's the, the the contingency essentially buys us time to figure out how to accommodate those reductions. But there are other ways council could approach this problem of having this large volatile revenue source. And so I think that's a longer term conversation. But as of, you know, this ordinance, I, I think we have enough tools in the toolkit to make us okay for this fiscal year. And that reserve is there in case something really goes off the rails.
127 So presumably, if we take out that 3 million that's set aside for emergencies, we would end this fiscal year with 3.8 million in our contingency fund. Yes. The numbers that you just gave, what did we end last fiscal year within our contingency fund.
128 So we.
129 I know none of us have looked at those numbers for six months.
130 For months. So it's a good question. I think we I think we had about $28 million in unspent contingency, but we budgeted for some of that. So that's where this budgeted beginning fund balance, we sort of pre-count some of that unspent contingency we did last year have, you know, it was sort of can be thought of as like a source of one time general fund revenue. Right? So like we had last fall bump the council put about, do you remember how much it was into into capital set aside 13 million.
131 Yeah about that.
132 About 13 million into capital set aside. That became essentially one time general fund revenue in the budget. It was used as beginning fund balance. And for 25, 26. So I guess I'm highlighting this to say there was a lot more. There was a lot more there last year at this time. And that was a resource for balancing the budget.
133 That's part of what I'm trying to get to is how much worse off will we be next year? Because this feels to me like the first real clear picture with numbers. We've known we would be worse off, but we didn't know how much worse off. So we're starting without that 25 million of one time funding. We're starting with our contingency at 3 million instead of 20. Did you say 6 million.
134 Of unspent? I think that's right. Let me. I'll confirm that.
135 So we're starting I'm going to round and say we're starting with 20 million less in contingency that we can rely on that we've actually spent through, which means we have to figure out if we're going to continue the current spending level, how we come up with those funds. So what none of this really shows is that we're actually starting the next fiscal year, 40 to $50 million worse off than this past fiscal year. And we don't expect our revenues to be back up yet. Is that accurate?
136 If in your 40 to 50 million, are you counting the health fund?
137 I'm not.
138 Increase I'm. Not okay.
139 So 40 to 50 million plus another 13 million in general fund worse off. And we don't expect revenues to be any better.
140 I think that is roughly right. And I will sort of I mean I'll have peter come up.
141 I don't need.
142 Exact numbers. I just.
143 Need scale.
144 For scale. That is correct. The only thing I will comment on on the revenue projections for next year, we can still have growth for that statement to largely be true, where revenue can increase between this year and next year. It just we're running with a current year deficit that's going to get carried forward to next year, is 100% accurate statement okay.
145 Thank you.
146 Okay. I'm going to keep on pushing us toward a resolution of this item so we can get on to our others. But I want to look to councilor Greene if you'd like to have a question before we move to discussion.
147 That's for discussion.
148 Okay. Ruth and anthony, anything you'd like to contribute before we move into discussion with the council or with the committee? Excuse me? Or is this the end of your.
149 This is the end of the presentation. I think we've covered covered it all.
150 Great. Okay. So the action colleagues today in front of us is to move this on to council. I will say we do have the work session with the whole council coming up. I am somewhat sympathetic and interested in your thoughts about postponing an action from the committee today to hear from our colleagues at the work session, and then to bring it back with passage at this committee, at a future finance committee once we've heard that work session. But I would like to introduce that as we have discussion as a committee for today. Councilor greene.
151 Thank you. Chair. That's actually what I was going to sort of broach here. I was prepared to to to move to refer this back to the the carrying office. I don't feel comfortable voting on the tao at this stage before we've had that broader discussion. I think for me, there's a number of items that I still need a lot more detail on the discussion around the prosper Portland prior years kind of billing snafu, for lack of a better term. I don't understand enough about that to understand, to be comfortable with voting on a package that is is probably the second largest chunk of of of the the carryover stuff. So I'll need to know that more. I also, I think we all need to work through these decision packages because I mean, I've identified at least one item that that is new since we passed our budget that is in this decision package for Portland solutions wasn't something that was intended to be spent in the last year. And if it was, it wasn't on paper. And so there's stuff that is new in this budget, and we need to figure out where that is so we can have conversations around that. And that takes a little more time. So I'd be very supportive of of postponing this and pulling it back.
152 Vice chair.
153 On the technical end, I would prefer that we not refer it back. I think that any changes we need to make, we could make through amendments to the exhibits based on the conversation with our colleagues. But I would rather, in order to do our work, get this to council and do the work at full council on the timeline that we need to be responsible with these budget decisions. I'd rather that we hold on to this, as opposed to send it back to have the administration bring us something.
154 New on the table, postpone.
155 Postponed to a future meeting.
156 Thank you. Vice chair councilor Novick.
157 I for council president suggestions? Well, okay.
158 I think with that and hearing from from all of you, I appreciate that a lot. I think we've given a lot of guidance for things that will help in the work session. And colleagues, I'm going to postpone action on this item and bring it back at our next finance committee. Right now, that is scheduled for the 10th of November. I also have opened the next two mondays, and so before I commit to that date, I am going to do a council ops check and a and a cfo check. It may come back that we request through council president's office a sooner meeting of the finance to meet this need. Okay. Go ahead, mr. Chair.
159 I just wanted to ask ruth if we do this, if we don't move ahead today, will the world end in some way? What what problems might it cause, if any?
160 Sorry, I'm just thinking on my feet. I think the. The first thing that comes to mind is just the health fund thing. And I would like to have council weigh in on that before we make any assumptions around that. And we do load those budgets. The first week of December. And then on the technical end, there may be.
161 I mean, bureau shouldn't, as far as we know, shouldn't be running into hard stops in the system like they would in the spring as they've spent down the budget. So. Two less weeks to in theory for Green 13 to operationalize. But otherwise I don't I don't I don't know if there's like a, a technical reason why we can't delay for two weeks.
162 Thank you. The date that I've been working from councilor is if we can achieve a council action prior to the last week, second to last week of November. So mid November was always a goal and I think we can still do that. If council opts in. The president notes that there may be some shoehorning in given that situation now. Thank you very much. I appreciate it. And with that clerk, I'll have you call the next item, please.
163 Item three authorized revenue bonds in an amount sufficient to provide not more than 41 million to finance city fleet maintenance, facility improvements and related costs.
164 Hi. Good afternoon. Go ahead and introduce yourselves and take it away.
165 Good afternoon. Finance committee chair Zimmerman, vice chair, pirtle-guiney and councilors. For the record, I'm matt gierok, debt manager in the public finance division, and I'm joined by some colleagues.
166 Hi. For the record, my name is maddie salter. I'm the director of the bureau of fleet and facilities.
167 And good afternoon, michael roy, city fleet director.
168 So we're going to see if I can share this. We'll be walking through the city fleet cutter garage bond authorization ordinance director sawyer is going to be walking through some project information, and then I'll go through information on the bond issuance, see if I can get this to work. There we go. Okay.
169 All right, so I believe that all three of you were able to take advantage of the tour that we offered to provide backstory and information on this project. Just as a quick reminder, city fleet is the largest municipal fleet in the state. And so we support all bureaus and all field functions at the city. We're an essential services operation that springs into action 24 over seven when required to for snow and ice activation, civil events, catastrophic events. It's very difficult to source most of the mechanical work that we require out in market, in part because we're an incredibly diverse fleet. We have all of the bureau functionalities that we must support, and particularly for heavy duty operations, there's really not a market equivalent for what we do technically. And then also for the 24 over seven operations, we've got about 85 fte and 40 of those texts are stationed at the kirby garage, which is our primary maintenance facility. The fleet in general, again, as I noted, is extremely large and extremely diverse. It's about 3600 units, all of pretty much all of the heavy duty fleet is serviced at kirby. And then, of course, we have the fleet transition on its way. So that is part of the city's climate action plan. And we're trying to figure out how to support and effectuate that. Next slide please. The existing kirby garage has been in place since for about 103 years. Built in different phases, it's been city fleet's primary maintenance facility since the early 1970s, and it's extraordinarily cramped in relation to what we need. So the fleet has grown, I think, by 270% in that time, and the space has grown by less than zero. And in fact, it's gone into the negatives because the mezzanine is a weight restricted area. And so we cannot perform heavy duty operations there. I think one of the things that's most notable is how inefficient and wasteful the layout is. In addition to being small, vehicles get packed in there and then they get delayed, which in my perception probably over fleets us because bureaus are purchasing more units than required in order to actually do their work, because we can't guarantee when completed work is going to get out of the garage. We've got sloped floors, the structure is not seismically stable, and we're in a landslide zone. We've looked at remediating those hazards in place, and it's not cost effective whatsoever given the obsolescence of the facility. And so instead, last year, as part of the budget process, we sought out a leased facility after several runs that have built facility because the leased facility seemed the most future proofed while also handling our current situation. And so that facility is the carter garage. Next slide please. That site is already under lease. We are completing construction documents for it right now. We will then be heading into bidding to get a guaranteed maximum price. Our most exciting thing about it is that it has fire suppression and flat floors, but it is also sizable enough for us to do the operations that we need to do. Yeah, it's all we're asking for, so obviously we'll be looking to improve productivity and efficiency there. Just through the garage's design. We'll be moving to a different model of work delivery holistically for our workforce. We'll have modern electrical systems that will be able to support ev charging at scale in the city's path to net zero, and I think we'll be achieving quite a bit of the energy efficiency and sort of labor related goals in the delivery of the project that the city has expected of capital projects and generally, overall, do you want to speak to funding or most of this project will be funded through the bond proceeds that this ordinance will authorize? But I do want to note that we're also having a significant amount of investment supporting this. And then city fleet itself is contributing cash that we had accumulated over the years, squirreling it away in the event this day came. This is a basic timeline in terms of order of operations. There's quite a lot that goes into the actual issuance of a bond. And so that's why there's an overlap between the completion of construction documents and the bidding process and the issuance of the bond. I do want to note that that timing is important. We don't want to front run with the bond too much our time, because it means we could end up not having a good estimate that we're basing this request on. We also don't want to delay it too much, because once you have a gmp and you know that firm price, that gmp is only good for a period of time, and so you can run the risk that it runs stale and and you need to go back and ask for more. And with that I'll hand it over to matt.
170 We'll talk about the bonds. So the bonds will be secured by the city's full faith and credit and payable from all available funds, including the general fund. However, the bonds are going to be budgeted for repayment from pass through revenues received by the city's fleet fund, which collects funds from bureaus that utilize the fleet division services. The bonds are going to be issued on a tax exempt basis and repaid over a 20 year period. We're currently assuming the interest rate to be 5%, which is cushioned by about 120 basis points to account for potential adverse interest rate movements between now and when we actually sell the bonds next April. As I mentioned, the bonds will be repaid from funds received from pass through charges, the city bureaus, the total annual pass through charges for the project are estimated to be $7 million annually, which includes the bond debt service, which you can see on the right hand side of the page here, the increase in pass through charges have been communicated to city bureaus for a number of budget cycles. Since the project was initially approved by the prior city council. You can see in the pie chart below, roughly 34% of those pass through charges will be the responsibility of general fund bureaus, including police, fire and parks. In addition, PBOT is the largest user of the fleet maintenance services and will be responsible for roughly 40% of the ongoing costs. And however, it's noteworthy to mention that a portion of that is funded through a work agreement for services that PBOT provides to bts. So that's the information on this bond issuance. I also wanted to mention some good news on some bonds that we recently sold for 2025 bonds. So we sold those bonds on October 7th, and we received bids from 19 underwriting firms. And those bonds are expected to close tomorrow. The financing results in roughly $100 million of funds for city infrastructure projects, including ADA curb ramps, two safety oriented transportation, corridor improvements and renovations to the mount scott community center. The really good news is that the debt service has come under budget because of interest rate decreasing, interest rates decreasing over the last several months. The lower interest rate results in $385,000, approximately in annual savings for both the general fund and the transportation fund for the next 15 years. And in addition, we experienced some modest annual savings with the build Portland bonds in about $75,000. So that concludes the overview of the bonds and happy to answer additional questions.
171 Thanks for the presentation. Let's move over to council Green.
172 Thank you. That's really great news about those bond auction results. So that's three. That was 3.8%. Is the interest on those sold.
173 That's correct. That's correct.
174 And if I recall correctly weren't you guys assuming somewhere like in the four to fives.
175 Yes I believe it was around 5% is what we were assuming.
176 Yeah. So great work. I'll note that that follows our second or two bond rating agencies. There was sort of uncertainty about the second one having a slightly lower rating than than our longstanding one, but I think it just reaffirms that what they're looking at is the quality of the total portfolio and what what it's what it's paying for, right. So good job. The I wanted to make a comment that the presentation, the slides where you break out how how you're paying for the bond if you go back one more this is this is excellent. I think this is a really good way to communicate. Not only what are we going to get for it, and $40 million in bond issuance to to do this new garage, I think is a bargain, frankly, relative to what we can continue to do. But but it shows me what parts of the city pay for it. And I think that that's something that would would very much like to see more of across across the city. It kind of helps us with this other broader conversation about enterprise, enterprise change. So I just want to say good work on that. I'm going to 100% support these revenue bonds. I've been to the the garage. I've seen the work you guys do out there. Despite insufficient working conditions, I think are frankly, we our city employees deserve better. So I'll stop talking so we can get to a vote.
177 Vice chair.
178 Two quick questions. And the first is actually a question where my colleague made an assumption. I think you probably did the right thing, but I'll ask anyway. We had our first bond rating sale, that one you talked about previously. After we got that second or our first bond sale, rather after we got that second rating, are the changes that you saw reflective of the market, or is there anything that changed based on that second rating, either positively or negatively, that we should know about as we go into this next bond sale?
179 It was broader market dynamics. So just the treasury market interest rates decrease and the municipal bond market follows that. So when we initially had the authorization approved, it was a different bond market at that point in time. So we saw improvement because of people anticipating that interest rates are going to be decreasing from the federal reserve. So investors anticipate that and then interest rates drop. So it was broadly that. And then your second question on what we refer to as credit spreads. And we did not notice any sort of really meaningful impact to our credit spreads. So the idea for when we added the second credit rating was really to expand the investor pool. So simply a lot of investors just can't buy bonds. They don't have two credit ratings. So by getting that second credit rating, we essentially expanded the investor pool and and improved the marketability of the bonds.
180 We saw that in this last sale or we haven't seen the effect yet.
181 Well, we didn't really see a significant impact of pricing. So we kind of priced where we expected to be regardless of of the having the second credit rating. So because our our credit quality is already so good, like we can't really get that much better. So I guess it's a better way of putting it.
182 Okay. Thank you. And then tangentially related I apologize, not related to the bond sale directly. Putting aside the costs of the debt service, once this new garage is built and it's a leased facility, what will our annual cost be for that lease and that facility compared to our cost of ownership at the current facility? Do you know that offhand.
183 Our cost of ownership of the current compared to.
184 I'm wondering, as we think about total cost benefit, deficit neutral for the city, what does this change mean?
185 Yeah, I don't know that I can answer that in specifics. We can get you the cost of the new facility and its annual run rate if you want. I think one of the challenges that we've had in communicating some of these trade off choices is that when your current state is so dilapidated, you don't have an accurate assessment of what it should be. And in fact, you know, we hear this in discussions quite often about internal service funds. And those rates are skyrocketing. Part of that is a rectification of the last 25 years of things not being done well. So I don't know that a cost benefit comparison is really valid, because right now what we're doing is totally unacceptable. So, you know, I think the better question is, is the base case workable? And if the base case isn't workable, you can't really create a comparison. Does that help?
186 It does. I think what I'd like to better understand is looking at cost of repairs, maintenance of the facility currently and then the cost of the inefficiencies of our employees trying to operate in a facility that absolutely does not meet their needs. Yeah. And the time that vehicles are offline because of that, all of those other pieces, is there a number that we can think about as the cost for operation here, and how does that compare for the lease costs of the new facility, if that's something that you need to calculate and get to me, that's fine. I just would love to understand that as we move forward with this project.
187 Yeah, and it's a fair question. And I want to make sure we're just doing the right math. So I don't know that we could do an apples to apples of the facility costs because they're so different. But I do think we have a standing question right now as this moves forward or appears to be moving forward of the businesses operating costs. So, for example, when the bureau is procure units from us, they have a replacement fund cost, they have our maintenance and repair costs for those assets. It's I speculate that we have two many fleet vehicles because they can't be assured of getting them back in time. And you can see that in the utilization data for the fleet. So I think the fleet currently has a utilization data, overall data point of like 31%. I think that that's really low. Now, some of that might be the way they designed their operations in the field. So if they're not efficient, they're going to need more equipment to service a basic day's work than if they were efficient. So I don't know that kirby accounts for all of that, but I do think that it accounts for some of that. And because they can't get vehicles back in time, I think they get a little nervous and then they buy another dump truck. And so that is only speculative on our part. But I do think as we move forward and we think about our operating model, we think about the garage service model and the impacts of that on efficiency. And we think about their operations. And if we're maximally efficient, what can they do? I would like to see utilization go up. And I would like to see that total cost maybe not come down. But as the city grows at least level out. And so that is a speculative math on our part right now. But we can try to put numbers to that if you want, because I think it's a fair question. What we are seeing is just anecdotal and. But but I think holistically as a city we can become more efficient. And that is a core way to help control internal service costs.
188 Got it. Thank you for at. Least walking through some of that. Yeah, I think this is a project that hits fiscal responsibility. As you're pointing to environmental sustainability. I know when I had the tour, seeing those electrical boxes and hearing your team talk about our inability to electrify our fleet, given the limitations of that building was very impactful. And then also the support for workforce, both our internal workforce, who really need a far better working facility, and also the commitment to using the regional workforce equity act and meeting both our labor and our training goals as a community through the construction of the new process, all really matter to me. It's great to see all of those combined here. One of the things that I've talked about a few times on this council is looking at our total borrowing limits and making sure that we're really cognizant of keeping a buffer there, and I know that that's something that has been calculated into our long term, our long term look at our borrowing limits. This is a project that you've been working on for a long time, and I appreciate that. We have been thinking about this in our total borrowing portfolio before you brought it to us. So thank you.
189 Well, council president I think has committed to be here until it's paid off. And I've done the math. That's only five more elections for her since it's in her district. So I think you got to stick around a while there. Council president, appreciate all this. Looking forward to when your staff starts talking about the back in my day stories when the floor wasn't flat. So to those who are working there now, I guess I say hold on, we'll be there shortly. Just this is an interesting ownership model. Can you reiterate again the length of the lease in this situation? And, and are your thoughts on that.
190 Yeah. So the the lease is an odd term. It's 23 years. The reason for that is we wanted to ensure that it was long enough to allow us to qualify for the tax free bonds. And so we just said 20 plus a couple. And so that got us to 23. We did factor in 210 year extensions. And so it could be up to 43 years. In other words, the fixed investment that we're making could last 23 years. It could last 43 years depending on what happens. The reason we took that approach is we had initially wanted to do a purpose built facility. We felt that that was most appropriate and actually had a pretty similar npv. When you look at the total life of an asset, but there, that was substantially more expensive. And I would say that there are some broader land use challenges that we're we've chatted about in other forums that we need to figure out. So the facilities asset base is particularly disinvested in. It is one where many bureaus need to have large plots of land to do different things on. I would say public works is one of them, and until that problem gets sorted out, we did not want to be sinking a bunch of costs in something that might be in the wrong place, or the wrong size or the wrong configuration. We have to maintain a three mile radius within PBOT, or that's what's ideal in order to service them, particularly for winter weather. And so within that radius of that kirby albina complex, really the only place to go is swan island. And so thus we found this facility. We got it for as long as we could that we thought it would be meaningful, but not so long that it's a sunk cost if we ultimately need to go somewhere else. And so that was our our focus.
191 23 plus ten plus ten councilor Green commits to be through the length of those. That's great, I appreciate that. I remember on the tour you mentioned that plus ten plus ten. I thought that was important. Thank you. Any other comments or questions? I'm not seeing any. Okay. Thanks for that colleagues. We can move. Actually, excuse me, I think we may have a do we have any public comments signed up for this?
192 No one signed up.
193 Okay. Thanks. Colleagues. We can move into discussion or I would entertain a motion to move it to the full council.
194 So moved second.
195 Okay. Councilor Novick and motions and councilor Green seconds to the full council recommendation and do pass clerk, can you call the roll, please?
196 Green I.
197 Pirtle-guiney I.
198 Novick very heartfelt.
199 I Zimmerman. I the motion passes with four eyes. Thank you.
200 Thanks for coming today. Thank you. Good luck.
201 Thank you.
202 All right. With ten minutes we're going to call up the next item. And. Take care of some land.
203 Item four authorize the city to acquire certain permanent and temporary property rights necessary for construction of the 3260 southwest upper drive north to 3139 southwest upper drive project through negotiation or the exercise of the city's eminent domain authority.
204 Are you, ken?
205 I am.
206 All right, ken. Introduce yourself and take it away.
207 Good morning, chair and council members. My name is ken ackerman. I am the interim chief engineer at the water bureau. And this is an ordinance to allow the water bureau to use eminent domain to acquire right of way for the purposes of constructing a water line.
208 Speak up just a little bit. That mic is mean to guess. It doesn't pick you up as well as you think.
209 Thank you. So next slide. So the main is. See if it switches. The main is located on the south side of highway 26 about where the zoo is located. Doesn't actually access highway 26 but it's located there. Next slide. So the the main was built about 80 years ago to two inch galvanized main. They typically don't last this long, but it's worn out. The main was constructed in a private roadway without an easement at the time. So we plan on replacing that with about 590ft of new ductile iron main, put in one new fire hydrant to serve the area and bring the current services up to existing standards. Next slide. The roadway is very narrow. It doesn't meet any standards, but it's where they access. It's across private property, so it's very steep. We have modified our easements from our standards to fit within the existing pavement. So we're not impacting landscaping. We're not impacting structures that are within what would be our standard easement. Next slide. So we need to acquire from ten property owners. We need to acquire 14 permanent easements. Ten of those are for water line. But we also have some access easements that go beyond that. So we can actually get to our main if something would happen in the future. And then five temporary construction easements to facilitate the construction of the project. Next slide. So mailer was sent to about 80 property owners, including the ten. We've talked to nine of the property owners that will be directly impacted. They're generally in favor of this project. This is being being done because we had a main break about five years ago. So they're aware that they would like to continue to get water served to them. They are aware that this is coming to council in a couple of weeks, so we can go ahead and do the next slide. So we're seeking authority to initiate negotiations. And we don't believe that any of the property owners have any concerns about this, but we're doing them in a domain because we are dealing with ten property owners. And we want to be able to get this constructed next summer. So. With that, if there's any questions.
210 Great. Thanks, ken. I'm looking to my colleagues if there's any questions or comments. All right.
211 All right.
212 Any public comment?
213 No one signed up.
214 Okay, colleagues, I'll entertain a motion to send this to the full council with a due pass recommendation.
215 So moved.
216 Second moved by councilor Green, seconded by vice chair pirtle-guiney. And with that, can you please call the roll Green?
217 Hi.
218 I'm sorry, pirtle-guiney.
219 With the assumption that you stay until this project is done, as you've put on some of the rest of us. Councilor Zimmerman.
220 I Novick. I Zimmerman.
221 I think he said next summer is when this one starts.
222 This will be done next summer.
223 Yeah. So the voters will have a choice in that. For me, the election season, I do vote. I and thank you, ken, for all your work.
224 Thank you.
225 All right. With 4 to 0 that does pass with a recommendation of full council. And with that colleagues, I am going to make the announcement that we are going to consider the third and also the 10th are currently scheduled for finance. Given the point we made earlier and more information to follow with that. And it is 155 in the afternoon and we're adjourned.