The record · Transcript

Council session — 2026-04-14

Transcript from the session's official auto-captions (23,406 words), shown in readable case and split into speaker turns. Speakers are AI-suggested and editor-reviewed (low confidence — auto-captions garble names); each color marks a speaker.

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You're over here, you're over here, you're over here. I know I'm right here. You're over here. I'm kind of sad. Oh.

Good morning everyone. I call the meeting of the public works committee to order. It is Tuesday, April the 14th at 9:30 a.m. Diego, will you please call the roll?

Good morning. I'm having troubles with my vote tracker, so apologies if this is order. Out of order. Excuse me. Kanal Koyama Lane here. Smith.

Here.

Green here. Clark. Here.

Thank you. And, claire, can you please read the statement of conduct?

Good morning, and welcome to the meeting of the public works committee to testify before this committee in person or virtually, you must sign up in advance on the committee agenda at Portland.gov/council agenda slash public works committee or by calling 311. Registration for virtual testimony closes one hour prior to the meeting. In person. Testifiers must sign up before the agenda item is heard. If public testimony will be taken on an item, individuals may testify for three minutes unless the chair states otherwise, your microphone will be muted when your time is over. The chair preserves order disruptive conduct such as shouting, refusing to conclude your testimony when your time is up, or interrupting others. Testimony or committee deliberations will not be allowed. If you cause a disruption, a warning will be given. Further disruption will result in ejection from the meeting. Anyone who fails to leave once ejected is subject to arrest for trespass. Additionally, the committee may take a short recess and reconvene virtually. Your testimony should address the matter being considered when testifying. State your name for the record. If you are a lobbyist, identify the organization you represent. And finally, virtual testifiers should unmute themselves when the clerk calls your name. Thank you.

Thank you claire. Colleagues, welcome to the new the new public works committee with my new vice chair. I was hoping to welcome our new member, councilor Kanal, but I think he's he's joining us a little bit later. So today I'm looking forward to talking about this new era and where we're going. But first, we have a couple of other items we need to take care of today. We actually have three. The first item that we're going to hear is a property rights ordinance from PBOT. I see them, they're here. Then we're going to consider the water revenue bonds, which will include a quick update on the bull run filtration project. And we've also invited ca lee to join us around 10:00 in case there are questions about bonding. Then we'll have a discussion on our committee priorities and the look ahead to the rest of this year. I'm really hoping that we're even though we have three hours, I'm hoping that we don't take or need the whole three hours for this agenda today, but we'll play it by ear. So, diego, can you please read the first item?

Item one authorize the bureau of transportation to acquire certain permanent property rights necessary for replacement rockfall mitigation system for the west Burnside road, southwest titchener drive slide project through the exercise of the city's eminent domain authority.

Thank you. Diego. So we have the team from PBOT here with an ordinance on permanent property rights that are needed to support a rockfall mitigation, which happened in councilor Green and ise district on titchener. It's very familiar to us. We live in a hilly place where there are a lot of rockfalls, so I'm going to hand it off to the PBOT staff to give us the specifics and and then we'll move into a decision. Thank you dca. Paul.

Good morning, chair clarke, and members of the public works committee, this is paul dca for public works. I just wanted to take a moment to say that we are really excited about the new committee, and welcome to the committee in its new form. And also welcome to councilor Kanal from district two. We are thrilled about continuing to work together with this committee and delivering the work that keeps the city moving and functioning every day. And we're also thrilled that all districts are represented in public works committee right now. We are here to present an update on the southwest drive landslide response and the associated ordinance related to it with respect to the eminent domain. With that, I'll pass it on to david from PBOT.

Thank you very much. Good morning. I'm david mceldowney, I'm PBOT real property services division manager. And today joining me is my colleague.

Hi, my name is michael mcgee. I'm the interim city engineer for transportation bureau and also construction services manager. Good morning.

The item agenda item before you today is an ordinance of intent necessity surrounding the titchener slide. This is an ordinance that we hope that the committee moves forward to the full council with your support for their consideration. This is something that you've all seen before over the last year, several times at council, but this one's going to be a little bit different because typically we bring these to you before we construct a project. In this particular case, the project has already been constructed and the property owners are expecting us to come back and acquire the easements. And with that, I'm going to kick it over to michael mcgee.

Thank you. I'm just going to give a little overview and some background and context of the work that was performed that's led us here. March of last year. We had a landslide at the kitchener and Burnside intersection. You can see it in the photo. This is looking westward. If you don't know, March is a common landslide time for us. We have one in the west hills at fairmont currently with the road closure. So the heavy rains combined with our topography, we end up with these. Some are smaller. This is a quite large one, so you're looking west here and you can see the material that came down on or near the roadway. What you can't tell very from this photo is there's a large like forehead of rock material that was perched that could have landed into kitchener, which necessitated us to close the road for safety concerns. And we this road is the main access to the arlington heights, also for emergency services. So it became a priority for us also with the springtime in Washington park and people being interested in there. So we worked with a lot of our community partners to get that road closed and make make this awareness until we come up with a safe solution. Just an overview of the work and what it what it was required. We had to work with urban forestry to remove the trees at the brow, which is the top edge, which was a contributing factor to some of the issues that we had. We had to get an emergency declaration put in place with the assistance from the deputy city administrator, so we could act quickly and get a contractor with the skills in place to perform the work. It's a specialized skill with certain equipment that they have to use. They use air tools, hydraulic jacks, specialized safety harnesses. You can see the large machinery that they have to do, and they have to hang the mesh down. Before the blasting was a consideration that we had in the toolbox. We're fortunate enough that we didn't have to do that, because if we had to blast the road, we would have had to close Burnside for safety. So it's a pretty significant effort that they make look easy, but it takes quite a bit of skill to get that done, and you can see a lot of the details, significant, significant, significant amount of material that fell prior to and with the work when they scraped the site and did their work. That area that they're working from is where the PBOT maintenance operations towards the sand piles for all of the winter weather operations, so that we were fortunate that that's where it landed, but we needed to make sure that we wouldn't proceed further towards into the roadway. So we were successful in that. And reconstructing a new version of essentially what was there before. And then a quick timeline. And you can see this is an after photo, but we March 29th, that's when the landslide occurred. We worked to get the emergency declaration in place. May 15th. We set up some a web page and did a tremendous amount of outreach emergency services to neighborhoods to keep them apprized we were. We were still allowing bikes and peds to walk along the sidewalk portion of their. There's a bus stop at the bottom of the hill, so we wanted to keep that open for them. We had to get permits of entry so we could get up on the top across some three properties. So right at the top, the leading edge of that, there's three properties that dave is going to talk more about. But we had to get onto their property so we could assess what was happening and make some judgments and refine our plan of how to approach the situation. So permit entry. And then we worked with them all along the way to make them aware of what we were going to do, what was necessary in order to make it safe for the roadway and stabilize the area. And so the road was open again August 20th. So about five months of work for us.

Excuse me.

Okay. Thank you. Michael. Once again, the purpose here today is to seek the authority from council to begin the negotiations with the property owners and offer just compensation. And if we're unable to reach a resolution with the property owners, then that would give us the ability or the city attorney's office, the ability to condemn property rights through the court system. We have three properties, as michael mentioned, up on the top of the hill there that we need to acquire easements from. Excuse me. There are three permanent easements for that rockfall system, and then one permanent easement that provides access from champlain drive to the site along one of the unimproved properties. We've been in touch with property owners throughout. They're invited to the council meeting, and we've had communication with them. So I'll orientate you to this map that's on the screen. Now at the top, this is an overhead view. At the top of the screen is Burnside, and at the bottom is champlain drive. The three properties in question are the yellow parcels, and the Green area is that cable mesh net that you saw in the photos earlier. The triangles represent the anchors that hold that mesh net in place, and you'll see that nine of those anchors are spread out across those properties. So what we would be looking to get is the permanent easements that cover the Green portion that overlaps the yellow on that map.

David, can I interrupt for just a second? Are those are the property owners losing some of that land to the slide? And I, it sounds like you're you're putting anchors into their property.

Correct. Michael, do you want to discuss that part.

Of it? Yeah. The dashed line that you see in there is essentially that top of that brow. And you can see how when it was the loose material was removed, some of it fell naturally and some of it was taken up by the effort. It changed that topography. So that's what that that dashed line represents. It reaches into their properties.

Yeah. I believe the before hand situation was already a slope headed down to to Burnside. This just made part of that slope a little more steep. And essentially that's what that is. And that is our our presentation. We can happy to answer any questions that you might have.

Thank you so much for the presentation. It's very clear. I'm glad that the arlington heights neighbors were alerted. I mean, they must have been scared after their, you know, not their backyard, exactly, but was falling down. And I'm it sounds like they've been very cooperative colleagues. Do we have any questions or comments? Councilor Smith.

Loretta Smith: Thank you. Thank you for the presentation. What does something like this cost? What are we offering the residents?

Well, typically we come we wait for the council to approve the ordinance, and then we go out and get appraisals. And then we we have a better idea at that point. So these are permanent easements, but they're not over a large area. And it doesn't really change the use of the property. So we haven't quantified that amount yet though.

What if I don't like the amount that you're going to offer? And then if we give you permission to do it first.

I'm sorry. Can you repeat that?

I said, what if I don't like what you're offering and we give you permission to do it and we don't know what we're giving you permission for?

Well, we were in communication with them. So they they knew what it was for. They knew what we were constructing out there, and they knew that we would come back to them. No.

I think you're missing what I'm saying. If you're asking me for permission, and I don't know if I want to give you permission because I don't know how much you're going to ask that you're going to offer them for the what we're going to be paying for this easement.

Yeah.

Is that a negotiation?

It is a negotiation. Okay. Yeah. I mean, we make our offer and it's based on just compensation and was once just compensation is informed by the appraisal. We make that offer to them. If they think we're wrong and we miss something, we're happy to hear what they have to say. And we go into a negotiation from there. And if we're unable to get it settled at some point, then it would go to the city attorney's office to to file for file with the courts, for possession.

To make me more comfortable, because I've been in this before and I've had it done the other way around when I was on the county commission that you you make the offer and then you bring it back to us, and then we either approve it or don't. But if I give you blanket approval right now, I have no idea what I'm approving.

Well, I mean, that's traditionally the way it's done. If it's through eminent domain, that's the route. So willing.

This is eminent domain.

Yes, yes.

Oh okay. I see, I see, I see.

I see, yeah, if this was like a, you know, parks or somebody that was acquiring this through a willing seller, willing buyer, that's typically how it, how it goes, then we come back with a specific number for you. But this is eminent domain.

And we should have had a conversation prior to this, prior to this hearing, so that we understand what the the rules of engagement are.

Councilor Smith maybe we can put that on a future agenda to learn.

Too late.

Well on this one, but we can actually have a conversation in the future about how this process works. I think maybe you've already been through it at the county, but the rest of us maybe have not been through it.

Right.

And I imagine that you this eminent domain is not used frequently, but when you have to, you use it.

Well.

I would have liked to have an executive session where you could have explained to us what the parameters and what we were prepared to do before we have before we came to this position. And so you're asking me to do something that I feel uncomfortable with right now. And I think we should have had an executive session first.

Thank you, councilor Smith, do we have any other comments or questions from the other committee members? Would someone like to make a motion? I would entertain a motion to send the ordinance document number 2020 6-133. The full council, with a recommendation to pass.

So moved second.

Thank you. The measure has been moved and seconded. Moved by councilor Smith. Seconded by councilor Koyama Lane.

Tiffany Koyama Lane: Wasn't moved by me.

Mitch Green: Oh I'm sorry, sorry, I said Green. I'm sorry. Misspoke. Excuse me. So if there's no more discussion, can the clerk please call the roll?

Kanal Koyama Lane I Smith? No Green. A Clark aye, Morillo with three I's, one nay and one absent. The motion carries. And the ordinance document number 2020 6-133 will move to the full council with a recommendation to pass.

Thank you.

Thank you. Diego. Diego, can you please read the next item?

Item two authorize water revenue bonds to finance water system capital improvements for an amount sufficient to produce net proceeds of up to $525 million, and to refund outstanding water revenue bonds.

Thank you, diego. Committee members, we're going to receive some transportation infrastructure related finance items that previously may have gone to the finance committee, but it's come to us today. The item is an example of that. We'd like to authorize the issuance of the water revenue bonds to finance needed capital improvements. That's what's before us today. I've also invited city administrator li to join us for this conversation and perhaps highlight this kind of practice, since some of the some of us may not be that versed in it. And because we have dca data and the water bureau here with us today, I've asked them to first provide us with a very brief update on the bull run filtration project and related financing. So we'll have the staff give us that brief update on the water filtration system, and then pause for any questions before we move to the revenue bond issue. So dca, would you like to begin?

Good morning, chair Clark and councilors. Again, for the record, this is the deputy city administrator for public works. As mentioned, we will be walking through the bulge on filtration project. Why is it required, how the project has evolved over the years, and how are we managing cost, schedule and risk? This is a large and complex infrastructure project, and over time, both cost and schedule have changed. As the design has advanced and the market conditions have shifted and the permitting processes were completed. Our focus is straightforward, which is to deliver a compliant and reliable system while managing cost, cost and risk with discipline. Next slide please. So today, public Portland public utilities director ting liu will begin with. The filtration is required followed by the project's evolution. We will then cover how we are actively managing risk with measures in place to maintain control of cost, schedule and delivery. We will also cover how we are ensuring accountability and transparency for the project. And finally, matt kirok, our city's debt manager, will be walking through how the project's projects like this are funded and the long term financing approach that supports them. With that, I'll turn it over to director liu.

Thank you so much. Good morning, chair Clark and public committee, public works committee members. For the record, my name is ting liu. I'm the public utilities director serving both water bureau and the bts. So I'll begin with a brief overview of the bull run treatment projects with how they have been evolved over time. Next slide. Next slide please. Since 1895, the bull run watershed has been Portland primary water source. It has been the backbone for the region's health and economy. Today, we are required to treat the water to meet federal regulations, and specifically, the treatment is for cryptosporidium. Since 2017, the city has been under the binding legal agreement with the Oregon health authority. That is to establish both the requirements and also the timeline for the treatment. This agreement explicitly directs the filtration as the type of the treatment, so this is not optional. City council selected filtration as a treatment approach. Uv treatment was considered but was not providing the best defense for increasing risk beyond meeting the regulatory requirement. Filtration provides also the long term resilience necessary to manage the impact of wildfire, extreme storm events and also earthquakes. Next slide. When we talk about the bull run treatment project, it's actually include three components of that. The first is the filtration facility that is providing the filtered water to meet the regulatory requirements. The second piece is the seven miles of a new pipeline that is connecting the filtration facility to the existing water distribution system. The third is the improved corrosion control facility, completed in 2022 to provide immediate load reduction at the tap one, the filtration facility goes live. The corrosion control treatment will be integrated as part of the field trip filtration facility. So together, these three component functions as one system and the project costs reflect all three together. Next slide. This one is a a little bit more complex, but the key takeaway of this slide is that project is a progressing multiple stages with increasing definition of scope and increasing certainty in cost. Over the last few years. In 2017, filtration was selected to meet the regulatory requirements. At that point, key elements of a project such as site location, facility design, pipeline connections had not yet to be defined. And then in 2018, council made a foundational decision on all this additional component, allowing the project to move into design by 2021, as a preliminary design was completed, the project reached a more defined scope and the cost estimate was refined based on the early engineering work in 2023 and 2024. As the design advance and we have reached to the higher level of cost certainty, the city entered into a guaranteed maximum price for gmp contracts, which established a ceiling price based on the detailed design and contractor bids, providing greater cost certainty moving forward. And then last year, we all have aware of this required land use approval and also the policy in 2025. So that's really the pause. And the additional associated elements has been impacting the project cost and schedule. So the land use permitting process has now been resolved with permitting affirmed and upheld, including the luba decision in 2026. This really provides us a legal ground and certainty for continued construction moving forward. Next slide. We know has been a complex project, and I'll walk through with you all how the project evolved with respect to budget and schedule, including the transition from early conceptual estimate to greater cost certainty based on advanced design and marketing pricing. Next slide. So this is our project budget evolution. So along with the bottom lines are from the year from 2017 to today, the bars are showing the project cost at each stage. The labels at the bottom indicate the project phase and level of certainty at the cost estimate for each stage. As we move from the left to the right. As the project progress from planning to design to construction, the estimate become more defined and more reliable. This is a typical for large infrastructure project. As I mentioned in 2017, the estimate was really conceptual, and that's about the $500 million under a regulatory timeline. Before key elements of decision was defined. As we advanced to the design, including early engineering work in 2018 through 2021, the project scope become clear and estimate was refined to approximately $1.5 billion by the time construction contracts were finalized in 2024. Costs reflected actual market conditions, including labor and material pricing reached approximately $2.1 billion at that stage, the city entered into the second guaranteed maximum pricing contract, which established ceiling price for us. We then updated cost estimate to $2.6 billion as this year. This reflects the impact of permitting pos and schedule extension, along with updated contingencies for remaining the work. So in summary, earlier estimate during the planning and early design phases were based on limited information. And today, as we are moving to the construction phase, it provides a more reliable understanding and high confidence for the remaining cost to complete the project. Other than major events like force majeure, remaining risks are intended to be managed within the project. Contingencies. And. This slide shows the tied with our compliance agreement with the Oregon health authority. The original completion target was 2027. As the project moves through the.

Next slide, please.

Oh, yes. Thank you. As the project moves through the permitting, the construction started shifting from 2023 to 2024. And then in addition, there was a temporary pause due to the land use appeal. So this total delay resulted in a 16 months of delay. And that process has now been resolved. As I shared earlier, based on this impact, we requested and received approval from oha to extend the completion date by two years. So now it's 2029. The updated schedule includes includes not only recovery of the time lost, but also a previously eight months of contingency to managing remaining construction risk. So the key point for this slide is that our current schedule is both realistic and achievable. It ensures we maintain the highest safety standard as well as delivering a high quality finished product. So we have looked at how the project has evolved to meet today's market realities and the schedule changes. Now I really want to focus on how we are protecting this investment moving forward. Our priority is to managing the cost and schedule proactively, and risk management and mitigation plan is designed to catch any potential issues early, giving us tools to manage the unknowns and stay focused on the safe, successful delivery. Next slide. So we're next slide, please. We're using a proactive risk management strategy to protect the budget and keep construction moving. This table shows the top four risks that we are actively tracking and managing. Because of schedule delay. We're now resetting our project baselines to making sure we are holding contractors accountable for their deadlines. Ensure every change is negotiated with clarity. The second is, we are analyzing the impact of a contractor's changes to prevent cost duplication and ensure that every form remains financially responsible for their performance. We are also optimizing our document and workflow controls to making sure to manage the scale of this project. We are preparing for the complex startup and commissioning phase early to ensure that the completed facility delivers a high quality project from day one. Next slide please. So our risk mitigation strategies helps us to manage the unknowns of construction. These actions are designed to maintain the control of cost and schedule. Equally important to ensure visibility into that work and ensure we have accountability and transparency measures for the project. Now, I'll provide our accountability and transparency measures. So beyond our reporting schedules, we have building multiple layers of expert oversight to act as a watchdog for our rate payers. These are just these aren't just administrative checks. They are specialized teams that are designed to challenge our assumptions, finding savings and ensure every dollar spent, according to the contract by bringing in outside eyes and industry experts, we are adding a level of scrutiny that protects both the project, future and community's investment. So these are multiple layers from the early before the construction start. Value engineering. We have engaged 17 independent reviewers with industry experts for the filtration facility. This work resulting in more than $200 million plus in construction savings. We have also established a project delivery advisory team, also called PBOT, which include experienced construction managers and members of a Portland utility board members. They are helping us to actively evaluating project construction, staffing structure, risk, communications and operational readiness, and their findings are incorporated into the continuous improvement also bring to the pub and the city leadership. We have also engaged a team of independent analysts who scrutinize major change cost proposals, advise us on potential disputes and ensure that every dollar claimed for change aligns with our contractual agreement. This kind of expertise really important to allow us to align, identify potential risks and prevent our cost overruns. Right now, for example, the claim analyst team is doing independent assessment of a suspension cost schedule and scope change request to ensure contract compliance and advice on dispute resolution in additional. In addition, under the guidance, I have issued a directive to refresh project governance, ensure we have a clear reporting and accountability starting March. These updates included detailed tracking of a budget and schedule performance and risk mitigation measures. I have also initiated a supply chain audit to identify any cost increase, and in addition, we have the project update as a monthly update for schedule and construction cost. On top of this, we're also adding another layer of accountability through establishment of independent financial oversight panel to provide truly external review and reinforce financial accountability. I'll be I'll be bringing a draft implementation plan to the city administrator, deputy city administrator, and city council for feedback with the goal of having the panel in place by summer. Next slide. Our commitment to accountability is reflected in a rigorous reporting structure that keeps city leaders, regulatory bodies and general public informed at every stage of the project. Since 2018, we have delivered a comprehensive annual report to the city council, providing a transparent record of operational progress. We have also integrated a dedicated project status update to the monthly update, ensuring council members have real time visibility into current developments since March 2026. As far as the public Portland utility board, we maintain a regular briefing with the public members, inviting project team members and delivery advisory teams to share updates on a regular basis for our communities and public. We have used a variety of traditional prints and also virtual outreach tools to connect with the communities and neighbors. We have also launched a new website that includes additional project information, such as the cost schedule, data that will be updated on a monthly basis. Finally, as a recipient of federal funding, we are adhere to reporting requirements with va loans. This ensures that our project management meets a high federal standard for compliance and progress. Together. This effort ensures that the projects are actively monitored, transparently reported, and accountable at every stage of the delivery. With that, I'll turn it over back to d.c. To wrap us up.

Thank you, director liu. Director liu shared today how we are managing this important project, end to end by the water bureau. To summarize, we have resolved the permitting challenges and established a clear path forward. We have a more defined and reliable understanding of the cost, which is grounded in advanced design and market pricing. We have an updated schedule that reflects both past impacts and a realistic plan for delivery, and we have strong systems in place for risk management, accountability and transparency, and we are definitely operating with the time is money mindset. Every risk we mitigate is a direct act of measure to keep the total cost down. The key message that we wanted to convey in this, in this discussion today is that the project is now in a more controlled phase with the tools, oversight and discipline needed to deliver it successfully. And with that, I'll pass it on to matt kirok to walk through how utility infrastructure is financed.

Good morning, public works committee. For the record, I'm matt kirok, debt manager in the office of the cfo. I'm going to provide a quick overview of infrastructure funding and the bond authorization. Next slide please. Infrastructure is generally funded through current revenues also known as pay as you go, issuance of revenue bonds for large projects, and also applying for and receiving grant funds depending on the city bureau, the mix of these different sources will vary. For the water system, the city typically utilizes ratepayer revenues and revenue bonds. The use of bonds provides the ability to finance large capital projects when immediate cash resources are not available, and also provides intergenerational equity as current ratepayers are not solely are not solely responsible for funding projects that benefit multiple generations, like the water treatment plant. It's notable that the use of revenue bonds also relies on the use of ratepayer revenues in order to repay the debt and interest, keeping the mix of paygo funding and bonds at a healthy level is managed through long term financial planning standards, which I'll discuss further on next slide, please. Next, I'll go over a little bit more in detail about utility revenue bonds that are typically used to finance water infrastructure. These are typically viewed as one of the lowest risk bond investments. From the perspective of investors and credit rating agencies, because of the essential service nature of the water and sewer assets for livable communities and the financial separation of the ratepayer funds. Because of this, the bonds are usually in high demand and also benefit from strong credit ratings that reduce ongoing interest costs. The credit rating analysis of utility bonds also includes an evaluation of the general characteristics of the system. As you can see in the lower left hand box. And also financial metrics as shown in the lower right hand box. Performance under some of these evaluation factors are directly controlled by the city, most notably the financial metrics of cash on hand and operating income relative to debt service, which is also known as debt service coverage. In addition, maintaining assets in good working order and minimizing deferred maintenance is a focus of evaluating operational management to ensure reliability and meeting regulatory compliance mandates. Next slide please. This slide provides a summary of the city's water system revenue bonds that are used to finance water infrastructure improvements. The first lien bonds maintain the second highest possible credit ratings at double a one and double a+ from moody's and s&p, respectively, and the second lien bonds a standard one notch lower at double a two, and double a, which are considered to be high quality and very low credit risk. Maintaining these high credit ratings has helped achieve a low interest rate for the water system of approximately 2.6%, based on the public bonds. Currently, outstanding utilities like the Portland water bureau maintain its credit ratings through long term planning of water rates that are sufficient to meet its financial planning standards around debt service coverage and cash levels. The bureau also plans its rates in order to meet legal tests for issuing additional bonds under its existing bond legal documents, which require current water system net income to be 110% of the future maximum annual debt service after a bond issuance. Next slide please. The project is funded through a combination of revenue, bonds and current revenues and will not entirely be funded with borrowing. At the newly revised project budget level, a total of roughly $2.5 billion of bonds will be issued in order to meet project construction requirements and to fund other critical capital work. The city has already obtained $1 billion of bond funding through the federal wifia program, leaving roughly 1.5 billion remaining to be issued, inclusive of the 2026 bonds that were discussing today. By 2029, when the project is completed, there will be roughly 2.9 billion of water revenue bonds outstanding, which is equivalent to 7.8 times projected annual water system revenues at that point in time. While this falls far from the double, a median benchmark, credit rating agencies and investors understand that debt levels peak shortly after completing a significantly large project, with the expectation that revenues will continue to grow and debt will normalize over time. Next slide. With the issuance of the project bonds through 2029, debt service paid by the water system is projected to ramp up significantly through fiscal year 2033, when the city's wifia bonds will begin to be repaid at that time, with debt service set to increase roughly three fold in the seven year time frame, it will require sustained significant water rate increases from the current and future city councils to increase revenues in order to meet legal tests and the city's financial metrics. Different scenarios will result in different outcomes in terms of debt levels, financial metrics and the pace of system reinvestment. At the new project budget, the projections will be reviewed by an independent third party financial feasibility consultant prior to issuing the 2026 bonds to ensure that the projections are sound and the city can meet its obligation on obligations under the assumed water rate schedule. Next slide. This slide shows a base case scenario of expected water, sewer, stormwater and combined annual rate increases required to meet the mentioned financial requirements for the bonds and ensuring the Portland water bureau and the bureau of environmental services can continue meeting its operating requirements. Under this scenario, water rates are anticipated to increase by 9.8% annually through fiscal year 2031, and then increase at a more moderate rate of around 6% per year. Because the sewer system is in a more stable period of capital, financing, rate increases are projected to be lower, resulting in an effective combined utility rate increase of 5% by fiscal year 2032. Next slide. We'll conclude with a brief summary of the upcoming issuance of the 2026 bonds. The bonds will provide up to 525 million of proceeds for water system capital improvements. Additionally, subject to market conditions, we will be evaluating the refinancing of the series 2016 a water bonds for interest savings. At today's interest rates, the city could realize roughly $4 million of total savings from that refinancing. However, we won't we will not know what the interest will not lock those interest rates until the actual bond sale. The bonds will be amortized over a 30 year repayment term and structured to satisfy the city's legal requirements for the additional bonds test. With the inclusion of the feasibility consultant report, the process will take approximately 12 to 16 weeks, with an estimated closing of late July or early August, and that concludes the presentation.

Thank you matt. Thank you, all of you, for the presentation. We've heard some of this before, but we took a little bit of a deeper dive actually today. And the bonding. I would like to invite our city administrator li, to make a comment about what we've heard today, if you don't mind. And I know that this is very common across all local governments. And maybe you could address that. Thank you.

Thank you. Vice president Clark, and I actually appreciate the invite to the conversation today. We had a great overview of kind of some of the initial thoughts and concepts as it relates to bonding overall. And I'll, I will share this first bonding is not good or bad or indifferent. I think it's really a tool that we use to really gain capital access to dollars that we need to truly move the city forward in a progressive fashion. When we're looking at some of the issues that we are faced as a city today, some of the financial issues that we see in our general fund, aging infrastructure as a city, and really trying to determine the long term strategic direction as a city, funding is going to be a tool that we use or we should be using within our toolkit to help advance some of the capital infrastructure issues and challenges we're faced with as a community. A lot of communities have battled the question, should we do pay as you go or bond? I think it's really built upon the makeup of the city and where they are financially. But when you have organizations like ourselves that are complex organizations with multifaceted operational pieces, moving funding becomes more of that. One of those critical tools to use to move things forward. Keep in mind, there's two really main bonding sources that the city can use revenue bonds, which we are describing today as a source, but also general obligation bonds that are typically paid through general fund revenues, our property taxes or any other tax that may be coming in that supports our general fund. And I think when we're looking at this long term as a city, we have to be strategic in how we build out our long term capital improvement plan, cip plan. And that is going to be a major tool to help guide council in some of the decision making. As we're looking at the different options, we have to fund some of our aging infrastructure, but also new infrastructure in our city as our city continues to develop. So as we continue this conversation, I want to make sure that we're grounded in the work that needs to be done as it relates to building out our long term capital improvement plan. And this is a bigger conversation, just water and sewer. This is also our transportation and PBOT. This is also looking at some of our environmental things as well. Also, capital could also be fleet and other equipment that also could be categorized into that equation as well. We just need to make sure as we are having this conversation, that we are looking at all the tools that we have to address these issues, but also that we're doing things that build long term stability financially and also in our actual hard assets as an organization. So I'm here for the conversation. I love to actually have this conversation because I think this is critical in where we are now as an organization and what we're trying to build for our future. Portland.

Thank you so much for that, kelly. I really appreciate the perspective and grounding us and it has been an excellent overview, excellent presentation. I have the sense that you didn't use the word asset management, but that that's really what we're talking about. And we are very far behind, I think in many respects in taking care of what we have across the city. And this is going to be our finance challenge. I really appreciate that this new form of government. I think there's going to be more accountability around how we do manage our assets and how we protect them and improve them. And new ones included. I think it's very important, however, that you did mention the independent financial oversight team, and I appreciate that. And all of the other measures that you have put in place to address risk, cost overruns, whatever it is. I think you've put a very good structure in place, but I want to ask colleagues, bear with me, and then I'll turn it over to you. But I had the sense that we needed more than just that panel, that we need an outside independent analysis or audit of, of the water bureau. And you can give me your feedback on that, particularly the last $450 million bump that which brings us to today. But I appreciate that you have put together an independent financial oversight team, but tell me if you think we need an outside audit, because I'm kind of leaning in that direction.

I think. Councilor Clark that's a good question. This project has multiple layers of accountability measures in place, and the independent oversight panel will also help. But the one that you're asking is for an independent consultant to look into the work that we are doing, especially with respect to cost increases. And I'm assuming it's also for the work that is going to be moving forward. And typically that work is done through an owner's advisory consultant who oversees the entire project. And, you know, looking over the change orders that happened, reviewing any claims and advising the city based on that, I think that that is something that will be helpful for us to have. And that's something that we as a, you know, the bureau is looking at looking at it as well. And we've had conversations with the city administrator on making sure that we we look into having an owner's advisory consultant to help us with this project overall.

And I'd like to share some insight on this. On any major project of this magnitude, I know we have subject matter expertise that are within our bureaus that have the capability of managing it, but it's always a plus if you have the funding in the in the resources to have an owner's rep who is looking at these bills that are coming in, coming through and checking it against what we said we were going to actually pay for and do. That's a plus for us in our conversations as it relates to how we manage this project moving forward. As you look at adding another layer on top of this and looking at a potential audit of funds moving forward or going back, that's always something we can evaluate as well. If we're seeing discrepancies in the information that we're seeing from the invoices that are coming through, are the change orders that are happening as it relates to this project. And keep in mind, every change order as it relates to this project has to come through my office for my signature for review and consulting before we move forward with any change, the pricing or work that we say we're going to be performed as a part of this project, we could evaluate milestones in this as well. And when I say milestones, once we hit certain milestones, we have an independent review of what's happening and what has taken place during that time frame. That's something else that has been done previously before in projects of this magnitude and size. But the owner's rep is a best management practice across the board when it's related to projects of this size and magnitude.

Thank you for that. And so to date, we have not had an owner's rep. We're going to get an owner's rep.

Now we've had multiple and director liu add to it. From my understanding, we've had multiple firms working on the project already, but advising us from an owner's capacity, but not one holistic person consulting firm overlooking the whole project end to end. And I think that would be beneficial. We've had multiple teams looking at different sections of the project, but not one independent oversight.

And that's what I would recommend. That's one of the first things. When I came in, I asked as we were looking at this project, do we have an owner's rep that is advising us, that is reviewing our invoices, that are looking at the plans that are signing off on top of what our team is currently doing, just to provide that extra layer of protection for the city as a whole. Because in some of these owner reps contracts, they take on some liability as well. So all liability is not just solely rested on the city.

That's good to hear. I don't want to put words in your mouth, but I want to see if I understand what you're saying, that when we get or we have an owner's rep, I think you're suggesting that we wait on an independent financial review until we get the owner's rep, and we establish this process. I think what you're asking for is that we wait on that, and that we come back and discuss that at another time.

Yes. I would always say that's an option that we can keep for us as we have our owner's rep come in and kind of evaluate where we are in the process, really look at things that have taken place. I would also advise that that owner rep come to the meetings like this to kind of talk about the project as well. And if council and its committee is seeing some discrepancies in the information that they're seeing and what is being reported out, let's take a deeper dive into it and look at adding a different layer, because I don't know currently, right now, if it's the project is budgeted for additional oversight over the owner's rep, and we would need to try to allocate some money outside of the project costs or increase the project costs for an independent audit of it as well.

Well, I just want to express my support for having that independent review, but I'm willing to wait. I want to hear from the other committee members as well, but I think we owe it to the public to have an owner's rep, to have a very tight controls of this project because of the escalating costs and what that's going to do to our utility rates. So thank you for that comment. I hope you will stay while we have this conversation. I'm going to turn it over now. Thank you for indulging me, colleagues. I'm going to turn it over to councilor Green for his questions and comments.

Mitch Green: Thank you, councilor Clark. And I know that we've got I think we've got a few people signed up for testimony. So I don't know if you want us to belay our questions until after testimony.

Or we actually haven't gotten to the oh, actually, that was the overview of the bond sale. I guess we can go into it.

I'm happy to do it either way you want.

Let's go ahead. And I just want to also mention that councilor Kanal has joined us online and at the perfect timing. And we do have someone signed up to testify. Would you do you want to speak before we have the testimony or have the testimony?

Maybe I'll just kind of ask some questions and then we can hear testimony. And then based upon the discussion, we can have a discussion. Okay. Sounds good. Thank you, madam chair. Madam vice president, whichever you're wearing your chair hat right now, thanks so much for the presentation today, matt. Thank you for your debt service projections. You know, I'd like to get into the numbers myself. I do have a couple of questions. Can you go to slide 21, please? Thank you. So this is a helpful chart. I just want to make sure I understand it. So this is a chart that shows on the y axis the annual debt service. Okay.

That's correct.

And it's the annual debt service from our existing bonds, our future non profit bonds in Green. And then any other fees we've taken. Right.

That's correct.

Okay. So what I'm trying to wrap my mind around is presumably the Green series that starts next year is the result of the action we take today. Is that right?

That's correct.

Okay. And so what I'm seeing is a, a steady escalation from 2027 through looks like 2032. And it peaks is that.

It looks like it goes kind of climbs incrementally is the way we're structuring it. So we're trying to make sure it doesn't jump too much in any given year. So we're kind of smoothing our way up to a debt service level that's manageable.

So, you know, council would authorize $525 million, but you'd only issue so much over the course of the years to smooth that impact.

This issuance would be issued all at once, and then we would be coming back to city council to get the authorization for the remaining billion dollars over time.

I see. So this this projection actually looks at it's not just the 525. This is the sort of the full stack, given what the gmp two is and our current estimation, like those are all the future bonds we need to issue as well. Correct. Okay. So then if you go to the next slide trying to figure that. So I'm following what you're saying. So what you're saying is based upon the assumptions in the previous slide, we know that the water rate needs to be raised on a sustained basis of 9.8% per year through 2031. But then it falls to six. And I I'm just having a difficult time sort of marrying that with the escalating debt service that plateaus at 168 on the previous slide. So can you help me understand how we get from that discontinuity, where we go from 9.8 down to 6% in 2031?

That's a great question. Thank you, counselor Green. Happy to clarify that. So on slide 21, that debt service schedule is only for bonds that are issued through 2029. So as with the water system, the sewer system, other systems across the whole country, there are periodic issuances that kind of happen kind of continuously. So on that 21, that would be just the issuances through 2029. In order to keep up with the cost of projected inflation and then future revenue bonds, that will happen over time. That's where rates will continue to need to increase over time to make sure that the the water systems fully financially sustainable.

Okay, so this, this slide that I'm looking at right now is that just looking at debts issue through 2029, or is this sort of. No, this is what we expect the impact to be through the full array.

This would be through 2036. So this is like just the longer term projections of of the water bureau. So in addition to whatever would be issued through 2029. So the slide 21 is mostly focused on the debt issue to fully fund the project. And then the other capital work that occurs through 2029, this slide is more focused on just the longer term projections of of the entire system.

Okay, so this this does have the impact of the bull run filtration project in it. That's correct. Including all the wifia balloon stuff that starts in 2035.

Correct.

Okay. It cuts off at 2035. So I don't know if it goes back up after that.

I would have to defer to the water bureau finance staff on that one.

Okay. Thank you, thank you. You know, I riffing off of something that the city administrator mentioned, you know, it is important that we invest in our assets and it is a common tool to use debt to do so. I just I think the thing that I, I'm increasingly having a hard time with is just squaring with the cumulative impact on the water bill, just from the status quo right now. And if we issue if we approve these bills today, we are basically committing to doubling the water bill in under eight years. That's the cumulative impact of 9.8% per year. So if you take the rule of 72, you divide it by 9.8. You get 7.35 years. And in the work session slides, the average water bill is $72 per month. So that would mean that seven and a third years from now, the average water bill is $133 per month. So that's my math. That's the math that I think folks in the community might be doing. I'm not saying that we should defund our public works, our water bureau. I absolutely am not saying that. But I I'm cautious to say yes to a $525 million issuance that then locks us into that. Because what I'm what I think I'm seeing here is that if we were to the 9.8% per year is a function of us approving these 525 today, plus some others in the debt service plan. So if we did not approve these today, we would not be facing a 9.8% debt service. I mean, of course we would have other consequences we need to talk through. But that's the way I'm reading it.

Can I add some clarification here, councilor Green yeah, so first I want to clarify. This chart is showing the rate projections for the current service level. So it's 9.8. But if it's we're going to like scenario two with the forecasted previous rate. And then the rate will be going down. So that's the first clarification I want to make. The second clarification for this is the bond is not only for this additional $450 million, but it's for the entire additional cost for the filtration project beyond what the loan has provided, plus additional capital projects for the water bureau. So that's the whole portfolio of project. Obviously, the filtration treatment is a big part of the capital project, but that's the entire five year project cost.

Yeah, I appreciate that. And that's really important to level set. That reminds me that I did want to ask. So the title of the bond issuance is really about the, you know, in the in the sort of term sheet, it says this is for the water filtration plant, but then it also says refunding action for 2016 bonds. So is there some part of this that just refinances some previous bonds.

That would be connected to this. So it would be outside of the 525. The 525 is just for the new money proceeds. And then the 2016 bonds, those would just be refunded, assuming that there's advantageous interest rates that achieve savings at that time.

Okay. I just wanted to note that in the financial impact statement for the ordinance, it reads that, and this is important for the transparency to our to our community that. Including all water system debt issuance through fiscal year 29, annual debt service is expected to grow from $55.6 million in fiscal year 2026 to $168 million beginning in fiscal year 2035, which will then require sustained annual rate increases. And so. Not everyone can get that from reading a bar chart like this, but it's it's something that I don't want us to gloss over as we're having this discussion. I know that there's people watching us very closely. Affordability is top of mind. And so we have to balance. We have to figure out how to balance the investments in our system and ask the questions of whether or not there are alternatives with what we are leaving to future councils, future mayors and our ratepayers. I have said previously, to be fair, that the way that you grow out of this cost disease is by growing and developing and adding more ratepayers to our region. That's what we absolutely must do. Whether or not we can double our residents inside the city of Portland to offset this impact inside of a decade is that remains to be seen. That's what we should strive to do every single day. I just worry that the rate at which we are going to increase the water bill because of this debt service cuts against that. So there's an interactive effect. So I think I'll leave my comments there for now. I'm curious to have this kind of back and forth and then hear from the public. And then I think we probably got plenty of time for discussion.

Thank you. Councilor do you mind if I just riff a little bit on councilor Green? We are going to be. I think this committee will be confronted at some point with the discussion of the rate increase, and I do not foresee us going to this rate. I'm just putting a little stake in the ground now. We're not going this high. We can't. And that's going to rework this chart. So just just to presage that, folks, we're going to be discussing the rates at a different moment. Maybe I see jonas in the back. I know we are just nod. Yes, we are going to review the rates at some point and we will have a decision to make, just like this committee did last year as well. Are you suggesting that the rates are going to go up after 2035, that we should see that?

Well, I'm suggesting that in the financial impact statement for this ordinance, it says the interest on the fee portion is deferred until 2035. Right. And so that won't start compounding until that year. And so you see that actually in the bar chart for the gray series, I think you see it jump from pretty de minimis amount to a substantial piece, almost as large as our current, our current debt service. And so that grows and that doesn't really fall off until 2060. So that's what I'm saying.

I hear you.

On the prior slide.

There are so many unknowns. We don't know what the bond market will be like then. We don't know what interest rates will be then. So it's kind of hard to predict out that far. But we will come back to the to the rate discussion at a different time. Did you want to add a note, jonas, before we continue our discussion?

Thank you. Councilor, for the record. Jonas biery the city's chief financial officer yeah, just wanted to reinforce for the public record that, yes, there will be a separate rate ordinance that comes back at which council will authorize the whatever rate increase you decide for fiscal 2627. If and maybe when is what I'm hearing. But if that rate projection is lower than what's projected here, then this team, the debt team will have to manage the issuance, the structure and the forecast within that rate increase that council authorizes. So I just want to be clear about that, that that's not making this is not making that rate decision today. It presages sort of those expectations, but also just acknowledging that they're not there's some flexibility, right? That if council ultimately comes back and approves a different rate, that puts this on a different trajectory, that has trade offs to the amount that maybe can be issued and how that folds through the project and the and the future impacts and projections. But it, it isn't like a hard stop to this authorization. It would just create a different constraint that that issuance would need to work within.

Thank you jonas.

Because jonas is up here. Can I just follow up? Sorry. I just want to be clear. If we if we approve an action that creates a debt service obligation, and then we approve a rate proposal that doesn't validate or meet that debt service obligation, I.e. If we say, well, we're going to limit our rate increase, does that cut against our credit rating? Because our credit rating is a function of our willingness to raise our rates to satisfy our debts, right.

Yeah. Councilor it's a great question. I mean, at the end of the day, we initially met in the debt management team would manage the issuance to make sure that we're this is what I say. The trade off would probably be downsizing to make sure that we're not going past a level of, of prudent management vis a vis those rate expectations. B also worth noting that it is for for city of Portland, for all cities that issue this kind of debt is described that council elected body willingness to increase rates is a large credit positive. And so that is something that's considered by the rating agencies when they provide that rating is the, you know, in a complex matrix of all the things they consider, including affordability impacts that this council's and ourselves are interested in, that is part of that matrix. As well as that, that willingness to increase rates to support the capital needs.

It is a bit of a gordian knot, isn't it, how all these things are connected? Councilor. Koyama Lane.

Thank you, chair Clark. Thank you everyone for being here. That was helpful to hear. I had a question just about the cumulative impact of rate and fee increases. So appreciate that it's on the radar of many of of the folks up here. One of my questions is around grants. And if the city's been able to apply for any to offset project costs, are we lobbying at all for this at the federal state level? Maybe even with local partners who are in similar positions. Can anyone speak to that?

Yeah, I can speak about that. That's part of how we manage rates. So there's multiple ways we're managing rates from cost management. What we talk about the project cost management to cip project, prioritizing the cip to really committing to seeking external funding opportunities and councilor. That's what you are asking. So we have the two wifia loans. We have also got grants from energy trust of Oregon. So we are. The funding landscape is not very optimistic right now, but we are continually exploring and looking to both the federal and state opportunities for grants.

Thank you. How many? So how many grants has the city applied for specifically? Are you able to share that for this project?

I know for the two wifia loans and I don't have the number, but happy to follow up with you on the grants part.

That would be great. Thank you so much.

Thank you. Councilor. Koyama Lane. Councilor Smith, did you have your hand up?

Yes, ma'am. Thank you so much. I have some of the same concerns that. Councilman Green has about putting this extra debt on the ratepayers. The other issue I was thinking when I was reading through your information, you said something about Green bonds. What is that?

Thank you. Councilor Smith that's a great question. Green bonds are it's a marketing tool where some bond investors will prefer to purchase bonds that relate to a project that are Green focused. So something that really improves the environment or delivers, you know, quality drinking water. So it's, it's a marketing tool that is reviewers will periodically use, it's most commonly used for taxable bonds for taxable projects. That's where we see like a financial benefit. Okay. For tax exempt bonds like these, they're typically is not a financial benefit. But we wanted to kind of leave that option open in case there looks to be some sort of benefit to marketing the bonds.

Kind of like the back end stuff to, to be able to sell the bonds very quickly.

It's to increase investor demand potentially. So if you're able to garner orders from bond funds that specialize in holding Green bonds for their investors, perhaps you can get additional orders in that regard, right?

We, me and dr. A prima donna paul talked a little bit about the type of bond companies that we use. And I want to go further. Ca lee, in regards to creating a minority bond table, we did something like this a little bit at the county. I know we don't have a lot of those companies like they do in chicago and other places, but I think as we're talking about using these resources and making sure that because people. I mean, this is a in addition to creating this infrastructure, it is. People are making money. And I don't want just minority communities just to make money on construction because there's money on the other side, lots of money on the other side. And I want us to be just as diligent about working with minority contractors as we are when we contract out our bond companies and who we're talking to and who does that. I briefly talked to prosper Portland about this as well, because they actually do the same thing too. So I will double back on this and thank you for engaging me in the conversation this weekend, because I brought it up to you at an earth day event. So, so thank you a lot. The other thing is. I'm concerned right now I'm not troubled. And that's a good thing for everyone. I'm not troubled, but I am concerned about the type of money that we're bonding out for, for this project. I was not happy to learn about the $500 million in new. Expenditure for this project. And so I'm when I'm when I'm looking at this and I was trying to figure out which projects for $530 million, it did not desegregate what projects are going to be done within this. To, to bind what is this 530 million paying for? I didn't see specifically. You just said the filtration project. So I don't know what in the filtration project are you paying for. So that would help me get a better idea before I can say, you know, yeah, let's go bond for this. You guys, I know we did not have and I agree with with with the chair. We do need to have a owner's rep. I know we had an owner's rep on the subway bridge. It was a $330 million project and that went well. It went under budget and it was on time. It was before time. I still like to take credit for that, but so it it's important for me to, to wrap my arms around what this new $530 million is paying for. Is it like, oh, if this happens, we'll have the money on hand and we won't have to come and ask council for new money? I don't know, could you give me an idea of what that looks like?

Would it be helpful to go back to the slide that shows the three different components and then discuss maybe some of the cost? What would we attribute the cost increases to?

Would that be? I think that's like, we can go back to that slide and I can add additional details about what is the exactly the for $50 million include their.

And I, before you talk about one thing I do want to mention to this committee is that the 450 million cost increase. A good majority of it was beyond the control of the city. It was because of external influences from the remand itself and the land use decisions and the schedule impacts as a result. And I wanted to make sure that is set on the record, and I'll pass it on to director liu to talk more about the breakdown.

Yeah, because I had the same question when I first understanding the budget request. So the 450 really break up into four categories. The first one, like dc donna paul said, is because of the the land use related suspension and all this work that previously has happened. That's the five months of the construction pass, which leads to the seven months of the delay for the project. And early on, we also have nine months of a complex permitting land use late start. So that's a 16 months. There's a lot of suspension costs because we still have to have the cranes and everything on site. So that's the the big part of the cost increase as part of this $450 million. Additionally, the second category is about the support costs related to the suspension costs, including the bureau, additional costs to making sure we can manage this project as well as, like I mentioned, about the claim team. So we're exploring, we are adding the additional independent claim team to look into managing the project change order and everything. The third one, the category is managing a lot of these contingencies. It's because we have with the land use requirement, we can't have everyone to drive to the construction site. We're doing the bussing to group people together. So that's additional logistics and the project costs that's added. And then the last category is the we call it the unknown unknowns. That's the contingency I mentioned. So that's about $100 million for the remaining time till 2029, whether that's extreme weather and other other things that we want to make sure we have the contingencies. So we are intended to managing the project completion within this for $50 million other than like earthquake or major force majeure that we can't control. I'm happy.

That was that was what I was going to ask you. Do we already have any contingency put aside for this project aside from getting the bonding? Do we have money that's in a fund that is a contingency pot of about 10% or something? It's 8%. Is it is is the 8% coming out of this out of this? But do we have money right now for this project in contingency, in a contingency fund? Because I think we should.

Yeah, we have already previously the we have the gmp guaranteed maximum pricing. So there is already that kind of a project budget that requested.

And what's what's the gmp on this before we even do this extra money, what's the gmp?

That's the previous slide. We can go back to. Let's see.

It's the guaranteed maximum price for those folks who don't know.

It's like nine.

Yeah. For slides nine. So the the previously the gmp is $2.13 billion. And that's what happened before the remand and everything. And now we're adding this for $50 million.

So it would go up to 2.63.

Correct.

Okay. The new gmp 2.63 billion. Okay. And so the money that we have in contingency right now, the 8% that that would just move over and we're going to add some of the new money to add to the to the growing price of, of, of this filtration project.

Correct. Because of the scheduled delay and the cost escalation, there is additional uncertainties we want to cover, but we are hoping to really managing that within the budget and not using all the contingency fund.

I agree. I think there's two things we need to get an owner's rep. We need to have an independent evaluation of the resources in in the restricted funds. And we also need to have an outside watchdog on this. I read an article in the in the Oregonian a few weeks ago, and there was some talk about a previous council that that had. Basically promised a watchdog group of, of ratepayers to, to overlook this. I think we also need that group in addition to our owner's rep, because that also keeps us honest on what we're looking at and what we're not looking at. This is a great opportunity for us as a region to be able to have some of the best water that I know in the country. And I've been all over. And oregon's water, portland's water, the bull run. It is some good water, and I want to keep it safe. The other piece is I, I don't know who said. I think it was Koyama Lane who said, we need to grow our our revenue and we need to go back to those folks like Gresham. That's a big deal. We lost a big client. We need to figure out ways in which to reduce the rate payer costs. If. Even if we have to give them a reduced rate, I don't know if we can do that, but whatever it takes to get our our, our customers, a good 40% of our customers are not coming with us. And that's why we're having to pay this. So it's, there's, there's some, there's some there there. And we talked about this in the transportation. Committee, but that is an issue. And I'm going to say it again. I asked y'all to go talk to the tribes. The tribes is always running out of water. And maybe they can connect in to our our water system. But it's, it's clear that this is a, this is, this is going to be one, an economic driver for our small businesses. It is going to be a great opportunity for us to keep a very clean source, safe source of water. But we're going to have some growing pains getting there. And many of us up here about the price of of pain for this new system is, is steadily going up. And I remember last year, the big thing was, oh, we got this federal wifia and we don't have to pay the interest on it until later. It's not going to change anybody's bill right now. It's going to be later. What is it, 2035 and wow, 2035. That's, you know, I don't think folks, social security check go up that high every year, 9%. And so we got to be thinking about how we're paying for this. I don't know, jonas, do you know how much money we got in ARPA over the 2020 to 2023?

Councilor? I don't know that off the top of my head, I'm not and I'm not sure any of it was allocated towards water.

I always like to pay for for you know, when we get one time money, pay for one time things, I bet we, we had enough money to pay for for this new $500 million that we have to bond for. So that's the other thing. So what I, what I'm just going back. I wanted to find out, are there any other bonding sources that we have to use other than the revenue bonds? Is it just the geo bonds that are available?

Yeah. Councilor. So for yeah, for the water system, typically your options are the revenue bond structure that we've traditionally used and continue to use. There are local governments that have gone and asked voters for property tax levy increases specific to, to utility borrowing. That's not something I think we pursued at the city, given that that's a tool that's available, an option to fund other needs that don't have revenue sources that water system and sewer system do have.

I mean, this is a smart way. I mean, it's, it's definitely the smartest way to do it. It's just going to bring up a lot of angst to, to people who are in my district in particular, because they, the average salary of a family of four is $60,000 in district one. And so I'm just worried. And I hope that when we have the rate conversation, that we also make sure that there is a opportunity for those vulnerable ratepayers who can't afford to pay this new double $150 bill, that that they have an opportunity to get their bill paid for. If that's embedded in the system.

You remember, we have a low income program in the water bureau.

Okay.

And we might want to revisit that at some point to see if that's adequate.

If that is adequate amount, because it's it seems like that in the next eight, nine years, we're going to have a big bump. So I thank you all for bringing this forward. I think it's important. And I think the entire council needs to have a better understanding of this.

Thank you. Councilor Smith. I just want to add to one of your comments about oversight. I think that the public our utility board, is made up of citizens. Is that right? Who we consult on some of these decisions. We get their input. Does that functions as a community board in some respects.

Community board as well as they have oversight. So so we provide them the update on our budget and other information as their request.

Thank you. You know, I think we might in a committee might want to invite the public utility board people to come in and talk to us at some point down the road. We can add that to our agenda. Seeing no other hands up right now. Thank you so much, panelists. It was a great overview. We really we dug deeper than I thought we would, but it was very valuable. I appreciate that and we will continue our discussion, but we would like to hear from the people who have signed up to testify today on this matter. Diego, would you call them up?

Yes. We have one individual signed up, samuel diaz. And apologies. Samuel, the timer in zoom isn't working, so I'm going to go the analog route. I'm going to play the timer from my phone. You'll you'll hear the timer ding twice.

We we practice this. We're we're good.

Great.

You may begin when you're ready.

Great. Thank you. Good morning. Chair Clark. Vice chair Smith and councilors Koyama Lane Green and Kanal. For the record, my name is sam diaz. I am the executive director for 1000 friends of Oregon from Portland for everyone to anti-displacement pdx to the multiple levy and bond measures, 1000 friends has been proud to fundraise, organize, research, and advocate to bring solutions forward to make Portland a more affordable, beautiful and prosperous place to live for everyone. And that may be why today's item feels like a punch to the gut. This is an alarming setback, and fighting for a future Portland that is affordable for everyone. Quote. It will be $4 billion once they're done, I guarantee it. The amount of debt that will need to be issued and paid back for the filtration plant will put the city right back in the exact same place as the bureau of environmental services 15, 20 years ago, when they worked on project bigpipe. The city will be raising rates at a rate that will drive you nuts, and they will be constraining the operational budget. At the same time, you should be talking to the city council about this issue. There is nowhere I could look from the chair I sat in and not see a fiscal problem. These are the words from administrator mike jordan during a city club of Portland exit interview just three months ago, before the city council authorizes this request. In similar requests, this council and the public need answers and names. Why is the city council still receiving outdated project cost estimates when former administrator mike jordan is publicly saying the project will cost more than $4 billion, why are key staff who pushed for the project while at the city now changing their tune once they leave? What happens to the projected rate increases when three large ratepayer classes leave the system before this project is even built? Did the city of Portland comply with its comprehensive plans? Anti-displacement policy to analyze how many families will experience shutoffs and are priced out of the city altogether? What about a title? Six impacts analysis and mitigation plan that is required when federal funding, like the wifi alone, is involved? When I was a city hall staffer, we had a term and standard for items requested by the bureau's council ready. It meant the due diligence, the outreach, the scenarios and the questions raised by the people who are elected to serve the public was, for the most part, done. And I will tell you, this item is not council ready. I urge this committee to ask the bureau to withdraw the request, brief this committee on contingency plans and decide the rate increase first. I also invite each of you to come meet with a group of farmers and local businesses, Portland residents and community organizations who are more and more concerned with the direct impact of the project and the water rate increases. It is not too late to adapt. There are viable, affordable options to proactively plan to treat the water we drink. In case of emergencies, we do not need to price out and force working portlanders out of the city.

Thank you for your testimony.

That concludes testimony.

Thank you. Diego. Interesting thousand friends is doing a lot more than just land use planning these days. Councilor Smith, is that a legacy hand?

No.

You a new hand.

Go for it.

Thank you. Is is dc a down here? Thank you, am I. I meant to ask this question before. What happens if we don't approve this today? What will not get done if we don't pass this today?

The bond. Yeah. I would like to invite our finance team to answer that question.

For the record. Matt kirok, debt manager thank you for the question, councilor Smith, if it does not get approved today, the bond sale will have to get delayed. You know, we need to have relative certainty around the authorization. So the further it gets pushed out, the further we kind of have to push out the financing schedule. And with the water bureau needing to pay its construction bills, they would have to continue to utilize its funding sources. Sofia, and potentially dip into its second wifi alone. That's already in place, that has a higher interest rate. So we're trying to avoid using that because then we would effectively.

Are you saying we're not going to be using the wifi and this is the wifi?

I'm sorry. We're trying to delay the use of our second wifi alone. So one wifi alone has an interest rate of 1.89%, and that's the one that we've been using. The second wifi alone has a higher interest rate because when we locked in that interest rate, the bond market was in a different state. So that interest rate is 4.49%.

And we haven't used any of it yet.

We haven't used any of it yet.

So how much is in that one?

I believe 319 million.

Okay.

And so we're trying to defer using that loan because we don't want we don't want to compound interest on that loan. And then secondly, there's a one shot rate reset. So if we do see a decline in long term treasury rates, we could ask the EPA to reset the interest rate on the loan. If we draw on the loan, then we can't get that benefit of resetting the rate.

And so I was saying so this actually this is higher. This this, this bond rate is higher than the four point.

Currently. It's about the same interest rate. Another aspect of managing the debt is that we want to mitigate interest rate risk. So you know there's always the chance also that interest rates just go up. So that's one of the, you know, cost components of the overall project where we're trying to lock in and mitigate how much interest rate risk.

And when are we expected to finish and complete this project?

I believe the substantial completion date now is September 2029.

September 2029. Okay. But you're but but your sense is that we have to approve this this month to kind of mitigate maybe future rising rates and not to jump into the second wifia loan.

That is a risk. Yes.

Do we have any other sources of income that are in contingency that we can use until we have a real good understanding? Because c I I, I heard the the testifier talk about what a previous city administrator said about this project. I don't know if it's true or not, but even if it is, I mean, it's, it's kind of reckless to go back on something that you were responsible for for the last five years and say that it's going to double without giving us any level setting of what that of why that is. So that that brings me some concern that that that maybe someone is saying that who had intimate knowledge of what was going on here and had intimate control over what went on here. So to have that conversation after they walk out the door is troubling to me. But it doesn't stop me from wondering why is it being said? It's based on something, something that we don't know, something that that we're going to have to pay for that has not been foreseen to the councilors yet. And I always worry about that. Whether I agree with what someone is saying or the timing of, of how they say things, that's a whole nother story. But the fact of the matter is, I know that I'm not privy to every single thing about this project. I understand that we should have done some things. We should have filed the right permits, or we wouldn't have been in this problem to begin with. And that was our problem.

Councilor Smith the issues with respect to permits were external to the city's control, and I cannot speak for the previous city administrator. Right. I can speak for what the project team is working on right now, and the conditions right now. Last year, the year before, there were things that were very uncertain. The project phase was in a different phase, right? Right now we're the legal complications with respect to the land use is no longer there. We have you know, the approval has been upheld by luba. So we have legal certainty moving forward. And with the cost, we are also have certainty with respect to the cost. We have a you know, we have an updated cost number based on the remand. And that is also at a higher confidence level. So this was not there a year or two ago. So aside from force majeure events and the stage at which the project is in right now, we're at 90% design and construction is already begun. We are 30% construction. So the confidence level of the cost estimate is high. And then we have multiple teams looking at minimizing the risk early and mitigating the risk. So the confidence level of all of that is higher than how it was a year or two ago.

But what's the possible risk? I trust you, priya. I mean, I, I trust you, but what could the the possible risks be? What else is there risk of?

Director. Do you want to speak to that risk?

Yeah. I mean, there's a extreme like the earthquake or something. That's a risk. We're not covering for this for 50. But the majority of the things. Because we are already in the construction deep into the construction. And then we have this guaranteed price, maximum pricing. So the certainty now it's very different from two years ago or one year ago. And then the luba remand, we are continue to conforming and upheld our permit. This provides a legal ground for us to continue construction. So all of that is being behind us. Yeah.

So the likelihood that this is going to go off at the price point that we are saying it is, is likely, right. I hope. That is when I hear when I hear people come up and we only have one person testify today, but it, it concerns me that folks think that that this project is going to bloom to, to, to double. And I'm trying to figure out where could that doubling come from.

There are things that, you know, we have the we have accounted for what the known unknowns. There are the unknown unknowns like fuel prices. If there are tariffs that are imposed. Right? So those are things that we don't know. Right. It's difficult to predict the future. So based on the things that we do know, we we are trying to mitigate the risks so far. And there's a there's a person from the project team here to talk more about that, specifically.

Colleagues, before we dive any deeper here, I just want to say we only have another 14 minutes before we need to take a break. And I was really hoping we could get to a decision before we break that we could actually take a vote on this and then come back and talk about the committee agendas. So just, just a heads up. So I appreciate your line of questioning, councilor Smith. I just wanted to put everybody on notice about the timing.

I mr. Miss, miss, mrs. Chairman, I am I'm trying to get there with you and I'm not there yet. And just just so you know, I'm trying to to, to be very confident about this, about this. Opportunity that's set before us to level set us and make sure that we have the, the funding at a particular price. And I'm also trying to make sure that our ratepayers, even the ones who can pay it, that. That they feel that they're getting a bang for their buck. I mean, the water is great and it's good. I'm just trying to be comfortable before I take this vote on what kind of mitigating things that could cause this, this project to, to blossom up to another 2 billion. And I'm just trying I don't see where that could happen based on what you're telling me. And I'm just trying to be comfortable in taking this vote. I know the project. Did you have something to add?

I could add some things. So my name is for the record. My name is muriel. I'm the interim chief engineer for the water bureau. I've been in the role officially for about three weeks, but I came from the bts side of the city managing larger programs. So in that respect, I bring that experience, and I think it's great that we could keep it in-house at the city to manage mega projects. So the remaining risks. To your question, the biggest risk we have now is maintaining schedule. That's our biggest risk. Okay. The cost to keep the machine churning, so to speak, with numerous contractors, trailers, trucks, people on site all the time is our biggest cost risk. Okay, because the construction site has moved out of the ground, we do have a tunnel underway where we found some things and there's remaining tunneling to do. That's always a risky area, but I believe that our contingencies are covering for that risk. So at this point, it's really our ability to control and manage a project within the contingencies and the budget that we're requesting. And that's our job.

Okay. Okay, good. And thank you.

I did want to ask or add one, one additional fact just to make sure I did fail to mention that there is a credit facility that the water bureau does have, that we have as a fallback mechanism. Essentially, when we were unable to draw on the wifi alone during the remand, there is about $260 million that is not drawn on that credit facility. But drawing on that credit facility essentially locks in the bureau to issue long term bonds to pay off the credit facility when it expires in 2028. So just wanted to clarify.

That messing with that, right?

Prefer not to draw on.

That alone. I think jonas is here, but we'll leave that alone. Jonas. Okay. Thank you, I appreciate that. And. I hadn't thought about the tunneling piece, but thank you.

Thank you, councilor Smith. Great. Great questions. And about the no approval. I really appreciate that because I think it also sends a bad signal to the bond market. And I'll just leave it at that. Councilor Green, you had your hand up.

Thank you, madam chair. I know you're trying to move us to a vote. This is a pretty important one. So I'm just going to state where I'm at right now. I'm not convinced this is the only way we can address our EPA requirements. There is room in our sdwa regulations and the EPA regulations for point of use and point of entry filtration. It's hard to get the variance, but it is worth pursuing given the cost. You know, if you put a a whole house water filter on a, on a house that ranges between 1500 and $4500 all in and at the most cadillac implementation of that, that's $800 million. Most cadillac at the sort of probably entry level place, we're looking at $200 million. And I think that that is worth discussing with our attorneys. I know that's a change in strategy, but that saves billions of dollars and that saves the potential ratepayer considerable money over the course of the next decade. And so I'm not prepared to vote yesterday on this bond. I think that's the only control I have over the cost of this project. I'd like to learn more with our city attorney on what precisely is our objective and what are we constrained to. I mean, I, I have heard from the presentation that we have to do this for regulatory compliance, but I'm reading the code myself right now, and I see other ways to comply. And I think that if we're not testing the boundaries with unconventional methods, I mean, frankly, I just have to say I think it's crazy that a centralized plant is more expensive than a distributed water filtration system across 300,000 households. I think that's wild. And that just speaks to the inflationary environment we're in right now. It speaks to other costs, schedule risks that we have. But I'm a no vote right now on this this bond issuance package out of committee. And we I'm going to commit to have these conversations inside this building. But if there's a way for us to get to clean water compliance that saves the ratepayer money, that's what I'm going to work on.

So, councilor Green, are you suggesting that we just stop the project altogether?

I'm suggesting that we need to be in that sort of decision phase right now, and we need to seriously contemplate that, because I think what has happened is a series of decisions have been made for us that put us on a timeline, that put us on a trajectory. And if we operate within the sort of like, well, we have to do this, then we're stuck on a trajectory that I think is unsustainable. What I haven't seen is a stress test on a legal basis on what our other options are.

Okay, so what you're suggesting is that we stop the project, we go and we look at what every single household in Portland can do to ensure they have clean water on their own.

What I'm saying is that the city of Portland can show some leadership. This council can show some leadership and say, here are two different ways or a range of options. Here's what the all in cost is to get the same level of outcome. And so under under EPA regulations, you can do a distributed point of entry and point of use system as long as the municipality maintains that system. And so my understanding is, is, is we need to have if we were to fail to do this, that we would be we would face daily water boil notices. But if we were to mitigate that with filtration opportunities and I'm spitballing here, what I'm trying to say is I'm not going to vote yes on $525 million today. I need a little more time. And I think there's a different way to pay for this and solve our problems that cost the ratepayers significantly less money.

What and I think what you're suggesting, though, would require that we go back to the drawing board and completely redesign a system where every single person in Portland would have to buy something for their water filtration.

Oh, I say we buy it for them.

I'm sorry.

We buy it for them. So we you may not like my approach, but I'm just telling you how I'm voting today.

I appreciate that and I I'm just wondering how that jives with our federal mandate, with the extension we've been given and that we've worked on from oha. I think we're really between a rock and a hard place when it comes to this. So I appreciate your concern for the ratepayer. I think we all share those concerns. But I think what you're suggesting is you want more time. But I think it's also a complete step backwards back to the cryptosporidium days when when actually this plant is designed to deal with the fact that we have climate change going on and that something that we had not anticipated are forest fires and what that's going to do to our water supply in terms of turbidity, in terms of all of the fire ash that's going to come into the system. And I don't know how every single household in Portland will be able to, to filter that if we don't have an upstream approach. So that really concerns me about climate change. And climate change is costing us all a lot in a variety of different ways. And I think this was really a silver lining to this plant is that we're getting we're getting ahead of that. What could be horrific damage to our very wonderful water supply, which we should be doing a better job marketing our wonderful water. So I appreciate what you're saying that you're not willing to vote on that today, but I think we're really taking a step backward. So Koyama Lane, did you want to make a comment?

Yeah, I appreciate the conversations. I agree with a lot of the different things that I'm hearing up here and have a lot of the same concerns. I have heard more. I was interested in what councilor Green was saying about his solution. I think that in these complex times, we have to throw all those ideas out there. I've heard more about the idea of like uv treatment. I agree we're in between a rock and a hard place. One thing is we have this federal mandate. We have to meet these federal water standards. What happens if we don't meet those? Do we know? Is it clear.

Will be facing daily fines and penalties there? So we could definitely follow up on some of the additional impact if we don't do this, what is the cost of that? But it's this is a entered into a already a binding agreement here.

Okay. And then can someone talk a little bit about specifically the uv treatment? Because I was looking into that and I saw that was interesting, but I also am seeing that the uv. So the big issue is the diarrhea parasite, right? The cryptosporidium. So that uv treatment can help with that, but not treat for like we're having more wildfires and there's particles coming in. And that's something we need to deal with with our water. Can we talk about filtration versus uv light in that area?

Yeah, I see it's really adding that additional long term resilience because the uv is a point of the technology. But filtration provides more flexibility not only to remove the cryptosporidium, but it has the flexibility to remove additional emerging contaminants by changing some of the medium and technology and uv, just a light bulb. You know, there's very, very kind of straightforward technology to remove this one pathogen. So what the, the approach that the team has set is having more long term resilience, not only on the extreme weather, earthquake and wildfires, but also for the additional emergent regulation. Compliance will have that flexibility to address them in the future as well. So this is for the generations to come for 50 or 100 years.

Thank you. That's all really helpful. While I agree we're in this hard place, I do think it's important that we are thinking down the road and that we make sure that we have continue to have good drinking water. I definitely think we need to be having accountability and oversight, but yeah, I think this is where we're at. And I do plan, I think, to support this.

Thank you. Councilor. Koyama Lane. Councilor Smith is that a legacy hand?

Loretta Smith: No, it's a new hand. And I just want to say we're we're we are in between a rock and a hard place. And we have gmp already signed. We have subcontractors already signed. And if we delay those, one of two things is going to have to happen. You're going to have to. Put forward the second with you at a higher rate. And instead of being able to pay this with with ratepayers. So I, I will be supporting this going forward. Madam chairwoman.

Thank you. Councilor Smith, I would like to move this item. We've got just a minute or so before we have to take a break. So I would like to entertain an ordinance. I think it's which one are we at now? 2020 6-134. Is that correct. To the full council with a recommendation to pass I would move that. Can I get a second. Second thank you councilor Smith. The motion has been moved by myself and a second by councilor Smith. I don't I don't think there's any more conversation about this. So, diego, could you please call the role.

Kanal? Councilor Kanal if you're still online? Looks like you might have dropped off. Koyama Lane. I Green no.

Smith I.

Clark I.

With three I's one a and one absent the motion carries and the ordinance document number 2020 6-134 will move to the full council with a recommendation to pass.

Thank you colleagues. Thank you. Diego let's take a ten minute break now and we'll come back and talk about the committee.

Vaguely familiar.

It's probably okay.

I'm sure it's fine.

I know for sure. Oh. Thank you.

Councilor Kanal. It looks like you're online.

Yes I am, I'm switching over to computer.

Okay, perfect. Thank you.

Okay, well, we can reconvene and the three of us can can start. The others are just going to miss out on a really fascinating conversation about the future of our committee. Diego, you want to go ahead and call the next item.

Item three public works committee priorities. Discussion.

Great. Well, what I'd like to do is chat a little bit. Hello, councilor Kanal. You're still there? Is he there?

I am, I am.

Great super because I want your input on this. I can hear more voices coming down the hallway. But what I would like to do is just discuss some of our priorities for the coming year. And I want to start by talking a little bit about what the old tni committee did do before we look ahead at the future. So let me just share with you some. I think what I think are some of the highlights of what we did in the last year, knowing that all of our issues sort of fall into three buckets. There's the policy bucket, there's the information items, you know, learning about things and which we did some in the very beginning. And then there are administrative or executive items that come to us on a regular basis. So there's kind of three categories. It's hard to believe that we had 22 meetings. Where does the time go? And we actually considered and recommended to council 22 legislative items, excuse me, which was a combination of executive and councilor Sponsored or councilor Initiated items. So some of the highlights from the councilor Sponsored legislation and discussion were asset management, of course, my favorite topic, asset management strategy, the PBOT alternative funding strategies. The vision zero led by councilor Koyama Lane. We affirmed our commitment to the cip, the sidewalk and street safety through the cip, and that was led by councilor Smith. I just mentioned that you you led the vision zero we're talking about last last year. And then we also had a resolution directing investigation of zenith energy that was led by councilor Green and councilor Morillo. And we supported the naming of portland's very own brooklyn bridge that was led by councilor Aye, Morillo, which was a fun thing. And then we had a lot of consideration of executive items from that bucket, and those included the 82nd avenue project with PBOT. We authorized the sale of the Sellwood community house to community ownership. We approved the city's next steps in renaming a portion of southwest jackson street to southwest rose hill street. We also monitored the bull run project. We educated ourselves on the city's water management and conservation efforts, solid waste and recycling, innovative traffic safety and public rights of way projects. And we heard from community members who were engaged in a complex of complex transportation projects, including from the city PBOT modal committees, the rose quarter project stakeholders. We took a tour of the interstate bridge project and yeah, we did that in Washington. That was interesting. So looking ahead from now, at least till the end of this year, I guess that's about eight months or so. I here's what I've got on my list and I would like to plan out the next eight months as much as possible. So we have some predictability. I'm not a big fan of taking up the full three hours if we can avoid it, but but we do have plenty of time. So of course, we're going to follow up on asset management and we're due to get that report in September. And then the budget amendment said that they would also develop an asset management finance plan, which I know councilor Green is very interested in from September to December that will want to work on together. I would like to get an update on the transportation system plan and really get my head around how that works. We need to do some parks oversight now that parks is more squarely within the scope of this committee, hearing us folded into public works. So we need to do some oversight of the the parks levy. I know that we are definitely going to consider and continue to talk about utility rates, and we may want to do a deeper dive into the low income program, but also in the future, the possibility of restructuring the rates as well. And I know councilor Green has a strong interest in that. I'd also like to receive continued updates on the facility, the bull run facility, and I'm hopeful that maybe we could take a tour this summer, depending on council action this week on the transportation utility fee and the street damage restoration fee. If those pass. We want to closely monitor that and really exercise our oversight because that's a really big deal. So with that, those are just a few of the things I am planning out the next eight months. So I'd really like to have your input. And I haven't had the opportunity to share that with our vice chair yet. So I haven't gotten her input. But I would really like to hear from from you, you three. The three of you. Who wants to go first? Councilor Green, you want to go first?

Yeah.

Thank you. Thank you, chair clarke. I always really appreciate some space for a little bit more of a freeform visioning type of thing. So we can not only get on the same page and the light of day, but. You know, share that with the community, you know, so. I think for me, I mean, I like everything that you listed. I think those are all top priorities. I think your prioritization is, is, is spot on for that work. I think my focus in the committee for the next year is going to be really on the rate design stuff. So you hinted at that. I think that I don't think the city does rate hearings or rate cases on a very frequent basis the way that other utilities would. And I'd like to see us mature into that space a little bit. I know it comes. I know it requires resources of staff time, and there's a lot of public engagement. But I think, you know, whatever whatever decisions we make on our big infrastructure projects, like we pay for those through rates. And so if we can have a steady cadence every two years, every five years, whatever, we think the right cadence is where we run through a full rate case where we say, here's our costs, here's what our cost of service analysis shows us. Here is our risk. Bands like this is our worst case, this is our best case. And here's our expectation for median, median. Also here are other designs that we could contemplate. I think that gives the public an opportunity to, to really understand how it is we pay for infrastructure, but then also stress tests to see whether or not there's some different designs that can allocate who pays and in what proportion. Because I mean, I, I think that we've got a little room to do on our at least our water rate. I know we've talked a little bit internally about our bts rates as well. So I'd like to have some of those discussions in public. I think based upon what this council does with the transportation utility fee, you know, I did put an amendment in to sort of explicitly say we should have rate design at least, maybe like at least the possibility for it on an annual basis to create space for folks who might be dissatisfied with with the proposal. As it stands, I would love for our committee to make some space as soon as practical. Probably couldn't be in the middle of budget, but maybe sometime this summer to begin a conversation on what an adjustment on rate design to the tough might look like. After we've adopted what we have on the floor, I. I think that could go a long ways to assuaging some of the concerns that are outside this building on that. And I think our committee should lead in partnership with with with the bureaus on.

That sounds great.

And then, you know, finally, I think strong, strong echo on oversight. But I would extend that to potentially other rate making bodies in the city that we might have franchise regulation over. So we might want to have some kind of a hearing to pull in pg and northwest natural and the waste haulers to talk about rates with them. I think that could be really useful. Again, affordability is top of mind for portlanders. And just making sure that they see that we are asking questions about their cost of service analysis and how they show up for the communities is also important. So just some ideas.

Would you mind if I. I just want to respond to that. We can have more of a conversation here today. I was going to raise the pg, so I'm really glad you did that. We invite them in or other utilities to talk about their services, how they set their rates, whatever, just to educate ourselves. I'm really glad you glad you brought that up. And there's no sense in waiting. I also wondered you were talking about our own utilities. You know, other communities have spun these off as independent, especial districts, like in oakland. They have, you know, their water and sewer. I think it's water and sewer is south bay mud. The municipal the municipal municipal utility is spun off from the city. You know, that kind of those kind of ideas, we might want to just just look at, I don't know, I don't want to scare anybody, but just just thinking broadly about our utilities. So I really, I really appreciate your ideas.

I mean, that's like, you know, I won't give you any opinion right now on what I think is the right answer for that. But that's exactly the kind of thing we should be talking in public about. So if we're contemplating creating a different public body because smud and that that's another municipal utility, it's still under public ownership. So I like that. But if we think that there's this other delivery system where it doesn't fall just on the city of Portland, but maybe it's like maybe it's something that the consortium might step into to consider, maybe a joint joint, you know, management tendency. Those are conversations that are important to have in public. So I support that.

Cool. That's great. Okay. Councilor Smith we're just now.t we did in the past, and now we're just talking about that. We want to focus on the future. So. Councilor. Koyama Lane.

Thank you. First, I want to genuinely say thank you, chair. Clark, I appreciate how you take time to hear from us and how you're open. I've shared this before, but I have learned a lot from watching you lead this committee, your organization approach the way you run these meetings has taught me a lot. So adding on, I heard this said already feeling hopeful that the transportation utility fee and the street damage restoration fee will hopefully pass. And I like the idea of this committee being committed to continuing to hear updates about, especially the tough and including how it's being implemented, how it's what the impacts are to portlanders. And I'm interested in more of these conversations that councilor Green is interested in about rate design. And I still I want to continue to explore some of the other transportation and infrastructure funding options. We started talking about some different ones, and part of the conversation was around ease. And if we were ready to implement some of those, but would love to keep exploring funding options that don't place an additional burden on our residents. So we had talked about fees on food delivery, package delivery services, you know, different mechanisms that can better align costs with also the the corporate use of our roads. I would like to hear updates on programs like the bike bus programs and safe routes to schools, especially since there have been cuts at the state level that are impact will impact us, and I'd like us to know what those effects are. Let's see. Yeah, making sure that we're we're partnering with schools and community organizations in that area. I'd like us to talk some more about tactical urbanism and just maybe get some education around that and talk around possibilities. Maybe our committee can have a chance to learn a bit more and discuss tactical urbanism, its low cost, quick build approaches, and allows us to test different safety improvements before making permanent investments can help us move faster, figure out what works, engage community in the process, and we can look to a lot of other cities like austin, nashville, atlanta, and new york city as a notorious example of tactical urbanism in the way that they've transformed times square into a pedestrian zone. So and I also think about how tactical urbanism can really go hand in hand with conversations that we've had, chair Clark, about ways to create meaningful, hands on volunteer opportunities and give community members a direct role in, in the city. And so and for this, it can be building safer streets or other opportunities. And then a big one that I have is I'd, I'd like to request a commitment to us getting regular vision zero updates at this committee. And I think I've talked to our citywide vision zero lead and saying that maybe, maybe the first one can be about 20 minutes, but if she could even be coming, ideally every other month or so, we could have 10 to 15 minutes just to ask questions. And I think that helps with consistency. Accountability keeps the work visible, ensures that we're tracking progress towards eliminating traffic deaths. And I appreciate how city administrator lee is adding a section to his report each month about vision zero. I know that we've been getting regular updates on when there are crashes in our district and also monthly data, and this is something that I know mayor wilson has been talking a lot more about. Our citywide vision zero lead said. He consistently is the person that actually emails back when those emails go out about there being fatalities. And so it's great to hear that more folks are are really talking about this. And I think for us to all know too, we have, we're pulled in so many different directions, but that we have a citywide vision zero lead who's willing to meet with any councilor, any district to talk specifically about each of our districts and how we can be making sure that we are tackling traffic fatalities. So thank you again for your leadership, openness and your support, especially around vision zero. And I see you nodding that we can hopefully have an update. I'm hoping we can bring her maybe before the end of this fiscal year for a short meeting to this committee to come. Come meet with us, and I'll follow up with you and your team. Thank you.

Thank you. Councilor Koyama Lane. That's a great list. I really appreciate some of these other ideas I hadn't thought of. I love what you said too, about volunteer opportunities. And I hope you're not talking about pothole vigilantes, are you?

No, I'm not, but I do think the more opportunities that we have for community members to be engaged and to be part of the process, the the more likely that maybe people won't fill potholes or else if people don't feel like they're part of it, they're going to find some way to be part of it.

Thank you so much, councilor Smith.

Loretta Smith: Thank you, councilor Clark. Chairwoman Clark, vice president Clark. I have to give you all your titles. I think this is an excellent opportunity to go back. I want to go back to something that we started earlier today, and I have to forgive folks. Forgive me to ask for forgiveness, because I was not clear on what actually was taking place when we were doing eminent domain. And so I think we need to come up with some rules of engagement on how our departments bring us eminent domain, because first of all, eminent domain is a real serious thing. And people need to know first that when you do eminent domain, it's because that's the nuclear option. There obviously have been conversations with trying to to, to get the easement without eminent domain. And so when things don't work and the public should know that that's the tool that we use. And if we're using the tool, that tool first, without trying to have a conversation with, with getting the easement without eminent domain, there's a problem. Secondly, and once you decide that this is this has gotten to the point where we need to put that in place, there should be an executive session on eminent domain so that you can discuss the kinds of resources that you're going to need to put forward to be able to do that. And so for me, that is so important for us to to know that first, because it just caught me off guard and I had some questions to it, and I just thought it was just a regular easement. I didn't realize it was it. And it's right up in the, in the, in the first paragraph, but I was looking at it just a regular easement that we were paying for. But then when I, when it dawned on me that they were asking for eminent domain, I. Initially I got real concerned, not troubled, but I was concerned.

Can I just clarify for the public that eminent domain is a takings. We're taking something, right?

Yes. Yes, ma'am. An eminent domain is the thing that they took with the albino descendants, and they did not give them anything for their property at all. And that's why we had to go back and and take care of a historical wrong and make it right. This is the other issue too. If I had to go back again and ask some more questions, I probably would have asked some some other questions because when I looked at our protocol afterwards, I pulled up our protocol for the city of Portland. And as it relates to eminent domain, and there is supposed to be a public conversation. And so I don't know if there was a public conversation with with the residents owners and they said in front of council and I didn't see anybody here who was a resident, and I don't know if there. And it was specific that they have to be in front of council. And so I think we need to be briefed. By the city administrator and the mayor's to, to, to let us know about how eminent domain should go. And I'm willing to, to draft with any one of my committee members some rules of engagement on how we will do that, because this came fairly quickly. But there's another issue too. The issue is that we don't find out about these things until Friday at noon, that we know what's going to be on the agenda. And I find that very it's hard to plan for. It is really hard to plan for. And we didn't do this. And I hate to keep talking about Multnomah county, but we were able to see what was on the agenda further than a week in advance. And so I could have conversations with people. And so I'm not able to have that conversation, particularly with this group, is because I only have a day to, to make those calls. And we were going over it on Friday and my district office. And so we were having the conversation. I just thought that it was something different.

But I interrupt you just for a second. I think you and I will be meeting and sitting down and plotting out everything we're going to know in advance, well in advance what's coming. Maybe not the absolute specifics about it, but we will know what's coming.

And so also in the future, I'd like to get more information around road maintenance. And I'm off the eminent domain. Road maintenance, of course. I am so into making sure that potholes and paving and road repairs are are things that we do. And I'm very much in support of cip in figuring out how to do that and what that looks like. And as as it relates to waste management, I think their calls for some discussions on garbage collection, recycling programs and litter control, water supply and sewage issues related to water quality. And I think we we will be doing a lot of that because of our bull run. We'll be having that plumbing and all those things and parks and recreation. There's a lot of opportunity there. The maintenance of our public parks or playgrounds and our recreational facilities, and we do a lot of programing that's paid for outside of the city, in our parks. And I would like you to join me, because I'm going to go on a parks tour in my district, and I'm going to go to every single park in district one. And whether it be attending their lunch programs or any other recreational programs, I'm going to know every single park in my district, and that is, it's going to be the Smith park tour.

That is so cool. You're going to invite all of us.

Yeah, I'll invite you.

You're going to give us advance notice.

I'll give you advance notice. I'll give you advance notice, safety and accessibility, you know, infrastructure. And when you come back with the the asset management report, and I'll be looking through a lens of safety and accessibility to our infrastructure and what that looks like. I think that pedestrians, cyclists, sidewalks, bike lanes, those kinds of things, we need to be clear about. But we own a lot of assets.

85 billion.

Oh my.

God.

$85 billion worth of assets. Yeah. And just the whole public funding and budgeting and how we allocate the restricted funds in those kinds of things. And I think we get a, we get a bunch of opportunity when we get these multifaceted ordinances to do things, it crosses a lot of different things. So we're talking about easements, and then we're talking about eminent domain, and then we're talking about transportation. So it's it all comes together. This is I am so lucky. I'm, I'm happy to be sitting in the vice chair to you because you have so much information. And then I have my finance guru over here sitting to my left, professor Green. Oh. Oh my. They gave you a different title. Your day of the week. Yeah. So I appreciate you and councilor. Koyama Lane you always bring a community element asking about how the community really is going to be impacted by things. And so I really appreciate those kinds of conversations. And, and I know that councilor Kanal, I don't know if he's here, but he, he also brings that community lens and he's very technical too. So we have a good group of people who, who care about the, the public works side of the city. And I think this is going to be a very, very good. Thank you.

Thank you so much. I really appreciate your comments. Councilor Kanal great to see you. And we we did mention you at the beginning as our new member. You weren't here, but we did. We did give you a shout out.

Thank you chair Clark. The first let me say how excited I am to join this committee, even though I can't be there in person due to traveling this week. But yeah, honored to join it. Honored to be district two's first representative representative at the table for transportation infrastructure, utilities. I think the core thing that I bring to this, and I know it overlaps with many of you is, is the things that you directly interact with as a portlander tangibly. So I could spend all my time talking about potholes, potholes and potholes, but I'll probably get to that in future meetings. And I'll start with some themes of things I'd love to see on the agenda. First, safety safe routes to school was the first thing on my campaign platform, and I view it as a leading indicator or metric. The things that you would have to do to make it safe for children to get to and from school, also make it safer for everyone to get around, regardless of their mode of travel. We have some work to do because of the state's inaction on this, and I'm excited to get into that. And I think this is about having a particular focus on vulnerable and historically underserved communities. Infrastructure is pipes and pavement, but it's about people and ensuring that our systems are reliable, resilient and protective. For those who've been historically underserved as a is a huge part of this second affordability. I'm a renter. I know how utility costs can stretch already tight budgets. I'm committed to making sure our systems work for everyone, not just those who can most easily afford them. This isn't just about costs that we directly assess to portlanders either, but about the cost we create when we choose not to be involved in something. My car repair costs are higher in Portland than they have been in any other city. I've driven in because of the state of our roads, and if I knew for certain that a fee that I would pay would help people like me avoid large, unpredictable car repair costs, that would make me overwhelmingly supportive of it. And it's about making sure that we can guarantee that as part of the process. And this also applies in the context of fixing our ratio of road users, meaning residents to road miles. We're in a structural problem there. And I want to talk about how we get out of it, because costs are going up, making road miles more and more expensive and without the density to make that work, we're going to be constantly falling behind. Third, equity and service delivery. Every portlander deserving access to fair, fair access to essential services. But I'll also just take a moment to talk about ensuring the district two gets the investments it needs for road safety and reducing road deaths. This happened in 2024, when district three's deaths declined by over 50% due to investments that occurred there. It happened in 2025, where district one's deaths declined by over 50%. And as the first representative in this committee from district two, which now has the highest traffic deaths in the city, I want that same level of focus we saw in those other two districts in the last two years to happen in 2026 in district two, because had they, ten of my constituents would be alive today that weren't that didn't make it through 2025. And the final thing I'll mention is good governance. So strong oversight, accountability, and thoughtful management. I did get to hear the presentation earlier from the public works service area about the oversight portion. I'm excited to get into that conversation as well and looking forward to to the leadership that has been brought by dc on that side, but also by you, chair clarke, a couple specific projects I'm interested in and these I'm going to use some specific locations, but it's really about the policy. I look at the folks who live on trenton or by mccoy park, or by the montessori school on lombard and mississippi, places where schools and students are and the crosswalks aren't, or on mlk, where pedestrians have a long and now recent history of trauma from drivers. And I think about opening the doors to greater levels of painting and repainting crosswalks, which is very cost effective. And then where possible, adding in other crossing safety measures like islands and lighting. I look at daylighting, which is to say ensuring visibility and intersections by setting back parking from the corner. I'm looking at a proposal I've received from community. These are folks who may at some point become vigilantes, and I hope that we can make them volunteers instead by allowing more people to repaint their corners when the paint there fails, I look at utility rates. I agree with everything that that councilor Green said. But I wanted to add in higher unit pricing at the higher usage levels so that extremely high usage entities like data centers, the type that force investment in expanding production and transmission, are paying their fair share of that required investment with higher per unit rates looking at improving engagement. So it's not just the people who live on the block, but everyone who uses a road that gets to weigh in on its future. I'm thinking about the area up by columbia park in the columbia annex right now on that, and then I'm excited to discuss parks as well. Get to work on ensuring maintenance adherence to the levy. But I really want to talk about also the the work on community centers, protecting and expanding community centers as a public safety investment by giving young people a place to go, but also as a free third space for more and more portlanders to use. And I think that this committee can talk about third spaces quite a bit because of community centers, but also because of street plazas and Sunday parkways and a lot of the things that the public works service area does to make free and available parts of our city that are historically pay to play. And I'm excited for that going forward. So thanks.

That's terrific. I really appreciate your list, councilor Kanal. We're really happy to have you join us. As you were talking, I was just thinking that about vision zero and bike busses that we used to call when I was in the environmental field, we used to call salmon the indicator species that if the water is good for salmon, that it's good for everyone. And I think that if our streets and our safe for children and for the elderly, there are indicator species for. For the rest of us, just to use an analogy, and I also appreciate your comment about vigilanteism. I think we actually could train people to repaint areas, their sidewalks or whatever, but I love the idea of expanding that as well. So great. Great list. Anything else for the good of the order? We've got quite a lot to do in the next eight months. Any other final thoughts before we adjourn? I do have a couple of announcements.

Sure, yeah.

Councilor Green.

Mitch Green: Yeah, thanks so much. I again appreciate this discussion. I think that for us. The work of this committee is to sort of really remind folks that, you know, good assets require maintenance, but we are taking very seriously the lifecycle costs and the prioritization exercise. And this is the committee where we want to prioritize that work and make sure that we are giving tools to the city to execute on that. And. And continuing to sort of invest in our active transportation and, you know, link those costs with the benefits that we have is basically what I'm trying to say, because if we don't, then we run the risk of our, our community members just sort of not knowing that we're doing great things and that there are opportunities, like you mentioned, the low income discount program earlier in the session today. Like those things exist and it's not clear everyone knows about it. So I'm really excited to be on this committee again. I'll appreciate serving with you on, on on this committee. So thanks for having me.

Thank you. Councilor Green, I appreciate your comments. Yes. You know, as councilor Smith said, I think we own about $85 billion of assets and the majority of those fall under public works. So we do have a real responsibility as a committee. Okay, so let me just make a couple of announcements and we'll get it out of here before the three hours. Because of the budget process that we're beginning to undergo, it's going to get really intense. We're only going to have one meeting of this committee in may. We've only been given one. So we'll curate that carefully. But just so you know, we unfortunately will not be meeting again. And my gosh, that's well over a month away. And at that meeting, I was really hoping to have an update of the transportation systems plan and maybe a couple items from parks. But what I'll do is take all the input that you have shared colleagues, and we'll put it in the blender and we'll figure out what goes where. And I'll do that in conjunction with my vice chair here. Councilor Smith. So if there aren't any other comments, I'm going to adjourn the meeting of the of what's now the public works committee.

Thank you.