The record · Transcript
Council Session — 2025-11-10
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Session summaryEditor-reviewed
The Portland City Council Finance Committee convened on November 10 at 12:04 p.m., with four members present and one absence noted at roll call. The committee heard a package of four housekeeping ordinances amending Revenue Division-related code sections, covering information sharing with the Bureau of Environmental Services, appeals board procedures, conformance with state statute on transient lodging tax confidentiality, and correction of an inadvertent omission in Lloyd District enhanced service district fee code; no public testimony was submitted on these items, and votes occurred with outcomes recorded in the vote ledger. The committee also considered reappointment of a citizen trustee to the Fire and Police Disability and Retirement Board of Trustees, and reappointment/appointment of two members to the Revenue Division Appeals Board, with discussion of board roles, term structures, and qualifications; votes occurred on both items. The bulk of the session addressed annual adoption of the City of Portland Investment Policy for calendar year 2026, including presentation of portfolio size, allocation categories, historical yields and earnings, and the existing socially responsible investment screen excluding certain industries. Extensive public testimony urged adoption of a human rights and international law screen, citing specific companies and international examples. Discussion followed regarding feasibility, credit-quality constraints, and potential future review; a vote occurred, with outcomes recorded in the vote ledger.
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0 Thanks for being here, folks. We are just waiting to get a quorum of the finance committee. I've got a member who is signing in virtually and having a little trouble, and at least one absence. So stand by. Okay. Good morning. It is November 10th at 1204. I'm going to call the finance committee to order. If we could. Christopher, can you please excuse me? Clerk, can you please call the roll? Before christopher?
1 Certainly. Good afternoon.
2 Green here.
3 Pirtle-guiney. Here. Novick here.
4 Zimmerman here. All right. We've got four present if christopher, can you read the statement of conduct, please? Thank you.
5 Welcome to the meeting of the finance committee to testify before this committee in person or virtually. You must sign up in advance on the committee agenda at ww. Agenda finance committee or by calling 311.
6 I apologize, that was me.
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7 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're a lobbyist, identify the organization you represent and virtual testifier should unmute themselves when the clerk calls your name. Thank you.
8 Great colleagues. I'm going to have us slightly change the order of of items today. We're going to go through one, two, three, four and then go to six and seven before we go into number five. All right. And with that we're going to read one through four altogether and open them all up at the same time. And so clerk if you could read those items and then we'll begin the presentation. Thank you.
9 Item one amend business license law code to allow sharing. Select business license tax information with the bureau of environmental services. Item two amend protests and appeals and revenue division appeals board, code item three amend special taxes code to conform to Oregon revised statute 314.835. Item four. Amend, lloyd. Business district fee code to correct inadvertent change.
10 Great. So it's a day of housekeeping in the bureau of revenue bureau code world. So, jonas beery, our cfo. I'm going to turn it over to you.
11 Great. Thanks, chair and committee again. For the record, jonas beery, the city's chief financial officer. Yeah. So this is a package of four proposed items to affect technical cleanups to various sections of city code related to the revenue division. These housekeeping adjustments will ensure that current code aligns with recent changes to state law and or corrects inadvertent omissions from other prior recent code changes. So very briefly describe what's happening within each of the four ordinances and then open up to questions on the package. We also have a number of revenue division staff and other subject matter experts in the room or online if needed. So starting with item one disclosed business license tax return info to the bureau of environmental services background here Oregon revised statute 314.835 places restrictions on sharing of tax return information by the Oregon department of revenue. The 2024 Oregon legislature adopted house bill 4031, which amended ors 4314835 to apply to local governments as well. The intent of the ors and the house bill is to protect taxpayer information, which can be highly sensitive from inappropriate disclosure. So this update to Portland city code chapter 7.02.240 will clarify that the revenue division is allowed to provide certain non-financial business license tax return information with the bureau of environmental services, specifically to aid with bts required compliance activities and in compliance with that statute. I'm going to jump a little out of order to item three, which is very closely related to item one. This is the transient lodging tax confidentiality update. So again related to ors 314835 as revised, that statute also applies to the sharing of transient lodging taxpayer information. So the updates in item three to section 6.04, 6.05 and 6.09 of city code brings the city's confidentiality requirements in conformance with that updated statute. Step back to item two, which is amend city code 7.0, 2.290 and 7.02.295. History. Here in September 22nd, 2022, council amended sections of city code chapter 7.02 to recognize the revenue division's role in administering income taxes on behalf of metro and Multnomah county. That 2022 ordinance inadvertently omitted adjusting the time for the revenue division to respond to requests for penalty waivers. This proposed update to 7.02.290 provides appropriate clarity about the requirements and timelines for such activities. Additionally, the code updates section 7.02.295 to clarify membership in terms for members of the revenue division appeals board, including the addition of a criminal background check for new appointments. And finally, item for amend chapter 6.06 related to the enhanced service district for the lloyd district. In December 2023, council amended sections of city code chapter 6.06 to reflect the fee rates and structure specific to the lloyd district enhanced service district. Subsequently, in November 2024, council amended that same chapter 6.06 for changes specific to the downtown Portland clean and safe enhanced district. Unfortunately, when that 2024 code revision was made, it inadvertently omitted the previous lloyd district specific changes in 2023. So the proposed change today simply corrects that omission and adds back the accidentally deleted provisions. So with that, administrivia spoken for the record. Hand over. Back to you, chair. Thank you.
12 Barn burner. A list of events and ordinances today, mr. Barry. Okay, colleagues, I'm going to go to discussion and questions all together. Actually. Excuse me, let me do a quick check with with clerk. If we have any testimony on any of these items.
13 No one signed up.
14 Okay. With that, I'm going to go ahead and questions and deliberation together and move to councilor Green first.
15 Thank you. These these all very much do feel like housecleaning adjustments. I am just curious on the esd one, are those rates in effect in practice like are these esd sort of like adopting this, even though it's not like it's somehow got screwed up in the amendment language council?
16 I believe that's the case. And if if staff in the in the room or online believe otherwise.
17 But this wouldn't, this wouldn't be like an abrupt change in their rates.
18 Correct. This is just cleaning up to make sure that the code actually reflects the prior council action from 2023.
19 I have to ask the question, so I appreciate that. That's it.
20 Okay. I'm not seeing any other questions. I'm pausing pregnantly to see if anybody pops up. Nothing. Okay with that clerk, if is it possible for us to adopt these all with one single vote, or do you need them separate?
21 We would prefer separate, but we can accept altogether.
22 Okay, let's go ahead and do separate. There are some different topics here. So let's just go ahead and go items one through four and we'll do quick votes on those. Thank you.
23 Okay. For item one.
24 Green a.
25 Pirtle-guiney I Novick. I Zimmerman. I the motion is approved with four eyes and no votes and one absent.
26 And to quickly make a administrative change, I'm going to go ahead and for the record, say that councilor Pirtle-guiney made the motion. Councilor Green seconded that we adopt all these. Thanks, colleagues, for my mistake, not the clerk's chair.
27 I would move that we adopt agenda item two on today's agenda.
28 Second, there we go. All right. Clerk, now that I'm done for the day, if you could call the roll on item number two.
29 You and I both okay. Green. I pirtle-guiney. I Novick.
30 Hi, Zimmerman. Hi.
31 And the motion is approved with four eyes.
32 Okay, colleagues. Same motion for the item number three.
33 Chair, I would move that. We pass item number three to the full council agenda.
34 Second, let's give it to Novick.
35 All right. We got pirtle-guiney and Novick in there. If we can call the roll.
36 Okay.
37 Green I.
38 Pirtle-guiney I.
39 Novick.
40 Hi, Zimmerman. Hi.
41 And the motion is approved with four eyes.
42 Okay. Do I have a motion for number four, please.
43 I would move that we I would motion that we move agenda item four to the full council with a due pass recommendation. Thank you.
44 Second.
45 Second from Green. Thank you. With that we'll call the roll.
46 Green I.
47 Pirtle-guiney I.
48 Novick.
49 I Zimmerman. I and the motion is approved with four eyes.
50 Great. All right. Thank you, mr. Barry. Appreciate that. Housekeeping. We'll see that back at full council with that colleagues. Reminder we're going to go to item number six which is an appointment of. Some retired excuse me, some reappointment of members to some boards. So let's go to item six please.
51 Item six reappoint catherine mcleod to the fire and police disability and retirement board of trustees for a term to expire December 31st, 2028.
52 All right. Good afternoon. Come on up. Introduce yourselves and take it away, please.
53 Hello, I'm sam hutchison, bureau director of fire, police, disability and retirement. I'd like to thank you all for having us here.
54 I'm catherine mcleod. I'm a citizen trustee, currently on the board of trustees.
55 And so we're here today to ask for your approval to reappoint catherine for another three year term with the board of trustees. Catherine's been with, I think, nine years now with the board of serving in various roles as citizen trustee for a while. The chairs, the mayor's designee as chair and then back as a citizen trustee. Cathy has a tremendous amount of public experience. She has her own actuarial firm. She's done an extensive amount of work in public pension work over the time. She has an excellent understanding of the pension, and she brings valuable pension experience to the board. We sometimes a staff will go to her as a subject matter expert. If we have certain questions about our pension plan and how we should administer it with that. She's a very engaged in all the activities that happen with the with the board and with the bureau. She's unafraid of asking pointed questions of my staff when they give financial reports to her. Same thing with milliman, our actuary, and also baker tilly. If I've got their new name correctly, our auditor with that. So it's been very helpful for that. She delves into questions and issues that other trustees haven't dealt with in the past. So it's been very helpful to us with that. And we think it's a great opportunity to have her continue on because she is such an expertise in the board. The board of directors look to her help, we look to her help and I think she does a fantastic job. So, catherine, if you'd like to give a little background on yourself.
56 My background I've been living in the city of Portland since 1979, worked for large insurers here, and been involved in pension or retiree health benefits for 45 years. So a long time I like to contribute to the city. I love Portland and like to contribute volunteer efforts, and I've done it in a variety of different ways. But 9 or 10 years ago, when I became aware of this opportunity to be on the board, I realized I had a unique set of credentials that probably only 20 or 30 people might have. So I could focus my efforts where they could be used most effectively.
57 And I'd like to go over my presentation I wanted to give. So why don't we go ahead and kick that off real quick? Some of that's going to be a little redundant with that. Is that up on everybody's screens here right now? It is. Okay. So this is we're here again just to reappoint catherine mcleod. So the next slide please. So what the fpr the the voters created fpr as its present form in 1948. It was created for the benefit of the sworn employees of the fire and police bureaus and to the benefit of their surviving spouses and dependent minor children. The plan is defined in the city charter, chapter five, as part of the. The design of the board is we have four or excuse me, five trustees who oversee the plan, and these trustees administer the plan itself, as well as supervisors and controls. The fund and reserve fund. They approve our operating budget, which is in turn used to to determine the amount of levy that is needed to fund the fund every year. And they prescribe rules and regulations for the administration of the plan, and they provide general oversight of the administration of the of the program. And all those are outlined in the city charter. Just want to give you a heads up of who is on the board. Presently we have patrick hughes, who many of you know. He's the mayor's designee and board chair. In the past, mayor hales served in this role. He did not designate, but mayor wheeler has designated patrick hughes at this time. Or excuse me, mayor wilson. Mayor wheeler did the initial. Mayor wilson kept him going. I'll get my mayor's all messed up here. Apologize. He is approved by the council, and there is no set term duration. He serves at the will of the mayor. Kyle mcclory is the fire trustee. He is elected by active duty firefighters. He serves a three year term. We have thomas stoffel jr who's the police trustee. Again, he's elected by the fire trustees for three year term, not fire trustees. The active fire. I'm going to miss this one. He's active duty police officers. My apologies. We have tom kramer, who's our other citizen trustee. He's selected by the mayor and approved by council, and he's serving a three year term. And then, of course, we have catherine with that next slide. I think we've covered everything. Just again, I just think katherine's extensive experience with npdr is something we don't want to lose, and we want to continue having. Thank you. Great.
58 Okay. Do we have any public testimony on these item on this item?
59 No one signed up.
60 Okay. Councilor pirtle-guiney.
61 Thank you, chair. And thank you, catherine, for your willingness to serve for such an extended period of time for our city. You've been doing this for a while, so I'm guessing you have put some thought into what the role is as a board member and for the board as a whole. And I'm wondering if you can just share with us as a, as citizen trustee, specifically what you see as your role on the board and then broadly as one of five board members working together to keep this plan moving in the right direction, what you see as your role and if those things are the same, or if there's a little bit of difference between them.
62 I'm not sure I followed all of that extended question, but I'll start in. And if I miss something, let me know and I'm happy to go back. In general, my role is to serve with the other trustees to make certain that the plan is administered in accordance with the rules and regulations that have been set forth by the in the administrative procedures of the plan. Ours is not to determine the benefits payable under the plan or how it's funded. We frequently delve into those areas, and it's somewhat frustrating to not be able to. Really take any action with regard to that. But our role is to administer the plan as it's set forth currently, and that involves things like setting annual cola limits, reviewing the budget and making, and the ongoing finances of the plan, the expenses, making certain that the benefits are administered in accordance with the plan. They are calculated correctly provided to the proper parties, those kinds of things.
63 Thank you.
64 Councilor Novick.
65 I can't resist now that you said that it's sometimes frustrating not to weigh in on the broader issues, I have to ask you, if you could weigh in on those broader issues, what would you want to do?
66 Well, again, we're driven more by the interests of the the covered members and their beneficiaries and by the dnr staff, and it will frequently come up things about equal to or better than tests or disability benefits or the plan funding those kinds of things. Again, it's our job to administer the plan as currently written and in accordance with our understanding of the rules of the plan. But those questions frequently will come up in front of the board, and we are engaged and want to listen to those and would like to move them forward. But as a board, a standalone board, we don't. It's my understanding from the external counsel for dnr that that is not our role or responsibility. So I guess if I could move something forward, I would be encouraged to have this finance committee or council be present to or participate in some joint discussions on some of those topics. But if they fall simply to our board of trustees, I think our hands are frequently tied and being unable to take action.
67 Thank you. I try to take you up on the suggestion of having those those discussions about plan funding in particular. So thank you and thanks for your service.
68 Thank you, councilor Green.
69 Thank you, mr. Chair. Yeah, I would just follow up. First of all, I want to say thank you for throwing your hat in the ring again and serving the city. And just to touch on that last bit a bit, if this committee did want to engage directly with the board of trustees on questions about funding in particular, would that be something you'd be comfortable with engaging with us on?
70 I certainly can't speak for the other trustees, but I certainly would be. I think it would be helpful.
71 Wonderful. Well, I'm sure you'll have some of those opportunities. We'd like to talk about this stuff often. So thank you so much.
72 Okay, cathy, thanks for stepping up. Appreciate that. Sam, thanks for your presentation and bringing us back to, you know, the origins and also the makeup of the board. It is helpful. We have a lot of these boards and understanding where where they all sit in our organization is helpful. So with that I'll entertain a motion colleagues.
73 Chair I would move that we move forward. The confirmation of catherine mcleod to the board or reappointment I guess confirmation of the reappointment to the board, to the full council for a vote.
74 Thank you.
75 Second.
76 All right. Councilor pirtle-guiney and then seconded by councilor Green with that call, the roll Green.
77 I pirtle-guiney. I Novick. I Zimmerman. I the motion is approved with four eyes.
78 Thank you.
79 Thank you very much.
80 Thank you. Okay. We're going to move to item seven.
81 Reappoint shaun wallace and appoint penny sweeting to the revenue division appeals board.
82 Okay. Mr. Barry is back up in the hot seat. Take it away, janice.
83 All right. Thank you, chair, again. For the record, jonas barry, the city's chief financial officer, in August, this committee received a briefing from the revenue division on the revenue division appeals board and appointment of two board members at that time. It was previewed at that time that another vacancy would soon be filled, and that time is now. A report from the prior presentation or sorry. A repeat of the prior presentation is included in the online agenda, so I'll let you take a look at that as a refresher. And I'll just give a 62nd kind of overview here verbally today. As a quick reminder, the revenue division appeals board, or dab, is a five member volunteer board comprised of members of the public. Occasionally, after review and audit of a filed taxpayer return, the revenue division will make adjustments to that return. If taxpayers disagree with that adjustment, there's a protest process via the revenue division, and if still unresolved, taxpayers can make an appeal to the revenue division appeals board. The board will then review the facts of the case here and review testimony, and then make a final decision on whether or not the revenue division's adjustments were correct. There's a very limited pool of individuals with the knowledge of accounting methods and tax laws required to perform this volunteer service and outreach has been conducted towards increasing the diversity of the board. We're grateful for the two appointees before you today. We appointee shaun wallace is a licensed cpa working in tax compliance and planning and will be serving his second term on the board. New appointee penny sweeting is a licensed cpa specializing in state and local taxes, and has previously served on other tax related committees. There are more full information is included in the packet, and I believe they're both available here online today. We thank mr. Wallace and miss sweeting for their willingness to serve city taxpayers and look forward to their participation on the board. Thank you.
84 Thank you, mr. Barry. Is there anybody signed up for public testimony on this item?
85 No one signed up.
86 Okay, colleagues, questions or discussion. Vice chair.
87 I'll jump in. Thank you. Chair. Jonas, it's a five member board. And do I remember correctly that there are no specific requirements for any of the seats? It's just a broad requirement that somebody have that cpa background to serve?
88 I believe that's correct. I don't know that cpa is required. That's just strongly, strongly recommended given the the expertise required.
89 Okay. But we're not looking at a board that says a seat for somebody from this background and that background, anything like that.
90 That's my understanding.
91 Correct. Thank you for clarifying.
92 Okay. Penny and shawn, thank you for stepping up with that clerk. If you'd call the roll.
93 Could we get a motion first?
94 Always helpful.
95 I would move that. We reappoint mr. Wallace to the board and appoint miss sweeting to the board. Or. I guess we don't appoint that. We move forward the confirmations to council. Yeah, second.
96 All right. With vice chair and counselor Green, we'll move to a vote.
97 Green. I pirtle-guiney I Novick.
98 Thank you very much for willingness to serve I.
99 Zimmerman I thank you.
100 The motion is approved with four eyes.
101 Great. Okay. We're going to move colleagues back to item number five. And I want to note for folks that we do have a number of people signed up today for testimony. So we'll go through that once we read it and go through that presentation, do some questions and then we'll go to public testimony and then have a discussion. Okay. Let's go ahead and read and open item number five please.
102 Item number five adopt city of Portland investment policy.
103 See staff come up to the table. And I think to start I'll turn it back to our cfo, mr. Beary.
104 Great. Thank you, chair and committee, for those just tuning in, I am still jonas berry, still the chief financial officer at the city of Portland, Oregon. Revised statute 294.135 related to public investments requires that the city council annually adopt an investment policy so that the city may continue investing fund balances and earned the desired interest income to the city. The policy, in effect for calendar 2025, the calendar year we're currently in, was approved by city council in November 2024. This resolution will approve the policy to be effective for calendar 2026. The city's policy places strict limits and conditions on the types of securities that the city may invest in, as will be described shortly. The city does not typically make significant changes to the policy, and we're not proposing to do so with this iteration. The changes proposed in this resolution are cleanup administrivia for consistency with changes in position titles driven by the fiscal 2526 adopted budget, the city is fortunate to have experienced professionals to manage the city's investment portfolio. I'd like to take a moment to thank investment officer michael montgomery for the work that he does every day to monitor city cash flow needs, market trends, and investment opportunities to maximize returns within the limitations of this policy. I'd also like to thank city treasurer bridget o'callahan, to whom I'll now pass to a brief pass over to you for a brief overview of the city's investment policy and portfolio.
105 Thank you, cfo berry. For the record, my name is bridget o'callahan, and I'm the city treasurer. And as jonas referenced, joining us online today is the city's investment officer, michael montgomery. Michael will be available to answer any questions that we may have as we go through the information today. As jonas mentioned, I'm here to present the city's investment policy for your consideration. As referenced, Oregon law requires us to bring this to council annually. And so we typically do that in the November time frame, and we are here to do that today. We do have a few housekeeping revisions. And a red line copy of the document has been provided for your reference. The investment policy describes the framework and criteria for investing the city's cash assets. That portfolio is presently up to approximately $2.8 billion, and that fluctuates over time depending upon, you know, different cycles of the city's financial needs. And the treasury division monitors very closely the activities of the various bureaus, as well as the budget to identify how to invest those funds. Again, typically, they're very short term investments. The city's investment policy, as I said, describes that framework for the investment policy. It serves as a guide to offer an objective course of action to be followed. And that's especially important during times of market disruption or when emotional or, you know, intensive situations might occur. So it's it's that that guiding force that keeps us on the straight and narrow as to what we need to be doing with the city's funds. The investment earnings make a significant contribution to the city's budget and to the programs and services that the bureaus provide. Investment earnings, net of the treasury's if admin fee to cover treasury's costs are distributed directly back to the funds. And in fiscal year 2425, that was $115 million, net of the administrative costs. Fiscal year to date September 2025, treasury has earned $28 million on the city's portfolio. The investment policy, as we mentioned, must go to council every year and there are no material changes. I'm going to ask to go to the next slide, please. The objectives of the policy are in order, which are listed here on the slide. And that is to preserve the principle so that the funds are available to the city when we need them to ensure liquidity. So that allows us to be nimble if we need to respond very quickly. We have the ability to do that. And of course, to earn a market rate on the portfolio. If we may. Go to the next slide, please. As referenced, the city's policy is based on some guidelines provided by the state of Oregon, certainly, but we also have further added additional provisions to our policy that really focus on the needs of the city, making sure that we are investing in very sound, stable and safe investments. And what you'll see on this slide are the investment categories that we have in the policy today. You'll see that it's heavily weighted in us treasuries and agency securities, and that we have corporate indebtedness that's limited. We'll talk about that on the next slide. And then some other investment categories. Again very stable what we would call fixed income types of investments. If we can go to the next page please. Several years ago, the city council and community have provided some put to the treasury division and the city in looking at our. Investment policy in terms of social responsibility. And over the years, we've evolved the policy that we're presently using today. The most recent revisions to that policy occurred in 2021. What you'll see presently is that there's an overlay or a filter that we use over and above our policy that's outlined that allows us to exclude certain industries. So we are presently using the bloomberg standard industrial classification metric to allow us to exclude fossil fuel related transactions, arms related transactions, alcoholic beverages, casinos, correctional facilities and security services. Again, that's an overlay that we put on top, over and above what we're required to do by state law and by our the base of our policy. But it's really allowing us to be responsive to the feedback we've had from community and from council in terms of making sure that we're meeting the expectations of our community. The next page, please. What you'll see on this screen are the investment allocations. So this is presently how the city's investment policy is invested day to day. The interest of time. I'm not going to spend a whole lot of time on this slide, but I'm happy to talk through it with all of you. If you would like to momentarily, or if there are any questions about any of these categories. Again, what you'll see is it's heavily weighted on treasury and agency securities. And then the other sectors are primarily used for diversification. Right. We don't want all of our eggs in one basket. And so it allows for risk management of the portfolio. If you'll go on to the next page please. This page represents the historical yields in the portfolio. And you'll see reflected in there. The COVID pandemic certainly was a challenge for us, but other things that affect the historical yields might be the size of the portfolio, what's available in the market, what the federal reserve is doing. All of those things are components that play into the historical yield. Again, we're, you know, trying to to keep the ship steady. We're not looking to make the highest yield on the portfolio. We're looking to make a market yield. Again. The focus is on safety on the next page, if you would please. References are historical earnings. So you see again that's going to fluctuate depending upon the markets and depending upon the balances that are in our portfolio. Some of the things that influence the balances in the portfolio certainly are revenue collection, but it's also going to be things like at the time the city might issue bonds. So when we issue bonds, we might have a larger portion of those, those funds available to invest for a short time before they're used in a construction project, for example. So that's going to fluctuate from time to time with that. Those are some highlights of the policy. I'm happy to answer questions. And of course, as I mentioned, our investment officer, michael montgomery, is online to answer questions as well.
106 Thanks so much. We'll go to questions before we go to public testimony. If there are questions from the committee. Councilor pirtle-guiney.
107 Just want to clarify in the red line of the changes that are actually being proposed, I see changes that insert the new chief financial officer position. Are there any other changes that I'm missing?
108 I'm not recalling. Let me just double check with michael montgomery. To my knowledge, we were just changing things that that would make it congruent with our current form of government.
109 Okay. So this is the the annual re adoption of our policy, plus ensuring that we're in line with the changes we've made over the past two years.
110 That is correct.
111 Thank you.
112 Councilor Novick.
113 Thank you, mr. Chair. Mr. Callahan, I think that I was actually the first counselor to propose kind of a socially responsible investment policy for the corporate investments back in like 2014, 2015. And at the time, I started off saying, let's not invest in walmart. And then I was we were talking about, can we come up with some framework that we don't invest in the most evil companies, regardless of what business they happen to be in? And apparently over time that's developed to their specific industries we don't invest in, rather than making a company by company determination of evilness. However, there are ratings agencies. I think there's something called msci that ranks companies according to social, environmental and governance criteria. And at one point an idea that we talked about was we decided to adopt a policy that we don't invest in the like 30 worst companies identified by rating service like that. But I vaguely recall that maybe a problem with that was that the those ratings aren't publicly available. So that would have kind of been a problem. Does this mean? So I'm just curious, are you familiar with these esg rating agencies, and would there be an issue with problem with revisiting that issue and trying to say that we're not going to invest in the 30 most evil companies, regardless of what business they're in?
114 Thank you for the question, counselor. And first of all, I want to acknowledge that you were a little bit ahead of the game when you introduced this. I believe it might have been as early as 2013, perhaps. So thank you, first of all, for that, that forethought. To answer your question, there are a number of indexes that are available for us to consult with regard to socially responsible investing. The challenge with those lists are one that they can be manipulated by the companies themselves. So that's certainly a challenge and something that we would need to monitor for. But those lists change so frequently that it makes it very difficult for the city to manage against that type of a list. We have looked at quite a number of the the lists that are out there, and again, I can share with you that our present policy is not allowing us to invest in firms that we otherwise, generally speaking, that that the city would be incongruent with the city's. Values. Specific to that, we picked these industries because these industries were the most egregious offenders. But we also want to bear in mind that we the city's investment policy, has a very high credit quality requirement, and the vast majority of the firms on those on the the list, the boycott lists or the divestment lists, the vast majority of them would not qualify for our policy in the first place because they're not of high enough credit quality. The other thing I want to make sure that we're clear about as well is that when we mentioned corporate securities in the city's investment policy, we're speaking of purchasing bonds of that organization, not stocks. That's a very important distinction because the with a stock, you take an ownership position in a company. The city of Portland does not do that. We are more like a creditor to them in the sense that we are investing in the firm or purchasing their bonds for a very short period of time. Did I answer your question, counselor?
115 Yeah. And I think that I still think that there's companies out there that we wouldn't want to forget about the entire category, such as banks, but there are some that are really do lots of really, really bad stuff. So I if you don't mind, at some point in the next few weeks, I want to get in touch with you and sort of go over what some of the issues are with those ratings agencies and see if maybe we could design a policy that if something was like in the top ten bad companies, you know, five out of six years or something, then we could exclude it. But that that's an offline conversation. But I appreciate the background, and I feel silly that since I've worked in this ten years ago, that I haven't gotten in touch with you about this before.
116 Well, thank you, I appreciate that and would certainly welcome the dialog.
117 And yeah, and councilor, if I may also add, just for awareness, the city. I don't think you stated this, but the city does publish our portfolio monthly. So that's available on the city web page, the treasury webpage. So folks can take a look at what has been historically invested in and currently invested in, and see how that may or may not compare against any, any lists that are out there.
118 Gotcha.
119 Okay. Councilor Green.
120 I'm curious about the. So it's helpful to know that, okay, we're just investing in bonds. Although I'll note that if you are a creditor to a company that you think has, you know, doing bad things, that's maybe you don't own it, but you're still party to that bad thing. I would argue, but I am curious, though, how often do we change our bond composition? Like do we buy to term and hold to duration, or are we constantly sort of rebalancing and changing our our stake, so to speak? In particular bonds?
121 Great question. And certainly would look to michael montgomery to provide more detail on specifically how we do that. But at a high level, if you think of from a treasury perspective, we are managing the city's cash flow in a dynamic environment. So that means that if you think of treasury as the city's bank, it's essentially what we function as. Write. All funds come in to the city centrally, we bank them centrally, and then we invest them centrally in a pool. And those decisions are being made on a daily basis, sometimes an hourly basis, depending upon what we're we're seeing the needs in the portfolio. So typically they are very short term investments. And oftentimes they because of the credit quality requirements, our challenge often is finding corporate securities that we can purchase so that meet our needs. In terms of the tenor and and certainly the return for for the risk in the portfolio as well. So if I answered your question yeah.
122 No, that's that's helpful. So it's sort of a daily treasury management.
123 Correct.
124 Okay. So then if suppose you know we have this conversation, we continue to talk about these other lists perhaps. If we got to a more restricted category, I understand there's only a few firms that we can even hold anyway. But but what would be the opportunity cost in revenue to the city? I'm curious to understand that a little bit. If we if we didn't have any exposure at all to corporate bonds, I guess is the question I have.
125 Yeah, I think we've done some math on what the corporate portfolio itself produces on average, and I don't, I don't remember.
126 That, michael. I want to make sure we get the most accurate information.
127 Yeah. We can go to go to michael to get that. I just also just for awareness. I think right now there's just over 40 eligible corporate corporates that even meet the threshold. So I just want to also acknowledge, you know, we're talking about a very limited universe. You know, also that's after we make our credit credit quality assessment, the existing socially responsible screen. And also just noting that many of those to use councilor Novick analogy of the evilest companies already, maybe all of them don't make that threshold right there already have credit quality issues. Maybe, perhaps because of those other realities that exist. So and then the last point I'll make, and then I will hand to, to mr. Montgomery is the challenge with identifying those where you draw that line. The objective should be that that it's very clear. Right. So the the benefit of the current screen we use now is it's very professionally managed. It's clear, it's consistent. And we don't put the burden on a human at the city to make that judgment call. And so that's a that's a very dangerous kind of spot. Because of that. The last comment I'll make because of that, I think there is legitimate risk that when we start to stray from those sort of. Very solid methodologies, kind of known methodologies, consistently managed methodologies, there is risk that we just say, you know what? It's we can't put that burden of judgment on a on a city employee. And so we would potentially lose the ability to invest in those corporates, all of which to then hand to mr. Montgomery to identify what that if you can, what that trade off would be in in return.
128 Thanks, jonas. Hopefully you can hear me. Michael montgomery, investment officer of the city of Portland. And I would echo what jonas and bridget have have both mentioned from an implementation standpoint, from as far as an offset. If if the city chose to disembark from a balanced investment program and approach to managing the city's assets, we can go back for any number of years. Some of the data that I've presented, and I think richard shared internally with you, is for for a roundabout number in today's environment, the credit portion of the investments is adding, on a net basis, around $6 million a year to the earnings in the portfolio. And I'll say that with a caveat, because much if we look back at the slide of the interest earnings, it fluctuates greatly based on where market returns are, how much money the city has and where spreads are at. On on corporate bonds and and in in the last ten years, corporate bond spreads have narrowed tremendously. So where we have triple a corporations a double a corporations that we invest in and the 35% bucket it historically may have traded in the 40 basis points over treasuries now trade within single digits. And so that additive value that the corporate bucket adds to the portfolio, although today may be $6 million in hard dollar terms, it can fluctuate. And so it could be much larger. It could could continue to narrow. But but in an honest number for today's environment, I think $6 million is a fair number to to reconcile with. If you were to exit investing in any high, high grade corporate bonds.
129 Thank you, michael.
130 I appreciate that. And that's just helpful to note I am interested. So so this is an annual update process, right?
131 Correct.
132 But it's a resolution. It's a policy that can always be revisited at any time.
133 That's correct.
134 I am interested in kind of taking a deliberate approach to looking at our policy and adding another sort of human rights screen lens to this, but I want to make sure that I understand the full impacts of how to how to do that in a good way. I'm not bringing anything forward today, but I'm just thanks for the thank you.
135 I would welcome the conversation. Thank you.
136 Vice chair.
137 Thank you chair. I just want to make sure I understand the the socially responsible parameters, the appendix a, we have identified industry classifications and we use the bloomberg standard for that. If we were to overlay something that was a values based outside of an industry classification, let's say for example, I wanted to overlay something that said we won't invest in any corporates that have problematic labor relations. It's a thing I might be, you know, that might align with my values. How would we go about do do we have a way to determine that even is there? Does bloomberg have an overlay like that, or is that something where we would really, to the point you made earlier, be asking our investors, our city employees, to try to go through and find out who that was and determine which companies were bad enough to fall within that category.
138 Great question. The challenge is exactly as you've highlighted, the source of locating that information is is very difficult. However, I would say that oftentimes that's factored into the credit evaluations that those firms are required to undergo from the rating agencies. Right. They're going to take all of that into account. So that will often be factored in if there are egregious activities going on by that particular corporate that's going to be incorporated, likely will affect their credit rating. Just like we worry about the city's credit rating. A corporation would worry about that in the same way. So so that I would highlight I'm not aware of any reliable source for that kind of information. And I will be honest with you, from my professional opinion, in terms of looking at the investment portfolio, I would probably recommend excluding corporates from our portfolio entirely rather than putting ourselves at risk of trying to make those decisions. That is is unfortunate because the corporate securities, as I mentioned, diversifies our portfolio, helps manage risk in the portfolio. So there's other reasons to have corporates in there. But I also would not want to put us in a position where we couldn't comply with a policy or that we were making decisions that would not be prudent. And, you know, as I said, the the number one requirement of our policy is that it's safe and sound and secondarily liquid and available for us. And I couldn't guarantee that if if we have an overlay that's too difficult to manage.
139 Got it. So as I'm understanding it, looking at industry classifications is doable. Looking at some other sort of overlay might lead you to instead make the recommendation that we disinvest from corporates altogether, which would cost us in the last year or two, about $6 million a year in services that we could provide to portlanders. Knowing that that number variables varies significantly year to year.
140 That's correct.
141 Okay. Thank you very much.
142 Back to councilor. Novick. Councilor Novick. You are muted right now.
143 Thank you. I think actually that the previous council, either the end of my term or after my term decided to simply stop investing in corporate debt entirely to avoid making those distinctions. I think that's a very unfortunate thing to do, because it sacrifices money for the city without making any point. I mean, the point is that we're trying to make is that some corporations are more worthy of our investment than others. And as to the criteria, I, I recall, I mean, I'm going to talk to the treasurer about these ratings agencies, but my recollection was that I think it was the ratings agency. Mc had these comprehensive social, environmental and governance criteria. And if you looked at the worst five companies in their list, they look pretty damn bad. So my inclination would be to find some outside rating agency to look at and base our decisions on them. If that may mean at least that's what I want to explore. So I want to have that conversation with treasurer o'callahan. And I do seem to recall there was like a a sort of process problem with that in that only subscribers to those rating services are able to release what their ratings are or something. So that might make things somewhat difficult. But my idea is that I'd like for us to have some screen pure, other than purely just the lines of business for evil companies, and I like that screen not to be something that our employees are doing, but that somebody else is doing that we think is reliable. So obviously we don't need to have I mean, so I plan to renew this discussion after this meeting. I obviously have no problem renewing our current policy, but that's the that's my thinking.
144 Yeah. And councilor Jonas, happy to have that conversation. And no, bridge is happy to have that conversation. I would just reiterate bridget's comments earlier, and this is probably something that's evolved in the market over the last decade, that those esg scores are now factored in as part of the rating process. And so let's do the due diligence. Let's have the conversation. But but often those sort of negative esg related characteristics are also reflected now in the broader credit quality assessment that's given, which might actually already be a natural screen to prevent those corporates from from being eligible in our portfolio. But let's have the conversation. Let's do the due diligence. I just wanted to call that out here while we're having this conversation today. Thanks.
145 Thank you.
146 So when I look at the list, I, I see I guess, some of the very expected vices, if you will, right? Alcohol, casinos, gaming. I don't see tobacco there and I guess not that I care one way or the other about either one of those, but whose set of values and how did their set of values find their way to that list? Also, what constitutes security services and why that found its way onto the list? I'm trying to understand just some of these categories, and I say that also with the with the caveat or umbrella statement of perhaps there are no corporations or businesses within those categories that we give a darn about in terms of being something we would want to invest in. But I'm wondering how they found themselves to this list and what we consider that. And then I've got a couple of follow ups.
147 Yeah. Great question. And I may also bring mr. Montgomery in the conversation as well, because he was part of the process several years ago. As councilor Novick mentioned, there was some guidance from, from council to create a socially responsible investment committee on a temporary basis to do exactly that, to look at how we could add this kind of a filter to our policy. And we tried a number of things as, as was referenced, including taking corporates completely out of the portfolio. What we ultimately ended up with was this list, based upon the input we received at that time, there were a number. We started with a number of specific names, specific firms that there were concerns with at that time. And then we looked at what industries they were involved in so that we could exclude them. I'm not I'm not aware of the tobacco issue. So I'll ask michael in a moment if he remembers the history of that. But I do know, for example, security services. This was looking at private, privately run prisons. There were some concerns about privately run prisons. And so that's.
148 Different than corrections facilities because that's also listed. That's where my one of my questions is at on that topic.
149 Right. I believe that some of these firms might have been classified as either. And so I think that's how that came about. But michael, is there anything you'd like to add? And if there was a conversation about tobacco, do you have some of the history on that?
150 Yeah, I it's been a number of years since that committee was around. You know, we can go back and kind of take a look at the notes and try to see. I know offhand, as far as tobacco companies, there aren't any publicly traded firms that issue debt that are rated high enough for us to purchase currently, but not not a not opposed to, you know, looking at adding that into.
151 The oh, I'm not actually proposing it. I just I'm asking the question to get a good sense of like how certain people's value statements got onto this document and others did not. Right. And so don't take my questions as I wish one industry or another was on there. It's more of a kind of a fact finding. I remember this as a consumer of Portland government back in the day, but I wasn't involved.
152 Sure.
153 So. I guess with. We have seen the market move from smaller companies, smaller corporations to large conglomerates, taking on a host of lines of business. It's not unheard of for maybe a business who's in the the, you know, manufacturing of some sort of material all of a sudden now owns an alcohol company or a telecommunications company, now owns a, a nintendo type of, of gaming that your kids might play. But then they also get into the business of selling a casino game. Right. And so as we see the large conglomerates own 50 brands, how do we square that in our difficulty in terms of our investing? I worry a little bit that these broad swaths and the way the market is going is that we work ourselves in. We're already down to only 40, but we work ourselves in. If we if we really pull the thread, we could say, boy, there are also owned in part by or or supervised by. And where does it end?
154 Great question. And again, one of the reasons why we would probably advocate for removing removing corporates altogether if we are not able to come to an agreement that council and our community supports with regard to our values. Typically when issues occur, right, when securities are issued, they're going to be issued for that subsidiary or that particular use. Right. So so that is going to be captured by our filter. So if it's for the casino gaming, you know, product, typically they're going to issue funds to to raise funds for that subsidiary in most cases. But you're right they could be also issued at that higher level in the organization. And it would be classified under that.
155 And because to the point that you're having earlier the question of bonds versus stock, I think that that helps make that understanding a little bit. Thank you for that. In the graph that you showed, I think we used the term yield. I want to make sure that I'm understanding that term correctly. Yield is meaning what in that graph.
156 Could we go back to that.
157 Next one.
158 That one. There we go. And michael I'm going to have you if you can hear us we have the historical yield slide up. If you want to speak to that.
159 So you're just looking at a graphical representation of the return of the portfolio.
160 Okay.
161 So the so the second slide with the the dollars are the the amount of interest earned on the portfolio. And this, this yield will transform into the return as a as a percentage.
162 Okay. So.
163 So like for like at that that graph there we go back into like 2014 2015 post market collapse. You know the federal reserve reduced rates dramatically. The portfolio yield and the amount of yield offered on bonds we're investing in dropped equally. Right. So the return on the portfolio dropped. And then it can vary. So we've had, you know, rising interest rates for the last five years coming out of COVID. And so the return has has improved. So you look you know generally the average average duration of our portfolio is somewhere around a year and a half. Historically. And so when you're looking at comparative yields, you look at the two year treasury note and say today it's paying 360. And and so that the yield on that fluctuates. And so like the portfolio we're continually investing money as it comes in from the city into new new new bonds to add into the portfolio. And that affects the return and the amount of money we earn long term. But it doesn't change dramatically. We we take a lot of money in every year. You know, we have an $8 billion annual budget. The vast majority of all of that is is spent. So the fact that we we take money in and spend it all every year limits our ability to add duration to this portfolio. So we really have a pretty short term book, and we're limited to investing into the front end of the curve, where interest rates are generally typically lower.
164 Thank you.
165 I don't know.
166 Yeah that's great. So the reason I wanted to highlight this is that this graph shows a dip in our yield at a time when if we if we are not careful in how we think about our city investments as bond related and not just playing the stock market, because often as a, as a policymaker, right? When people talk to me about this issue, they have a strong opinion up or down about we should or shouldn't invest in. And they kind of use that term as if they're talking about buying stock in one company over another, picking our favorites, picking our enemies. Et cetera, et cetera. And if I were to put this graph against the stock market, it looks different in 2021. And if I think about what was happening in 2021, we were all refinancing our homes in the two and 3% world, and now we're not buying homes at the six and seven and 8% world. And so we see those price of bonds. But it's very different if we're not careful in how we talk about this conversation about buying stock, because those were also years I, I'm pretty sure that it felt like people were in the stock market seeing earnings that wouldn't reflect this graph necessarily. And I just I wanted to use this as a moment to kind of highlight the difficulty in sometimes this conversation, because what we buy is not what if I go to my broker and buy necessarily buy stock in a company or not? This is slightly different. And I just thought that this graph, given our experience through and you noted a big change during the pandemic and into now, and I think we've all lived that. And it's a recent example of markets and differences in bonds versus stocks, etc. That up until this point, I don't often hear get talked about when we talk about institutions, investment policies. So just thank you for including it. Thank you. And michael, thank you for the the yield explanation. It gives me more now to talk when stakeholders come and talk to me, gives me more to understand and and talk to them about our portfolio. So I appreciate that. I don't have any other questions. I'm looking to my colleagues before we go to public comment.
167 I'll just note that I'm glad that we weren't in crypto. And I mean, we made a lot of money, but then potentially lost a lot of money even more than that. So good on you for not doing that.
168 I agree.
Procedural episode · turns 169–177
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169 You heard it here first. Greens happy we weren't in crypto okay with that let's go ahead and have you both step back and we'll have public comment. Let's call three up at a time please.
170 Sounds sounds good. The first three david chen, lydia kiesling, sally jackson you can all come forward.
171 Great. Come on. Forward. Introduce yourselves. And whoever gets up there first, take it away. You're up. Go ahead.
172 Hi.
173 My name is lydia kiesling, and I'm a member of Portland dsa. I live in district three, and I'm a proud mom of two ps students. I'm here today to ask that the finance committee and the city council as a whole implement a human rights screen for our investment policy. History shows that economic boycotts, divestment and sanctions are critical to movements for justice. The apartheid regime of south africa was toppled by south africans, with global support from individual grocery store clerks to national governments. I believe our city investment policy can help bend the arc toward justice, or at least better reflect portland's values by using human rights as criteria when deciding how to invest and spend our public dollars. It's my understanding that there are logistical concerns around amending our investment policy, both due to the nature of the corporate bond market and the need for a third party service to assess investments based on human rights. Respected organizations like the American friends service committee have helped other cities find workarounds, from manually adding a short list of companies to asking providers to create custom indexing products. If the nature of our financial system is such that truly there is no possibility for ethical investment, that's a bigger problem. Like I said, I'm a democratic socialist, but surely our council can create a framework that would avoid direct investments in companies that are not in the stocks, but in the bonds in companies that that appear in reports, for example, human rights reports or un watch lists. Our current policy already prohibits investment in security services, and I would argue that some tech companies have already moved us out of compliance through their role in civil liberties infringements here and abroad. I know that what is happening in congo, sudan, the occupied west bank or gaza, where Palestinian families continue to be killed daily despite the so-called cease fire, may not feel like a priority to our local government. But there are many reasons to take action on human rights. It's not just empty rhetoric that many struggles are connected. The technologies of surveillance and incarceration that Israel uses in its systematic violations of Palestinian human rights are also used by ice agents to track and kidnap our neighbors. In Portland, I volunteer with perc, and I have seen with my own eyes the way portlanders are being tortured by the paramilitary force that uses some of these technologies. Although countries, including the us, have consistently made a mockery of the post-world war two legal framework intended to prevent atrocities like the holocaust, that legal framework does exist, and it obligates governments and corporations to act in the face of atrocity crimes. If justice ever becomes a guiding principle of our world, governments, companies and the individuals within them will be held legally accountable for their economic support of criminal regimes. On the pragmatic side, while American politicians may not think gaza matters, their constituents do. Horror around america's role in gaza was a factor in kamala harris's weak performance in the last election, just as it helped propel a historic ground game and electoral victory in the new york mayoral election. Constituents want to see effective legislation that addresses our moral objections to genocide. This is one of the most direct ways you, as legislators, can take action for the families of gaza, sudan, congo or any place torn apart by human caused violence. Please take action. Thank you.
174 Thank you for coming today. Ma'am. Please go ahead.
175 Yeah.
176 Good afternoon, I'm sally jackson. I live in southeast Portland, district three. I work with Multnomah democrats, foreign policy and criminal justice study groups, and I am active with the Oregon for human rights coalition. I'm testifying today because I'm very interested in investments made by our city. I want Portland to profit from entities that support human rights, abide by law, protect our environment and benefit our residents. I'm very glad that Portland already has a policy of not investing in the petroleum industry, nor in alcoholic beverages, casinos and gaming. For profit correctional facilities, small arms and security services. But now I want city council to update and significantly add to this list. This will mean divesting from some current holdings, such as corporate bonds invested in five companies amazon, microsoft, google, nvidia and intel with ties to the Israeli military, us immigration, us military and or us prisons. But I'm confident that there are many profitable new investments that can replace them. I say this because there are other cities saint louis, medford, massachusetts. Somerville, massachusetts, iowa city, Portland, maine and northampton, massachusetts that have already divested from entities that violate their values, which they wouldn't do without knowing that they can meet their financial goals through ethical investing. Portland's portland's expanded list of prohibited investments should definitely prohibit entities that contribute to the violation of human rights or international law anywhere from denial of due process to genocide. Portland should not invest in corporations that harm our environment, including other fossil fuels besides petroleum or in spyware companies that sell to countries that participate in warrantless surveillance or in large weapons, corporations that arm governments engaged in serious abuses, or entities that contribute to the illegal and harmful treatment of non-citizen residents of our own country. We are a sanctuary city, so no company that violates due process and deporting immigrants or detains them in inhumane facilities deserves portland's investments. I have great confidence that you, our city council's finance committee, will come up with expanded screening policies that are up to date and reflect the values of portlanders. Thank you.
177 Thank you for coming today. Let's go ahead and call the next three.
178 Up next we have julia ford, rod such and ricky king. Julia your online you can unmute.
179 Thank you. Hi everybody. My name is julia ford. I'm a lifelong portlander living up here in north Portland and alumni of Portland public schools, a precinct committee person for the Multnomah county democrats, a member of Jewish voice for peace and a member of the Oregon Jewish caucus. Because I'm Jewish, I believe deeply in the words never again and in the universal dignity of every human life. That belief demands that we hold our own institutions, including our city investment policy, to the highest standard. It's mind boggling to me that here in Portland, a city that outwardly prides itself on progressive values, that we still don't have alignment on ensuring that our city's investments, our tax dollars, are not funding human rights abuses both here at home and abroad. We you took the right stand to withdraw our complicity in the genocide in sudan, and it's now time to apply that same standard to any entity, for example, corporate or foreign bonds violating international law. This includes the Israeli government, us immigration enforcement, and other components of the prison industrial complex. The frameworks to make decisions to implement and reevaluate our investments against robust esg frameworks well beyond credit worthiness do exist. Our current policy is out of date, and we are behind other cities in our ability to uphold the values of our constituents, our taxpayers, all of us. Right now, nearly $140 million is tied up in corporate bonds from companies that sally, sally named amazon, microsoft, google, nvidia, intel. Companies which are directly involved in technologies used by the Israeli military, by us immigration enforcement, by the us prison system. As a sanctuary city, this should deeply trouble all of us. As a Jewish portlander, I want to be very clear that applying a human rights lens to Israel, to every government, including our own, it's not antisemitic. It's our moral responsibility. Every major international human rights organization from the world health organization to human rights watch, amnesty international to doctors without borders, from save the children to the united nations nations, they have documented Israeli apartheid, ongoing genocide in gaza, ignoring that while claiming to stand for justice is an abomination to my Jewish values and to our values as a city, Portland must join places like saint louis, northampton, medford and somerville, massachusetts, iowa city, Portland, maine in adopting a strong and expanded human rights and international law, screening for our city investments. Our city policy must reflect the current realities of technology, global finance, and human rights. Our money should be out of genocide, out of illegal deportations, out of racial profiling, out of human rights abuses. Thank you.
180 Thank you sir. Go ahead. Sir.
181 Rod.
182 Oh, okay.
183 Sorry. Thank you. Finance committee members. My name is rod such. I live in district three. As you review portland's investment policy today, I'd like to remind you of some history. In January 2016, the Portland city council voted unanimously to suspend investments in corporate bonds for one year. This suspension came in response to widespread community protest opposing portland's investments in bank of America and caterpillar inc. The grievance against bank of America was due to its financial aid to the private prison industry, and. The dakota access pipeline, which was being built illegally on the lakota sioux reservation. The protest against caterpillar was due to its role in war crimes and ethnic cleansing in Palestine. Rather than single out these two corporations for their bad behavior, however, the city council enacted a one time, one year ban on all corporate bonds, almost as if to avoid taking a stand on caterpillar and bank of America. Since 2016, I have monitored the city's portfolio, and I've been grateful to see that the city has never again invested directly in caterpillar. Recently, however, I discovered a little noticed news article in which the former city treasurer reassured the supporters of apartheid that Portland would continue to invest in caterpillar via the state treasury's short term fund. Today, that short term fund has more than $350 million invested in caterpillar bonds and commercial paper. Fortunately, this egregious decision on their part can be remedied because Portland can withdraw voluntarily from that fund. Its participation is not mandatory. Portland must not continue to invest in a company that has played a major role in the genocide in gaza, a company that has refused to stop selling its equipment in the state of Israel. Even after video evidence revealed the use of its equipment in the mass burial of Palestinian ambulance drivers and rescue workers, the international court of justice ruled in July of this year that israel's occupation of Palestinian land is unlawful. Caterpillar has long played a role in that illegal occupation and the ethnic cleansing of Palestinians. Any investment in caterpillar in those is a violation of those war crimes. I urge you to notify the board of the short term fund that Portland will live up to its value and will affirm the importance of international law by withdrawing from the fund, so long as it is invested in caterpillar. Thank you.
184 Thank you.
185 Ricky is online. Ricky, you can unmute and begin your testimony.
186 Hi there. Thank you. Councilors and council president I'm ricky ricky king, I'm from northeast Portland. I'm active with the Portland democratic socialists of America and Oregon for human rights. I live and was born in district three. I'm here to ask the finance committee to genuinely work, to find a way to include human rights abuses in the investment over overlays mentioned earlier in the presentation. Right now, several of the tech companies in the city's portfolio, those being mentioned earlier, amazon, nvidia, microsoft, google have well-documented ties to the Israeli military, and each of them have a detailed company complicity profile on the on the no tech for oppression. Documentation on bds movement, and I'd be more than happy to provide those documents to the committee or to your office emails after the hearing. In terms of of prophet of violence ends up being pretty profitable, especially if you're in the business of selling weapons tech or surveillance software. One of the most striking ways that our money here in the us and and through the city of Portland, that we enable genocide is through project nimbus, which is a joint contract with amazon, google and the Israeli government and military that enables the latter to use an ai system called lavender to identify which gazan targets or which people to airstrike. Last year, Israeli news publications themselves reported that this method led to the many of the thousands of civilian deaths in gaza. The city has already prohibited investments based on their impact in the world, and it's long past time that we include human rights in these socially responsible overlays mentioned in the investment policy presentation. And while the bloomberg standard industrial classification may not be the way to do that, the way that our the way that the office already does. So I also don't agree that like a credit score is enough to reflect whether a company is committing atrocities. A few of the of the cities across the country mentioned earlier, including two recently massachusetts. Both medford and northampton, most recently have passed divestment language at the city level, and in northampton, they resolved to divest from companies that contract with Israel in September, September 18th of this year. And from an article about the vote, there's this quote saying the next step in divestment is for the mayor and treasurer of the city of northampton to negotiate and determine financial logistics. The city council members have developed a two year plan to ensure divestment will occur, along with more investment investing in the future. So it's possible to resolve to move towards divestment and to remove our funds from genocide and human rights abuses without without having the full framework immediately. The afc the afc has helped cities to build a framework and a short list of investments to avoid. And I agree that the burden of judgment shouldn't fall on a city, a single city employee. But I do think that there's some manpower and time that needs to be dedicated to finding a solution so that our city can be and actually ethical or socially responsible investor in more than just name. Thank you.
187 Thank you. We can call.
188 Next we have sammy ortoleva, danish ortiz and lori mercer.
189 All right. Go ahead and introduce yourself. Thank you for being here.
190 Thank you. My name is doctor sammy ortoleva. I'm a queer Palestinian and I'm a recent addition to the Portland area. Were it not for the united states, support for the ethnic cleansing and genocide of my people, I would have been born in Palestine, but instead I was born here on occupied native land. We have all seen the images from Palestine the last two years. The mass murder of indigenous Palestinians, the total leveling of civilian infrastructure necessary to maintain life in densely populated regions like gaza, both only made possible by weapons primarily provided by the united states. The proposed investment policy lists prohibited industry classifications that were discussed earlier, based on the bloomberg industry classification standard, which notably includes a prohibition on investing in small arms but no prohibition on large arms manufacturers producing the bombs affecting genocide as we speak, and as the zionist state continues its destruction of gaza despite the so-called ceasefire. But physical arms manufacturers alone are an insufficient exclusion. With American support, Israel has dropped so many bombs on gaza that it cannot select its targets manually. Tech companies such as amazon, google and microsoft have eagerly stepped up to provide the digital resources to allow automated target selection, digital infrastructure and the ai models that run on it are themselves weapons when deployed, as they are against my people in Palestine, just as there are weapons when deployed here by the department of homeland security and immigration and customs enforcement. The most current report on the Portland on the city of portland's investments from last month indicate that the city holds $68 million in amazon corporate notes, $26.4 million in google, and $30 million in microsoft. Three of the most participatory companies in the genocide in gaza. The current policy is clearly failing and in no way prohibits investments in the most egregious companies, as claimed earlier on this agenda item. The further claim that credit creditworthiness concerns alone are sufficient did not stop these corporate note purchases. Over $20 million of the aforementioned corporate notes the city currently holds in those three companies were purchased in 2020, five years after the total leveling and genocide in gaza was broadcast to the whole world. Years after, there was time for that to be reflected in the credit worthiness. Purchasing a corporate note is a direct monetary loan from the city to the corporation in question. It is material support and it must reflect our values. I urge the commission to add a human rights screen to its investment policy. Prohibited industry classifications alone are insufficiently granular, as many industries, like many technologies, can be used both to benefit people but also to commit genocide. Thank you.
191 Lori is online. Lori can unmute and start.
192 Hi, my name is lori mercier. I'm a longtime Portland resident in district four. I urge the Portland city council finance committee to adopt a human rights and international law screen on city investments. It's disappointing to learn that the city currently has investments in corporations that abuse human rights and violate international law, as others have specifically addressed today, our investment policy needs updating to reflect the values of portlanders and to avoid financial risk. There's a growing movement in cities across the united states, from maine to california, and in cities and countries around the world, to divest from weapons manufacturers and companies complicit in human rights violations. For example, alameda, alameda county, california, the norwegian sovereign wealth fund, and the netherlands have divested from caterpillar due to its role in supplying bulldozers used in israel's murderous assaults on gaza and used to bury the bodies of Palestinians to cover up war crimes. Unfortunately, as rod earlier mentioned, the Oregon treasury still holds more than 350 million in caterpillar financial instruments in the short term fund. Not only should we not be investing in companies that profit from death and destruction, these companies are or will become unprofitable and risky. The investor alliance for human rights notes. As the global economic costs of conflict and violence climbed last year to an estimated $19 trillion, or almost 15% of global gdp, these trends are also having material impacts on investors. The united states currently spends over $1 trillion annually on military weapons and warfare, and the pentagon is the number one institutional polluter in the world as it unleashes over a billion metric tons of co2 in the atmosphere from its 800 military bases and multiple bombing campaigns. It destroys human and environmental life when that money is sorely needed in American communities for basic needs, including housing, food security, health care and education. Our cities, including Portland, can be laboratories for turning to more socially productive investments and withholding our capital and taxpayer investments away from the material and moral risks of the military industrial complex. Numerous studies indicate that portfolios with the human rights or socially responsible investment screen typically perform similarly to or better than traditional portfolios, plus they can reduce risk. Their long term, long term performance is generally considered to be competitive, and incorporating these screens aligns with ethical values without sacrificing financial returns. The references today about some of these rating agencies that can help us provide the screen, including the united nations, the American friends service committee and others.
193 Thank you.
194 City of Portland.
195 Thank you, lori. Appreciate that any more.
196 Yeah. Next we have hyung nam, irina haass, and chris lo hyung. You can unmute yourself and start your testimony.
197 Hi, my name is hyung nam, and I was one of the members of the socially responsible investments committee for Portland. And I'm looking back at my notes and documents here. And first of all, I just want to say that I think it's important for us to have a human rights screen and to remember that the impact that the global divestment campaign made against apartheid in south africa, and that we need to do the same, especially considering the situation with Israel and the fact that the international criminal court of justice and also un experts have raised concerns about apartheid and genocide. And what I want to urge is that we should not rely on something like the morgan stanley msci proprietary. Ratings for esg. When we looked at it before as a committee, it spent quite a lot of time on this. We found that to be completely insufficient with them rating corporate bonds from companies like wells fargo and caterpillar to be invest to be rated high enough to be investable. And the whole idea that this is all proprietary and not nontransparent is really a problem. But I think the important thing is that the city not buying these bonds by themselves does not make a huge difference. But the important thing is that we join this campaign, international campaign to make a difference. Just like what happened with targeting apartheid and simply not investing in any corporate bonds like what the city did because of the controversy back when this was brought up is not good enough, because we really do need to name these companies. This is really kind of a symbolic thing, but for us to do our part in this global campaign against apartheid and genocide, and I'd be happy to talk to you in much more detail about our experience back when we had this committee and spent all this time looking through the msci reports, which we had to return to council because those were all proprietary documents. Thank you.
198 Thank you. Go right ahead, sir.
199 Hi, my name is chris lowe. I live in district three. I'm a member of Portland dsa and a Jewish voice for peace. I'm also the holder of a phd in african history from yale university, where my research focus was on southern africa, and I was very active in the anti-apartheid movement relating to south africa in the 1980s and into the 1990s. Basically, I want to testify in favor of a robust and principled human rights screen for city investments. I think I it's wouldn't fit probably into how bloomberg classifies industries, but as a sort of principle. I to the ones that are listed there in the current policy, I would want to add something like services related to the administration of human rights abuses. And. This is partly informed by my memories of the anti-apartheid movement against south africa, where the question of ibm was of great importance because they were they supplied computer equipment of that day for the administration of passed laws and other forms of internal repression in south africa, and which were sort of considered to be by some people in a sort of gray area regarding an international arms embargo that went on. Anyway, I think that part of the lesson about south africa that comes up now is that one of the kinds of screens that was used was collaboration with oppressive governments of particular countries. And, you know, which that also has a certain kind of objective quality. So, you know, to me, a principled policy would potentially involve, you know, we've heard about sudan, democratic republic of congo, one could add the philippines, chinese practices towards uyghurs in xinjiang province, actors in the yemeni civil war, possibly el salvador, possibly nicaragua. So but I think there probably would need to be some kind of body that was assisting administrators of the funds to make that kind of determination and be consulting with the citizens of Portland about our values and which countries may be making practices that violate them. Thank you for listening to my testimony.
200 Thank you. Mr.
201 That ends public testimony for today.
202 Okay. Appreciate everybody who signed up and was able to make it down here and testify. Colleagues, I'll look to see if there's any discussion before we entertain any motions.
203 I apologize. We have one other person online who. Please go ahead. An incorrect name. Yep. I'm going to go ahead. Allow them to speak I irina haas, you can go ahead and start speaking.
204 Hi. Thank you. Good afternoon, city council. My name is irina haas. I'd be there today, but I'm sick. I'm a mother, documentary filmmaker and taxpayer. I urge city council to bring human rights into our investments, as so many American cities have already done. In 2004, I visited the west bank with my cousin, who is a professor and was doing work there. What I witnessed profoundly impacted my life. The west bank land, about the size of delaware, has been and continues to be broken into noncontiguous islands. Israel fractures community movement and basic freedoms by building the wall and then breaking them apart with so-called settlements, the word settlements and bypass roads. Bypass roads are made just for Israelis, make very destructive, destructive, deadly and cruel practices seem almost benign. One morning I observed a man helping an old woman who was attempting to climb over a new part of the wall. She was probably trying to see a family member. I'm guessing it was her daughter or her grandchildren, and she couldn't do it. And I tried to imagine my mother trying to do the same thing every day, and I couldn't. I saw checkpoints that would take hours for people to get through. I saw teenage idf soldiers standing around Palestinian markets, huge guns slung over their shoulders. I saw rubble, wreckage and poverty. And I remind you, this was in 2004, in jenin. I remember climbing a hill of rubble and then seeing a boy who was about ten years old playing there, and he smiled at me. And I think of him sometimes. Is he still alive today? Does does he smile like he used to? I bring this up because it is far past the time to divest from large weapon manufacturers that uphold genocide. We need to divest from surveillance tools that spy on people without judicial authorization. We have to divest from any and all corporations complicit in genocide, and we need to divest the entire range of the fossil fuel industry. And finally, we have to divest from any entity that cooperates with ice detentions and deportations, especially without official warrant. All these things are supremely connected, and I know you've all heard that before, so I won't belabor the point, but those of us who have been aware of what's been happening in Palestine for 75 years knew that this kind of terror would make its way here. And of course, it's here now with kidnapings on the street, with Israeli software that hacks phones and scans people's biometrics, including their pupils. And next week, I plan to speak about tear gas at your next city council session. I just want to close by saying money is a love language of the fossil fuel industry, Israel and ice. And we the people need representation that are going to do the right things with our tax money. I voted for you. Please do the right thing.
205 Thank you. Okay, colleagues, we'll go now to any discussion before moving to a motion. Councilor Green.
206 I just I just want to know I appreciate the testimony today. I know it's difficult to talk about. It's an important thing that we need to take, I think stock of in our city. I did not bring an amendment today pursuant to some of these things, because I think you have to do a little work to get there, and I haven't I don't think, given the space to do that thoughtful work, I am interested in moving forward on a human rights screen. So I'll be working on that over the course of the next year. And I, you know, look forward to working with those of you who have some expertise in this area and anyone else wants to work with me. Thanks.
207 Vice chair.
208 Thank you. Chair. I'll just note that in listening to the testimony, I heard a lot of different asks. There were asks for human rights. Screen asks about fossil fuels more broadly than we already have. Asks about international law and specific companies, and asks about investments in both broader and narrower lists of countries. So I think as we. Potentially see more discussion, that it sounds like you're going to bring forward, I'll be interested in hearing from you. Councilor how that relates to the broad array of asks that we heard today, because I, I think there were some themes that wound through them, but certainly not the same asks from everybody we heard from.
209 Okay, I'm not seeing a lot of other discussion. I will be supporting this moving forward as it is. If there is more discussion to be had. I think that a deliberate and also a specific dive into the concerns that exist for some of these, because I often do not hear the specifics that come with the concern. When you name a company, I am not prepared to, at this point, move the city away from bond investments in in some of these corporations, as our cfo and our treasurer outlined, it sounds like only about 40 corporations out of the however many exist even qualify currently that we're investing in. And so I am appreciative to councilor, Novick and others from the previous council and the work that they've done. I'm not prepared at this point for any additional work. I would entertain a motion, though, to to pass this to the full council. If my colleagues would so entertain.
210 So moved.
211 I'll second.
212 Okay. Moved by councilor Novick and seconded by vice chair pirtle-guiney clerk. We can call the roll Green.
213 No.
214 Pirtle-guiney I.
215 Novick I.
216 Zimmerman I.
217 The motion is approved with three eyes and one no vote.
218 Okay thank you colleagues. And also to everybody who showed up for testimony today. It is appreciated. And I know it takes a lot of time out of people's days. The that concludes our items for today. The next meeting of the finance committee will be next week on 1117. And with that, we're adjourned.