The record · Transcript
Council Session — 2025-10-06
Transcript from the session's official auto-captions (18,084 words), shown in readable case and split into speaker turns. Speakers are not yet identified (colors just separate consecutive turns). Auto-captions can contain errors — check the recording for anything that matters.
Session summaryEditor-reviewed
The Transportation and Infrastructure Committee met on October 6, 2025 (per the transcript, though the roll call/agenda references note this as a body session with roll call presence recorded). The committee heard three items: a recap of a recent state special legislative session on transportation funding, including discussion of state funding estimates for Portland that were stated inconsistently across figures presented, the possibility of a ballot referral effort and its potential timeline impacts on fund availability, and related budget pressures facing the transportation bureau; a presentation from the Water Bureau on water supply sources, wholesale and retail customer structures, demand trends, conservation programs, and fixed-cost pressures affecting future rates; and an annual report on the Bull Run Treatment Projects, covering construction progress, land use appeals and a related construction suspension, workforce and contracting details, cost figures that were also stated inconsistently, and financing through loans and bonds. Discussion included questions about wholesale customers departing the system, minority contracting protections amid a mayoral executive order, contingency funding, and future rate impacts. A motion was made regarding the Bull Run report; votes occurred, with outcomes recorded in the vote ledger. The meeting concluded with an announcement that the next session is scheduled for October 20.
AI-drafted from the session's auto-captions, reviewed by an editor — describes the discussion only; recorded votes live in the vote ledger. Captions contain errors.
0 Okay.
1 Good morning everyone. I'd like to call the meeting of the transportation and infrastructure committee to order. It's Monday, October 6th at 9:30 a.m. Diego, can you please call the roll?
2 Good morning.
3 Green here. Smith. Here.
4 Koyama Lane. Morillo here. Clark here.
5 And, claire, can you please read the statement of conduct?
6 Good morning, and welcome to the meeting of the transportation and infrastructure committee. To testify before this committee in person or virtually. You must sign up in advance on the committee agenda at Portland city council. Agenda slash transportation and infrastructure 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, please 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.
7 Thank you claire. So today we have three items on our agenda. First, we're going to hear from PBOT and our government relations team on the outcomes of the recent special legislative session. Can I just say hooray. And then we're going to hear from the water bureau to give us an overview of the city's current water management and conservation work. I thought it was important that we hear this before. We hear our third item, which is the annual report on the bull run treatment projects. Diego, can you please read the first item?
8 Item one legislative special session recap.
9 Great. The special legislative session finally came together, focused on transportation funding and wrapped up just last week. So we've asked PBOT and I think we have dca dhanapala here. Nice. And government relations to update us on exactly what passed, what happened. So I'll hand it off to dca. Good morning.
10 Good morning chair Clark. And councilors t&e committee. I'm the dca for public works. I'm very pleased to be here this morning to talk about the recently passed state transportation package. This long awaited state transportation funding will be critical investment in helping to stabilize transportation operations in the city of Portland. And we are very thankful to you and all of council who helped advocate for this funding and for the Portland delegation in Salem, who helped get it over the finish line. This is the funding that will help us keep critical systems going in the city of Portland. It will help us fill potholes, fix traffic signals, and clear the roads when there is snow and ice. And this funding will help us to keep Portland moving. While this funding is incredibly good news, it will help stabilize things. For now, it is still, unfortunately, just a stopgap. The transportation system has been underinvested in for years and our needs are many. I look forward to continuing the work with this committee and all of council as we think about how to stabilize and invest in our transportation system. And with that, I will turn it over to PBOT director melissa williams and director sam chase, who will share additional specifics about what this package means for PBOT and what will be next in Salem.
11 Thank you so much. Okay, can everyone hear me? Good morning, chair Clark and the members of the transportation and infrastructure committee. I'm also pleased to be here discussing the state transportation package. I know the questions that many of you have on your mind is how will this benefit Portland? As you see here, we are estimating that in this fiscal year, the city of Portland will receive about $10.6 million. In future years. The amount will fluctuate a bit, but it is estimated to be around $24 million ongoing. Unlike versions of the state package that did not ultimately pass, the amount will not increase in future years to keep up with inflation. Although this funding is welcome news, without additional funding, we will very quickly lose ground again. There are other ways that this package will benefit the city of Portland as well. Our partners at ODOT, TriMet and Multnomah county will also receive funding that will help them provide critical services to portlanders. Next slide please. The most immediate impact of this funding is that it covers the approximately $11 million that was already assumed in our fiscal year 2526 budget. This is critical funding, which eliminates the need for any additional position reductions or service cuts this fiscal year. It is important to note that there is an ongoing effort by republican legislators to refer this bill to the voters. Petitioners will have 90 days from when the legislature adjourned, which was October 1st, to get the signatures needed to send the bill to the ballot. If petitioners are successful in gathering signatures, funding will not be available until after the November 2026 election. We have heard questions, whether regarding whether or not PBOT has extra funding this fiscal year. Let me address this head on. Our budget forecast is somewhat dynamic, and there are indications that revenue may be less than indicated. We receive forecasts from ODOT about state funding twice a year. The forecast that we receive in April was lower than the forecast that we received last year in October, which is what we based our budget on. We will receive another forecast soon, and we're anxious to see whether it will have decreased further or if it will bounce back a bit. Our parking revenues also remain dynamic and it is not yet clear how they will end up this year. Given the signs, it is likely our revenue will come in lower than expected. Finally, the extreme budget pressures over the last seven years that we mean that we've borrowed against some reserves and set asides. If we do end up with any extra resources, we would ideally like to be able to pay back those set asides. Next slide please. Even in the longer term, this funding is really just a drop in the bucket filled with many competing priorities. We look forward to working with all of you as we go through the fiscal year 2627 budget process to program any additional state funds. Looking ahead, there will be many considerations as we think about these funds, including the cost to simply cover our current service levels is expected to continue to rise significantly due to inflation and other costs. Other indicators we have ongoing commitments like continued expansion of street sweeping, which will require increased funding. Over the last seven years, we've had to make a number of painful cuts, like significantly decreasing our contract paving work. Micro surfacing, which is another form of pavement maintenance. Small safety projects and even things like funds to replace parking meters. Not very exciting, but still very necessary. We also have significant liabilities that we've not been able to take care of. We have street light poles that we cannot maintain or replace, signs that need replacing, and we face risks if we cannot keep up with reasonable timing on filling reported potholes. We continue to see increased severe weather and with that, increased costs to to address flooding, landslide abatement, and to keep the streets clear during snow and ice events. For instance, already this fiscal year, we've had unexpected expenses associated with addressing damage brought on by the landslide. Finally, we appreciate your support of the transportation bureau and your efforts to introduce resolutions related to asset management. The sidewalk improvement and paving program and vision zero, and know that we will only be able to make progress in these areas with additional funding. Unfortunately, the list is of needs is quite long. Again, this state funding is very welcome, but will not get us very far towards meeting all of our needs. With that, I will turn it over to my colleague sam chase to talk about what's next in Salem.
12 Excuse me just for a second. Sam, before we move on to director williams, can you review one more time? The timetable, which when we are expected to get the funds. But we have to wait until we see if there's enough signatures to put something on the ballot. Could you just review that timetable again?
13 Sure. If we did not have the resolution to the potential of a resolution, excuse me, of a referral, we would be able to begin to realize funding as soon as January of 2026. So that 10.6 million, roughly would begin to impact our bottom line. Then, if we have to wait on a referral once the 90 days from October 1st. So kind of in line with the beginning of the year as well. We have 90 days, 90 days. There are 90 days that need to pass, during which time signatures can be gathered, and if there's enough support for a referral, then it will be 2026. So they any funds.
14 Let me make sure I understand they have 90 days to collect the signatures. Is that right? That's correct. That's correct. So we should know maybe end of January, something like that. In which case then you would expect the measure to be implemented, the legislation to be implemented, and we would start to receive funds in February ish. Maybe.
15 That's right. Yes.
16 Okay.
17 Thank you. And it would be that $10.6 million.
18 That's if they get the signatures to get it on the ballot.
19 If they get the signatures to get it on the ballot, it would be delayed until February. If they if there is indication, early indication that that will not be likely, they may abandon those efforts.
20 Right. Thank you so much. All right. Now, sam, please proceed.
21 I would just, you know, provide kind of a little bit of a reminder about this long and arduous path that we are on, that we've been on and that we have, you know, to look forward to. And it goes back to putting a transportation package in the city, working on a transportation package for many years, getting ready for this last session. We all know how that kind of played out toward the end of session. And I just want to thank this council once again, because stepping in at the very end of session and saying, look, an ODOT solution that is a solution for ODOT only is not acceptable because of the condition of our streets and the folks that we have here at PBOT to do the work that is needed. That is part of one big state transportation system. So that was a really important. The council and the city activated very quickly at the end of the session, and I think really made a big difference in saying, hey, look, you got to take time and come back and take care of cities, too. And it was one of those moments where we saw that Portland really did have a big influence on the on the outcome and that messaging and getting people to understand and be well informed. So that happened in September. Hb 39191 passed. Of course, it it it's only some of the measures that we wanted to see forward. And so we look forward to continuing to try to navigate, you know the you know any potential referral, but also looking toward those other priorities that we still need to take care of. And so, you know, one of the silver linings transit is going to be sunsetted in two years. One of the silver linings might be that, you know, there is going to be a larger coalition of folks continuing to push for those long-term transportation solutions for great streets, safe route, safe routes to school, the rose quarter, and and and other key priorities. And so we'll be working through the the I think shorter term and the short session to be defending and making sure that these policies and these shared revenues stay in place and then looking toward long session to be preparing and really articulating the importance of the work that is yet to be done.
22 Thank you. Colleagues, do you have any questions for our panelists here? I have one more or two more. Oh, I see councilor Smith's got her hand up. Sorry, councilor Smith.
23 Thank you. Thank you, sam, for giving us this update. I have a question. We were awarded. I think it was $10 million that director williams had told us about from the biden administration that would be able to be used for sidewalks. Has that money been released yet?
24 Have to. I'll have to look into specifically which which funding you're you're thinking of there and get you that information.
25 I can follow up. That is for a sidewalk project. The funding is has been obligated. It's dedicated. It will not be pulled back. But it is for a very specific project. I believe it's the 122nd avenue project. I can double check on that.
26 But that was for $10 million, right? Correct. And we reapplied for it again this year, but we don't know if we got it.
27 That's correct.
28 Okay. So do you know when we'll find out if we receive those funding.
29 I'll need to follow up with the team. We made the submission by the required deadline, but I can follow up to find out when we can anticipate hearing from the us department of transportation on that.
30 Excellent. Thank you.
31 Okay. Councilor Green.
32 Thank you, madam chair. And thank you so much, sam and your team for helping us get this across the line. It was terrifying to think we got that far without those funds. And we we did it in no small part. Well, largely to your efforts, I appreciate that. I want to use this opportunity to highlight an op ed that sarah iannarone and representative mark gamba wrote, published in the Oregonian last week on October 1st. And it might have gotten buried because a lot of things happened over the last week related to the federal government invading our city. But they it's an excellent op ed, and it speaks to the sort of state of play with transportation funding in Oregon. You know, the grateful for the stopgap bill. But what they're what they're saying is that we must not think of this as a solution because it is not a solution. And they've offered a number of ways to to take the opportunity, the lessons that we've learned. And this is comments for anyone listening, it's not not for you, of course. Of course you know this, but is we need to take the next year as a turning point to think about how we want to fund infrastructure going forward at the state level. Our current model up to this point is not going to serve us well into the future for providing the surety and certainty for a changing transportation mix and the challenges that we have. And there's one aspect of that article that really speaks to me, and it speaks to all the work we do at our council and across all of our committees, which which is a sort of appeal to stop treating transportation, climate action and affordable housing is is three separate domains of practice because they are all intertwined in the same thing, because you can't really have a rationalized transportation system that's cost efficient if you do not have dense housing and residential mix in an urban core, like like Portland, because then you get folks living, moving out to the suburbs, and that's just not sustainable from from any measure. You also can't. And we're going to get into this discussion later with the water bill stuff, but it's hard to keep up. Bottom line, it's hard to keep up with the fixed costs of a modern city if we cannot grow our population. And so I think that as we are sequencing all of our work and we're I think we're having broader discussions about what our priorities are as a council as a whole. I would just make the appeal that every time we think about transportation, we need to also be thinking about climate action and also be thinking about affordable housing as well. So just wanted to use the the pulpit in this moment to, to sort of raise up that op ed, because I think folks following this conversation would be well served by reading it. Thank you.
33 Thank you, councilor Grenier here to all of that. You sound like a true urban livability advocate, of which we had many over the last, you know, 40, 50 years. But it's good to have it back.
34 I'm a hot dog urbanist, as their say.
35 I have a question, sam. It seems like it's been a tradition as long as I've been around that every seven years or so, the legislature puts together a huge transportation package. They take a great leap forward, and my sense is that those days may be over, given the struggle that we had this time where the legislature had, and that efforts may become smaller, more regular, more piecemeal. I do have an opinion about that. Or does your staff, it just seems like that may be the the way of the future.
36 Well, I mean, I, I can say there's a lot of speculation about what it will look like in the years to come. You know, obviously we're not getting the big, big boost that we, you know, hoped we would as as is the tradition and it looks like it will be, you know, for the near and mid-term future, more of a, you know, going each biennium. I am worried about having peeled off some of the transportation package in one part and then coming back for the rest, because you don't have as big a coalition saying, we need we need to do all of this work. And so that is, you know. You know, crystal ball, you know, would be really helpful to to be able to say how that all plays out. But I think that dynamic is different, and I think it's going to make it very challenging to get, you know, kind of a full package. And. And so for the time being, there is going to have to be a year to year approach, unfortunately.
37 And it used to be a lot more bipartisan. I think coming together on the package. One question I forgot to ask director williams is back to the signature gathering. If they are able to collect the signatures, is it on the may ballot or the November ballot of 20th.
38 November ballot?
39 The November ballot? Okay, that that's that would be quite a delay, wouldn't it.
40 It would be quite a delay.
41 Yes. And I assume we'd have to come back and have that discussion again of what we do without those funds.
42 We would, because that would be 10 million, 10.5, 11 million that we budgeted for for this fiscal year that we would not realize any of in the fiscal year.
43 Well thank you. I don't see any other. Hands up. Thank you for the review. Appreciate it. All three of you, and I think we'll move on. Thank you so much.
44 Thank you.
45 Diego, can you please read the next item?
46 Item two water management and conservation.
47 Colleagues, knowing that we had the report coming up, our third item I had asked the public works service area to give us some background on water conservation. And so that's where this came from. It was really my request. And. Got three folks at the dais to kick us off dca dana paul.
48 Good morning, chair Clark and councilors. And again, for the record, I'm paul dca for public works. Portland has inherited an incredible water system, two excellent water sources and a legacy of excellence in planning and maintenance. And today, you'll hear from interim water bureau director quisha light and sarah murphy, the director of resource protection and planning for the water bureau. In this presentation, sarah will first walk us through how we will how we manage these two resources to ensure adequate supplies of excellent ensure adequate supplies of excellent water is available every minute of every day for all of our customers and partners. And she'll also talk about water supply management, water demand and water conservation. And after sarah, director light will show the connection to the rates and set the stage for our next presentation in the same committee on the boulder infiltration plant. Report over to director light.
49 Good morning. Welcome.
50 Hi. Good morning. My name is sarah murphy. I'm the director of resource protection and planning. Thank you so much for making time. I think this is a fantastic question. I'm quite excited to dig in with you a little bit. So next slide please. We're going to start by reorienting you to the amazing water system that we have here in Portland. So if you take a look at the slide you'll look on the right side of the slide. The bull run watershed in Green has been our water supply since 1895. It's a highly protected drinking water source, primarily owned by the u.s. Forest service and the federal government. The water bureau of the city owns about 5% of the land of the watershed, but we co-manage it together and have for more than 100 years. We like to say the management of the forest of the bull run predates the forest service. In fact, if you look sort of towards the middle of the slide, you'll see another Green outline that is the columbia south shore well field that is home to the 26 drinking water wells that are our our secondary drinking water source. We are really well positioned here in Portland with two adequate and high quality water sources that provide the drinking water necessary to keep our city thriving. So I know you're really interested in how we do conservation, how we plan for demand and impact on rates. So we're going to we're going to tease apart all of those issues. But one thing I think is really important to note. If you could go back for me. Thank you. The area shaded in white is our service area. So we at the Portland water bureau, the city of Portland provides drinking water to more than just the city of Portland. We serve about a million people in communities from the city of sandy on the east to the city of tualatin in the west. So we are not only really proud of the work we do for our community here in Portland, but also for our partners in neighboring communities. We're going to dig in a little bit more on our wholesale partnerships in a bit. If you could go to the next slide, please. So now that we've looked at where our water comes from, let's talk a little bit about where it goes. So we have some incredible data sources for understanding and tracking water use across our system. We have water meters of course on every service in the city of Portland. We also meter our wholesale connections so that we are aware of how water is being used throughout the system. We also, of course, meter the water that we produce from the different sources. In 2324, we sold about 38% of the water that was produced to our wholesale partners. Those are 19 water providers outside of the city of portland's service area, 52% of the water produced was sold to our retail customers. Those are within the city of Portland. Those include residential customers and homes and apartment buildings. Our commercial customers at hospitals, manufacturing and of course, education and small business. 10% of the water we produce is attributed to what we call technically other uses. This is actually a technical term when we do our water auditing, and these are our authorized uses. Things we don't meter but are approved uses like cleaning the mount tabor reservoirs, filling and refilling tanks, and hydrant uses. The remainder is about 9%, which is water loss or water leaks. We have an old system. We have aging infrastructure. It is totally typical and normal across the country, across the across the world to see water loss of some rate. Ours is something that we are attending to and I'll talk a little bit more about that in just a minute here. So just looking across how we use water, I think it's really important to ground us in these in these information. So again holding your head for now because we're going to talk about wholesalers. About 38% of our water is used with our wholesale customers. Next slide please. There's a lot of information on this slide. But I'll highlight for you the list on the right are our current wholesale partners. Those that are highlighted in red are leaving our system in the next couple of years. So we'll talk a little bit more about why I imagine you're curious about that. But Portland began providing wholesale water to neighboring communities almost since we started running the system in 1895. We currently serve 19, and four of those are leaving the system in 2026. We have long known that those partners are leaving the system, and there's various reasons for that. We're going to dive into that a little bit more, but a lot of it is about local control. There's there's a lot of interest and drive from city of Gresham and other partners to have control over their water system, decision making, budgeting, all the things that you know, you all care about as well. So the drive sort of to develop these sources has a benefit across the region. We're interconnected systems. And so having that additional resilience is a value for sure. Water is sold to these partners under water sales agreements or contracts which are negotiated. We just completed some negotiations for those. Wholesale rates are established and approved by council annually. Those go to you in our annual rate ordinance process. The rates are set in accordance with provisions of the contracts and are and are acted upon each year. For the most part, wholesale customers contribute to the part of the system that they benefit from, so they don't contribute to running infrastructure that just benefits the city of Portland retail customers. So hydrants within the city of Portland, those costs are not attributed to our wholesale customers. So they're paying for things like our sources and our system primarily. And so that's an important distinction and nuance to understand and how we do that rate making for wholesale customers. Let's go to the next slide and talk about our retail customers. So retail customers use a significant amount of the water that we produce over 50%. And those are divided into different categories. So different account types. And our billing system, which is how we keep track of all of our retail customer data, indicates, you know, typically three different types of customers single family, residential, multifamily and commercial. In Portland, we serve over 600,000 people, about 150,000 single family accounts, almost 14,000 multifamily accounts, and 20,000 commercial, industrial and institutional accounts. Each of these customers receives a bill from the city for water, sewer and stormwater services, and the bill is based on actual water use used at the account based on their actual metered water use. These bills are typically sent to customers quarterly, which is something I'm sure you're familiar with. As you know, that can be challenging, that can create cost challenges for customers, and these rates that we charge are set again each year by city council with input from the bureau, of course, and it's based on the cost to operate the system. So when we think about the distribution system, again, our wholesale customers don't pay for that. That is cost is borne by our retail customers. So all the fire hydrants, the system pipes and services and meters, those are the costs that are allocated to retail customers. If you could go to the next slide please. And then our third sort of major bucket of of uses are these other uses which include authorized uses and water loss. The picture on your slide is a photo or a screenshot from our satellite leak detection pilot project. Every few years we work with a consultant who does a satellite leak detection scan. I'll talk a little bit more about that in a minute, but I just wanted to let you know what that data is all about. That's representing where we have possible water leaks. And we do go investigate those.
51 Sarah, can you tell us the difference between the yellow and the Green?
52 I will have to get back to you on that, because I can't tell you for sure which color is which. And I didn't, of course, put the key on there, but I can get back to you on that. Some of them are are the suspected leaks and some of them are ones we've identified. So I think this was halfway through the process of verifying those leaks. So I can get back to you on that one. Go to the next slide. So just we've covered a little bit about where the water comes from, how we use it. Next we're going to talk about sort of how we match that work together so that we're making sure that we are planning for the future. So one of the key responsibilities of any water utility is to understand how our customers use water, so that we have adequate infrastructure, staff and rates to support the needs of the system. The bureau recently updated its demand model. So this is something that all utilities have. You have to have a way to to understand and predict your future demand demand for water, that is. And so we have recently done that work. And with that information we have a few key water demand takeaways that I want to share with you. Trends that we're seeing. So we are seeing lower wholesale demand. That one is something we talked a little bit about. We know four of our largest wholesale customers are leaving our system. So currently, you know, we're expecting that we sell about 40% of our water now to wholesale customers. In the future, it will be about 14% of our water will be sold to wholesale customers. So that's a pretty notable trend, one for all of us to know about. We'll talk a little bit more about the financial planning for that that we've been doing for years. Another really notable trend is changes in retail residential. So what we are seeing is decreased single family usage and increased multifamily usage as a category, not per capita. And that is telling us something we know. You know, our city is densifying. We are seeing more and more folks living in multifamily buildings. So that sector is growing while single family is decreasing. An additional change is commercial demand. We were we saw a lot of impact from the COVID pandemic. We all were tracking that businesses were closing, restaurants were closing. They weren't able to do the kind of work that they wanted. So we've been seeing water demand in the commercial sector bounce back. But that is a that's an area where there is a little bit more variability. Economic conditions drive that really primarily. And the city has is doing some work and we have some more work we can do in terms of increasing the water sales in that sector. Go to the next slide, please. So as we're looking at those trends here is what we do. Sort of the takeaways from a water supply perspective. Reduced total demand decreases pressure on supplies. Right. So we have two excellent sources here. And currently we do fine with those sources. You know we rely on bull run primarily. We activate groundwater when we need it and we do fine. But with lower demand loss of wholesale customers, we will have more water available to meet changing needs and regulatory commitments. Another takeaway for us is that there are opportunities to attract commercial users. It's an important strategy for future rate stability. It's an important part of the economic development for the city of Portland. We are assuming middle of the range demand forecasts for our financial planning. We'll talk more about that in a minute. But we have been projecting this demand decrease. When we think about our rates and we think about our financial planning, and we're continuing to assume sort of a middle of the road decrease. And one thing we have really learned, and, you know, is that it's important to continually monitoring trends. No one saw the pandemic coming, right. And that had a really big hit on us all financially. But continuing to monitor those trends is a regular part of our work. If you go to the next slide, we have a picture on the slide. Here is what we call cone of uncertainty. This is truly a, you know, an important planning tool. We do adaptive water supply planning, which means we are in regular conversation about trends that are happening with our systems. You know, are we seeing decreased streamflow in the bull run? What wells are in service or out of service in the groundwater system? What our economic conditions, what are we seeing in our data for demand. So we're in these regular conversations to proactively monitor conditions. This is a this is a change. You know, I think ten years ago water utilities did long term planning. They did 20 year demand projections. And those as soon as you publish them, they were already out of date. Now we do a little bit more. We do a lot more focused and flexible planning. Current long term supply demand and climate change forecasting indicates that we do not have a need for expanded conservation programing or potable water reuse. So here in Portland, talk about this in a bit. We use conservation as part of our adaptive strategy for meeting needs. Conservation does have pros and cons. We'll talk about it a little bit more in terms of rates and revenue. But we are required to do it by the state of Oregon. But we consider it an adaptive action, meaning you can sort of push the gas, you can do more conservation, or you can take your foot off the gas and do less. So let's jump in a little bit more. Next slide to some of the details. We have a variety of different planning frameworks that we do here at the city of Portland. For for the water supply. We have a water system master plan. It's required by the state of Oregon distribution system master plan, again acquired by the state of Oregon water management and conservation plan, which we'll dig into more a little bit. The regional water supply plan with the regional water providers consortium. And that ongoing collaboration, which councilor Green is our representative for that. And then we do short term seasonal supply planning each year. So we make sure we're tracking, you know, what's happening with weather in any given season. Next slide please. You had asked specifically about conservation. So I'm going to dig in a little bit more on the water management and conservation plan. This is, as I said, a plan that is required by the state of Oregon for all systems that you know, are using the the water rights that are belong to the state. So the water management conservation plan is really designed to ensure that water providers are using the waters of the state responsibly and well. We've been doing water conservation and management, water management, conservation plan for over 30 years. We have one that was completed five years ago. It's a ten year plan. The state requires that that water providers meet certain benchmarks. How we deliver those programs is up to us. But if you see on the slide here, you know, we're required to do an annual water audit that tells us what our water loss rate is and gives us information about where we need to move and act. We're required to fully meter the system. We're required to test and maintain our meters. We have to make sure those are accurate. We're required to have a rate structure that is based in part on metered water use. We're required to do water loss management. If we are seeing a high leak rate, we're supposed to actively work on that. Public education, technical and financial assistance program, and retrofits and replacements for inefficient fixtures and a rate structure that supports conservation. Those are all the required benchmarks in the state. So if you could move on to the next slide, I'm going to dig in a little bit more on our services that we offer to our customers. So again, the water management conservation plan through the state sets those benchmarks. But how we deliver those are up to the water providers themselves. Some of our some other water providers who have a more of a supply challenge situation might be more aggressive on rebates than we are, but we have sort of worked these years to understand really what our customers need, what our supply system needs to tailor these programs. So we do this for a variety of reasons. It can save customers money. We have a special focus here in Portland on working with low income customers and working with small businesses. It's been a focus of ours for 20 years because we have found that those are the folks who really can benefit from the management of the costs of their bill. We do it because it reduces energy use and carbon emissions and chemical inputs. Those are important values across the city. We do it because it helps us manage supply and demand, and we do it because it was in the past a really key part of how we avoided expensive infrastructure investments in the in the 90s. We were talking about building a third dam in the bull run. Also in the 90s was when national plumbing code dramatically changed. So toilet flush rates went from five gallons per flush to 1.6. That's part of what drove that national trend is those plumbing codes. But it allowed us to avoid building a third dam, which would have been millions and millions of dollars. And we have really evolved these programs to to match supply needs with regulatory requirements and customer needs. I'm going to walk you through some of our programs that we offer to all of our customers. But I did bring each of you a bag, which is some of the information we have. We have information on our financial assistance programs, which some of you may be interested in. Water bottle touting your love for Portland tap water straws. We distributed these with our partners from PBOT, who just spoke to new residents of Portland. There's a straw kit and information about your water sources. I don't know if any of you are water nerd like me, but whenever I travel, the first question I have is where does the water come from and how do they treat it? We also have showerheads and aerators in here. I'll let you explore those after I talk, but next slide please. So services again for all of our customer classes rebates, toilet rebates, irrigation rebates. We have technical assistance. We have two full time staff who are available to go out to businesses and help them find any water problems that they have. We've partnered with we partner with 100 businesses each year. We go out on site. We will sometimes do data logging of their meter to really help them understand where their leaks might be, or problem areas and opportunities for savings. We distribute the water conservation devices as I as I will show you in this bag. We also have a water leak repair program. This is a pretty special program where we are able to do fixture repair and replacement within low income homes. We serve over 100 customers each year. The water bureau funds part of it, but we have funding from PBOT, which is sorry, pcf, which has allowed us to double our customer served. That's a really important program for folks who are trying to hold on to their homes. If a water leak gets out of control, it can really create a financial problem, which is really hard to dig out of. We are very active in language access and accessibility, so all of our materials are available in multiple languages. And then we're out in the community. We talk to folks about where their water comes from. We help them understand how to use it wisely. But we're really there as a as a friendly presence to just offer support. Next slide please. So as I mentioned, we focus on supporting small businesses. So this is a photograph of a couple of my staff looking in a meter box. They have just set a data logger on a multifamily building multifamily buildings. It can be really hard to understand where the water use is. You've got 100 units. One leaking toilet can cause your water bill to double. So the services they provide really, you know, in partnership with the with the owners or the property managers, help them keep their water costs within the within the realm of what it should be. So we do technical recommendations, site visits, flow recording incentives, trainings, will train maintenance staff. Here's how you check each toilet for leaks once a year. Do it once or twice a year. It's a good practice. Next slide please. Our other focus is on supporting and working with low income customers. So we have enhanced rebates for for folks who qualify. We can also do some of that more technical hands on work where we're look at their bill with them, help them understand where they may have a leak or what they what they could do to lower their bill. We do workshops and multilingual presentations, and I described it already, but we have this home water leak repair program, which is pretty unique for the city of Portland. And then finally, next slide. We also really focus on our water loss control. So every system leaks totally normal. There's nothing abnormal about that. But we have taken a really proactive approach. We do this interesting and innovative satellite leak detection program, which is much more efficient than having staff walk the system that we used to have them walk the system, and you literally listen with a listening rod to a fire hydrant or to a water meter to see if you can hear the leak. Now we do a little shortcut. We do a satellite scan so that our staff on the ground have a sense of where they should go to look for those leaks. So last time we did the scan, which was last year, 90% of the leaks that were found were non surfacing, which means nobody would have reported them to us. Nobody could have seen them. We found 219 leaks and the water savings from that was about 365 million gallons, which is not insignificant. There's a carbon benefit from that work as well. It's 56 metric tons. And this is just a much more efficient and strategic way to do this work. Doing water loss control is good maintenance. You know, it aligns perfectly with our value of, you know, making sure we're stopping big leaks before they blow up or become really disruptive to our community. And this has been a really successful we've done the scans now two years. We're just entering our third year. So we'll be doing the field verification this fall. Next slide please. I think that's all for me. I'm going to turn it over to director light, who's going to talk about some of the realities of of all the ins and outs of all the water uses.
53 Good morning counselors. So sarah, got to talk to you about all the fun parts. Now I have to come to reality. Next slide. Oh, you were there. So we just to kind of summarize, I'm not going to spend a lot of time on this slide because sarah has talked through those benefits. But we have seen important benefits from doing the conservation work that we do. And they are very real. We've realized them. We continue to realize them. We've seen the things like infrastructure calls. As she mentioned in the 90s, we didn't have to build a third dam because we we were getting the benefits of this work. We're seeing avoided energy use and emissions. Customers are able to manage their costs better. All those things are very real. And I think it's worth just reiterating that the main driver of our conservation programing in Portland is regulatory. So we have our water management and conservation plan. And over the years, sarah and her team and others have done the job to rightsize the work to rightsize our programs to match our current supply conditions. And that means that they're taking target. They're engaging in targeted strategies, which is what we should be doing. And that's allowing us to reduce leaks in the system, is helping our low income households and is helping our small businesses. And so, you know, the reduced demand has clear benefits to our customers. And we will continue to do that work. It has clear benefits for our system and it has clear benefits for our environment. Again, great work and I'm very proud of the work that the team has done in this area. And even with all those benefits, there are some real challenges for us that we'll get into on the next slide. And I must say that I, I just want to double down on what councilor Green mentioned, the holistic approach of looking at these issues. You can't look at infrastructure by itself. You have to look at climate change. You have to look at affordable housing. You have to bring all of that stuff together. So everything that we're talking about, we're not looking at it in our own isolated world. And I'm glad to hear that council is also taking that approach. So reduced demand does not mean reduced costs for us. It just doesn't mean that and or, you know, less water sold does not mean that that's less cost that the system needs to provide for. And the main reason for that is something that councilor Green mentioned earlier. Fixed costs. Our customer base is changing, and we have fewer people to spread those costs across. While we may see some increase on in population, we're primarily seeing that on the multifamily side. So that's not people directly responsible for the bill increasing and being able to spread that across more accounts. Both water and bts have very high fixed cost systems, and those costs don't change based on how much water customers use or how much flows through the wastewater system. It just doesn't work that way. And some of the examples of those fixed costs for us is operating and maintaining treatment plants, pump stations, our distribution and collection system. As sarah mentioned, our wholesale customers don't contribute to that distribution system. So the mains, all that stuff that's on our on our customers on the retail side, paying down debt on major projects that are already built. You know, people say, oh, well, you built that thing 20 years ago. Yeah, we did, but we're still paying on it. Or ten years ago, meeting new and more stringent state and federal regulatory requirements is another big one. Upgrading and replacing aging infrastructure to maintain reliability and then making targeted investments in affordability. Because just as much as we're trying to keep the infrastructure, build new infrastructure, we understand that affordability is an investment we have to make. So and that is another cost that spreads across everyone. So these costs are constant and in many cases they're increasing. And as these fixed costs rise so does our revenue requirement. That's the amount that's required to run the system. And what's not increasing at the same pace as I mentioned is the number of customers we can spread those costs across. So even though portland's population, like I said, is growing, we're not seeing it on the single family side. We're seeing it on the multifamily, and those customers have a single master meter. And so we need more account holders, not just new, more people. We do hope that the mayor's fcc waiver initiative will encourage more growth in the single family realm, and or support the building or conversion of some multi-family homes with individually metered multifamily units. So there is even value just with the multifamily. But we need those to be individually metered. And I could have a conversation with you at a future point around how much we get calls around with multifamily situations where people wish they had their own meter. So the challenge looks like this for us, costs to operate, maintain and replace our system are going up. Debt and regulatory requirements are not going away, but the number of paying customers is not growing at the same rate. So we have to deal with that mismatch because it creates real pressure for us. It puts pressure on rates. It puts pressure on affordability for both water and bts. And it's something we must manage carefully as we plan for the future and happy to answer questions later. But I'll pass it back to paul to close us out.
54 Great. Thank you, director leyden. Sarah, to put a finer point on the discussion, the reduced demands have brought real benefits, like we mentioned, avoided system costs and environmental gains through lower energy use and emissions. But the the key point is reduced demand does not doesn't reduce costs. We still have to operate our treatment plans, meet regulations, pay debt and maintain aging infrastructure. With wholesale customers leaving and most growth occurring mostly from the multi-family housing, there are fewer accounts to share fixed costs, and that puts upward pressure on our rates. And that's why our adaptive planning framework is so important. And it helps us anticipate, change, test scenarios and adjust in real time so that we're not just reacting, but we're preparing. So what levers do we have? So we do have some levers, but they're very limited. But they do matter. We can carefully manage costs and continue to seek outside funding, which is increasingly difficult as you're seeing in the in the funding scenarios. We can bring in new customers when opportunities arise, like wholesale partners. And most importantly, we can strengthen our affordability strategy. We actively evaluating how we expand and enhance financial assistance and including for small businesses. And we look forward to bringing our affordability strategy and the financial assistance programs to this committee at a future date. If you're interested. And you know, our goal is very simple. We want to keep our portland's water system reliable, resilient and affordable. And we are we understand the challenges. And but we're also proud of our progress. We're committed to managing our rates responsibly for our community. And with that, we can open it up for questions. Or sarah has a few more water saving devices that if you're interested, we can share that as well. Before we move on to the bull run, report.
55 Well, we're running up against time. I know I have lots of questions, but I will just list them out and you can respond to me online. But we also have councilor Green has his hand up.
56 I'm going to follow your lead chair and just list out my questions. And then just we can follow up offline after the fact. Really appreciate the presentation today and thanks for emphasizing the cost drivers director light slide ten. There was a cone of uncertainty. I'm curious if we can get an explanation on how that what the methodology that sort of guides, that uncertainty analysis, is it a monte carlo analysis? Is it some sort of other method? Would appreciate that as we think about looking at kind of tail risk metrics to rate risk down the road, I'm really concerned about the stranded cost of capital, fixed costs with this loss of wholesale ratepayers as being a driving a rate rate pressure bias. I think you said that the medium demand case probably picks that up, so it's probably already in your rate forecast. But that gets back to my earlier. Desire to understand the cone of uncertainty. So I know which way the rates are likely to go. And then finally, a lot of my constituents have asked about kind of the stormwater billable area. And that's that's more the biz side, I think. But in our part of the district in southwest Portland, there are many parcels with large accessible area. But but there's no infrastructure associated with that and it just goes into the groundwater. So I know that we're going to have a rate design conversation at some point over the course of this fiscal year, and I'd just love to incorporate that idea in there. So thanks.
57 Thank you, councilor Green. Let me just add to our panelists that as we list out our questions, if you could copy all of us on the answers, I'd appreciate it. Councilor Smith has a question.
58 Thank you.
59 Thank you all for giving the presentation. I want to go back to something that was just mentioned about the sdc waivers and director. I think you said something about you hope that the sdc waivers encourage is residential. Improvements with the water. But I thought that those sdc waivers were only for market rate multifamily.
60 They could be for just a multi rate multi-family market rate multifamily. The only thing I was saying is I hope it encourages more. Some individually metered units, because what we see for most multifamily is there's just one single master meter. Right. And and it would be nice if we could see some individually if for some smaller ones, because not all of them will be 2 or 300 units. There might be some that are 10 or 20. Could we look at, could they look at individually metered units?
61 Because I just wanted to be clear because I was like, okay, so when did we start lifting that for the single residents? I thought this was exclusively.
62 Mostly multifamily. Yes. Okay, okay. Just throwing hopes out there for individual accounts is essentially what we're I.
63 Love to see your your positive thinking going forward like that. Thank you, thank you.
64 Thank you. Counselor Smith. I just want to say I think this has been an excellent presentation. I'm walking away with a lot of really good information and actually dispelling some, I guess, myths and other ideas that I thought I knew something, but now I know a lot more and it's really terrific. Let me just list off a couple quick, quick questions and we'll let you go. I'm curious about the wholesale customers that are leaving. Why are they leaving? And you mentioned they want to control, but where are they going to get their water and how? How is that going to work? And when it comes to even though you said we don't have a water supply problem, I'm always worried about prioritizing who gets prioritized for water, particularly if there's a disaster. And I know we already talked about disasters the other day and we didn't really get into if the water gets cut off in my part of town, how is it restored? I think you have a plan for that. Maybe you can email us. What? That what that plan is. That's certainly a concern for some of us that are on the west side, because all the water is over there, pretty much on the east side when it comes to the water loss. I was just curious about the chart, and I know that this has got to go into our asset management plan. Dca, I'm sure everyone's on top of this, but you know, where would we where would we prioritize? Where are the real risks when it comes to leakage and water loss, as well as the other facilities that you mentioned? Just looking through my notes here. Interesting about the plumbing code. I'd never thought about that. Oh, and when you mentioned that the wholesale customers are paying less than residential, could you maybe explore that a little bit when you talk about the wholesale customers? Why is that? And is that something that you're examining some of those mismatches. But I'm just after listening to this, I'm, I'm very confident that the bureau you're balancing out all the the mismatch, as you put it. And I'm really confident that you're ready and willing to meet those challenges. I feel very good about this and we'll be there with you working through those things.
65 Thank you.
66 Any other questions from my colleagues? Thank you so much for this. All the preparation and the special show and tell. Thank you so much.
67 Thank you for your time.
68 Diego, can you please read the next item?
69 Item three accept the bull run treatment projects 2025 annual report.
70 Thank you. Okay. I guess we have a slightly different panel to discuss this. The report and this is an annual report that comes to the council. I believe it will come to the full council in a couple of weeks later in October. So this is our preview. And when it's over, we'll need a motion. Just a heads up. So thank you dca do you want to kick this off.
71 Thank you chair Clark this this is dca for public works. And we are going to share a status update and review of the bull run filtration annual report, which will be coming to full council on October 15th. And with that, I'll pass it on to director light to give the introduction.
72 Thank you dca and good morning again, chair Clark and committee members, we thank you for your time as we come to you today to talk about the bull run annual report, bull run filtration project's annual report. The water bureau is responsible for delivering the bull run treatment projects, which include the improved corrosion control treatment project and the bull run filtration projects. And together, these projects will help the city of Portland meet federal drinking water regulations under the lead and copper rule and the long term two enhanced surface water treatment rule. Today, we will provide an overview of these projects. Progress made over the 2425 fiscal year and challenges that are on the horizon. We would love to know what questions you have about the project, and how we can best keep this committee informed. Our city attorney will join us at council and will be available on the 15th for questions. But now I'm going to turn it over to david to walk you through the project overview and annual report highlights.
73 Hello, my name is david peters. I'm an engineering manager with the Portland water bureau in the engineering services group, and I'll be providing an overview of the bull run filtration program and what we are constructing and why we are constructing it. I'll present the highlights of the program annual report, and then spend a bit of time discussing the challenges and risks ahead of us, both from a schedule and cost standpoint. When we talk about the bull run projects, we are referring to three projects. As director light mentioned, there's the drinking water filtration facility that will filter the bull run water. There's seven new miles of pipelines that will help us connect the new facilities to our existing facilities that bring the water into town. And then there's the completed corrosion control facility. The filtration facility will have the capability to treat 135 million gallons per day on on peak days, and it will be located in unincorporated Multnomah county. It's near the city of sandy, on a 95 acre parcel of land that we own, that the water bureau has owned since 1975. The pipelines will connect to our existing system to bring raw water to the facility for treatment, take the treated water and put it back into our existing system and reconnect existing customers in the neighborhoods near the facility. The pipelines will be replacing approximately eight pipeline miles of our existing conduit system that ranges in age from 60 to 115 years old. These pipes are in poor condition and are in risky positions. From a seismic standpoint, the new pipelines will be more robust and built to current seismic standards. And of note, these new pipelines are replacing approximately 15% of that existing conduit system. This replacement is consistent with our plans to make our conduit system more resilient. A small but important piece of the projects is our corrosion control treatment. This facility came online in 2022 and has significantly reduced lead at the tap for customers who have lead solder in their private plumbing. Private plumbing. So the bull run filtration is more than just meeting the requirements of the environmental protection agency. Long term two enhanced surface water treatment rule, which we know is lead to, is the system that will provide a safe, secure and safe water future for the residents of Portland. Water provides the foundation of a thriving community, and this facility will provide greater resilience against events that may impact our community, such as fires, storms and and climate change, just to name a few. This resilience will provide access to safe water after disaster, which will enable the community to recover more quickly. These projects set us up for future us and future generations up to adapt to an uncertain future. The city council in 2017 recognized these benefits, and that is why they voted unanimously. Choosing filtration over other options for treatment. Filtration provides multiple benefits, and I won't go over all of these benefits in detail, but some specific examples of the benefits that informed the city council decision in two 2017. Filtration is not a one trick pony. It removes cryptosporidium. It doesn't just inactivate it, but it takes it out of the system. But it also takes out other organic material, which means we can use less chlorine disinfectant. And so we can have less chlorine disinfection byproducts. And most importantly, we see the effects of climate change all around us. And filtration is the method that actually works during these significant upsets, intense storms, earthquakes or wildfires. In 2017, we experienced the eagle creek fire, which was right on the edge of the watershed. But since then we've we've had the camp creek fire, which was actually right in the heart of our watershed. We were so lucky that the fire didn't get worse, or that it was worse than it was. We had amazing support protecting the watershed, but filtration will make us all sleep better at night when these storms, landslides, or fires strike next. There's a lot of words on a lot of the slides I have, but the main point I want to make on this slide that has a lot of words is that we are required to build a filtration plant by September of 2027, lt2 was promulgated in 2006 and took effect in 2009, with several years to come into compliance, we were able to show that we met compliance without doing further treatment, and in 2012 we received a variance from having to build further, further treatment. At the time that variance was revoked in 2017 due to an increase in the incidence of cryptosporidium, the city grappled with the decision of how to address cryptosporidium in 2017, and they decided on filtration over ultraviolet disinfection treatment. Even pre-pandemic, filtration was a higher cost. The council determined that it was a better value, mainly for the benefits I've described. So while in 2017 we could have chosen a different cost, different path cost was considered as part of that decision and council decided. And after that decision, the Oregon health authority approved a compliance agreement that we must follow. This is the compliance schedule that we agreed to and oha approved, and to which we are being held accountable in the bilateral compliance agreement with Oregon health authority. At this point, earlier completion is not possible. Getting it done earlier than September 2027 is not possible, and it will be challenging to meet this schedule due to the events that I'll describe in detail in a few minutes. We've had success in meeting the first two milestones of submitting our planning documents and designs on time back in 2020 and 2022, respectively. The site of the filtration facility was chosen for a number of reasons. This site. The site is at an elevation that will allow the water to continue to flow by gravity through the filtration facility and into town and all the way to Washington park, just like we have for the last 130 years. No pumping is required to get the water into town, which makes this system more sustainable because of the reduced power needs into the future. The benefit of gravity flow is that it will always flow into town without relying on pumps, making the system more reliable. This location is close to the existing conduits, therefore, fewer and shorter new pipelines are needed to divert water to the filtration facility and connect back into the existing system. The proposed pirtle-guiney filtration facility is planned to be located on properties that the city of Portland has owned since the mid 1970s. For water system purposes, the site is zoned to allow a community service facility, such as a water filtration facility, as a conditional use. The approval to be at this location has been approved by Multnomah county twice, and has been affirmed by luba upon appeal. We've talked a little bit about water efficiency, and we took those thoughts into mind as we planned the size of this facility. As I mentioned earlier, building these facilities is an investment in the future of Portland. And we're we are here to support a thriving and growing city and having safe, adequate, safe supplies of water is what will allow the city to grow and attract businesses. Additionally, despite the water systems that have moved to alternate sources, Portland will still be the primary emergency supply to each of those systems. Because of the size and length of time that it takes to develop a system like this, it takes a lot of thought and evaluation about how a facility not only meets today's demands, but also takes into account future needs. That is what we did as we went through the planning and design of this facility in 2018, when we were doing our early evaluations, we knew that the tualatin valley water district was going to leave our system. But summertime peak water demands look like they were still going to be in the 100, 160 million gallon per day range. Over the next couple of years, though, we continue to see retail water demand reductions. And we learned officially that the city of Gresham, the rockwood water district and the water district would also be leaving our system in 2021. We were completing value engineering reviews of our facilities and took a look. We took all this information and made the decision to reduce the size of the facility and raise the elevation of the facility. These efforts, coupled with other changes, allowed us to realize over $200 million in savings at the time that those decisions were made. One last feature of this facility is that we bifurcated the system, so we'll be able to operate one half of the facility at a time to meet average demands or declining demands. As we look into the future, the facility has to have the ability to operate over a wide range of flow conditions to meet the peak use days during the summer and the low flow conditions that we see in the winter. The size and design features of this facility will allow us to the flexibility to handle demands into the foreseeable future, whether they go up or down. So this slide is just a quick overview of the program. Cost history. At the time of the original council decision, the estimate that was used to describe the filtration facility was $500 million. At that time, we had not done any planning on a facility. We had not evaluated size, location or technology. This was and that cost was for the treatment only. Pipelines actually had a separate budget at the time. 2019 was when we had contractors on board and were able to and we had worked with city council on the technology, location and size, and we were able to put the first estimates together. And that's where the $1.48 billion was developed. These total costs are are reflected in the 2025 annual report to seattle city council. The budget we are still working under is 2.1 billion, which was established in 2024 when we brought the guaranteed maximum prices for the construction contracts to city council. We recognize any changes to the budget, require council approval, and if we need to make such a request, we'll be back to discuss that with you. These totals cover all the costs from 2017 forward for the planning, design, construction and financing of the. Program projects the growth of 44% between 2019 and 2024 had a lot to do with the economic pressures of the pandemic that the pandemic placed on the construction industry. The project is funded with federal loans, water revenue, bonds and water revenues from rates, fees and charges. So the primary reason we're here today is to present the bull run filtration project's annual report. The full report was submitted ahead of the meeting. Hopefully, you've had a chance to read that. And so I'm just going to provide a couple of the highlights from that report. I'd like to first highlight the improved corrosion control treatment facility, which has now been in operation for three years and has been performing exceptionally well. The lead levels were reduced by 50% in homes with lead lead in their water system components. Portland's lead levels are now well below the epa's proposed lower regulatory level for lead in drinking water. In this reporting period, we began construction on both the filtration facility and the pipelines projects through the summer of 2024. We make great progress in completing the excavation of the site and preparing the site and the local community for the construction by mobilizing equipment and materials and improving local roads. During the reporting period, we addressed the land use appeal to the state land use board of appeals. Unfortunately, this appeal required a five month suspension and work. When luba sent the appeal back to Multnomah county for resolution of one topic related to natural resources, the good news is that the land use permits were reinstated in June, allowing us to restart work in July. Of note, through the approved land use permits, we have once again note that those approved permits have been appealed again to luba, and we're in the process of luba taking on that case for review. Also, during this reporting period, we've been able to secure a second water infrastructure financing and innovation act loan, also known as wifia, bringing the total loan proceeds for the project from wifia to just over $1 billion of low interest loans with flexible repayment terms. Finally, we wanted to highlight the impact that these projects are having on the construction workforce in the Portland region. Prior to the suspension of work, we had over 350 craft workers involved in the construction trades on the project. There are over 90 unique subcontractors with over 150 subcontractors that will be working on the projects. Many of these are local businesses. Additionally, many are also minority or women owned businesses, which are anticipated to receive almost $400 million for their efforts on these projects. So these are a couple of photos that highlight the progress that has been made since we started construction in June of 24. The we completed road improvements to the sites and on the haul and detour routes that will be used throughout the life of the project around the facilities in the community. We completed the excavation and grading of the site, which is what you're seeing in the photos here, and which included excavating nearly 800,000yd■!t of soil. We mobilized equipment and established temporary utilities, roads and facilities to support the multi-year construction. We've installed much of the piping that will be underneath the facilities on the site, and have actually started the placement of the concrete for the foundations of those facilities. So nearly 2000yd■!tf concrete have been placed, and we've installed over 3000ft of 66 inch diameter pipe and over 4000ft of small diameter pipelines for I don't know if you can see them, but there's a few cranes in the photo on the left. A few of them are yellow cranes. For perspective, I like to point to those because they're over 400ft tall. So this site that you're looking at is 95 acres. As I've mentioned, most of the construction in the front of that site is on the front, 45 acres of that. And these are large facilities. Dare I say this is portland's largest and most important public works project. This facility will be providing clean, safe drinking water for the residents and businesses throughout the Portland metro region. This project is only going to be possible through the efforts of the dedicated trade workers that represent a wide array of trains, from laborers to ironworkers, electrical and many more. We have most trades touching this project because of the type of facility that it is. These dedicated individuals are working six days a week to make these facilities possible. There are over 200 craft workers on site today, and this will peak next summer at about 460. We're pulling labor from a pool of over 10,000 journey and apprentices available in the Portland metro region. This job will also be training the future workforce for our region by having over 20% of our labor hours going to apprentices. So a little bit about land use. Oregon land use laws are not designed to support regulatory deadlines, nor advance projects that support public health. This has created challenges in the progression of the projects. The land use process itself has been challenging and but very thorough. The land use process for the project has extended over three years to date, generated a record that is over 16,000 pages in length, has decisions that approved and re-approved our land use permits that total over 400 pages. And as I mentioned, the process still is not complete. The project, located in Multnomah county, borders on Clackamas county. So we actually were required to get land use actions in both counties. The use is allowed as a conditional use, but requires this land use review. So we started between October of 2022 and January of 2023 is when our original application was submitted and being reviewed by both counties. We could not submit earlier than that because of the detailed information that's required to demonstrate that we can meet the the land use code requirements. But in by November of 2023, both Multnomah county and Clackamas county had approved our land use applications. And then in December of 23, the original approval through Multnomah county was appealed to the state land use board of appeals. That appeal took over a year to review, and in January of 25 this year, luba upheld Multnomah county's land use approval on all items by the opposition except one louma. Luba remanded or sent back to the county for the county to clarify the meaning of natural resources required, requiring all the construction to pause for the duration of that remand period. Because the original land use permits were no longer valid. So February 14th construction was suspended. June 30th we received land use approval because we showed we could meet the new definition of natural resources, and construction restarted in July and then in July. The opponents have filed a new appeal to luba. So with that original land use application, there were a number of constraints that were developed to gain approval to be at this location. These conditions were developed to manage the impact our project will have on the local community. We recognize these projects are having an impact on folks everyday activities and lives, and are committed to complying with the conditions to help manage manage our impacts out there. But the combination of a suspension of work and the land use constraints will impact our ability to meet the compliance schedule. Some examples of the impact of the conditions of approval include. Hours of construction. Now, while those aren't specifically. Land use condition, they are in code requirements for Multnomah county, so we are limited to working between 7 and 6 Monday through Saturday on the project. So we can't be out there doing multiple shifts and working 24 hours a day throughout all the year to try to get things done more quickly. The number of vehicles arriving at the site is restricted to limit the number of vehicles per hour on the roads leading to our facilities, so we can't just add more people, more vehicles to the roads out there because we are limited by the amount of traffic that we're bringing in into our site. There are certain intersections have restrictions that we call blackout periods. One intersection has a condition that requires that we can only close it during the month of October. So all the work through that intersection has to be done in that month. And so we we are doing extensive planning to make sure that that work during that month goes very well and that we don't have hiccups that cause us to have to stop work and come back and do it another year. So it's forcing us to be thoughtful in, in our planning to make sure that we're getting it done efficiently. So we're also continue to work closely with the neighborhoods we have and the service providers, schools, farms to ensure that we're keeping the community safe and moving. And we have regular meetings with all of those groups as part of our efforts. So, so examples of schedule impacts that we've experienced to date and others that may have impacts in the future include. We had a because of the timing of our land use approval, work started none later than anticipated. We I mentioned the five month suspension of work and the associated loss of production as we've restarted work has had an impact on schedule. We've talked about the conditions of approval, and so I won't elaborate on those points any further. The normal construction delays are wide, ranging from extreme weather to archeological finds to supply chain issues. All things that we've experienced as we've been working on this project over the last eight years, as we look forward to the things that worry us. Some of those items are the fact that the land use process is not complete, that we have another appeal. We will have to go through the process with luba responding to that. And we still have some of the riskiest work ahead of us the pipeline, underground work and two tunnels that will be installing our items that were working hard to better understand but have not started yet. So we're not just sitting back letting these things happen to us. We are working actively to manage the potential outcomes of those those future risks that we can foresee. As I just mentioned, there are several items that we have experienced that will impact the amount of time it takes to complete the project. We are actively working to understand these impacts, and we are continuously monitoring work progress. We we've created a multidisciplinary team to evaluate options for schedule adjustments, and we're working closely with the contractors as they develop their time impact analyzes to ensure that these are done in a reasonable amount of time. These activities do take time. The suspension of work impacted many of the contractors and subcontractors working on the project, and the prime contractors are working to identify the potential impacts to all 150 subcontracts and determine the potential impacts on the 40,000 plus line schedule. That use is used to track progress on these projects. Ultimately, this is a negotiation with our prime contractors. If an adjustment schedule or cost is needed as we go forward, and so we're working to find reasonable solutions to that. That will be in the best interest of the city of Portland. While we are working through the impacts of the past events, that does not mean we have let down our guard and we are continuously looking forward, ensuring that the work we are currently doing is advancing. At the rates we anticipated. When the program schedule was developed. To this end, the team and the contractors designers, owners representatives are co-located at the site and review monthly schedules updates. They work together on pre-planning of work activities to ensure work is progressing as anticipated, and this team does visual schedule variance analyzes and evaluate scenarios to provide risk analyzes on all the upcoming tasks. Of note, we also coordinate closely with a couple of the wholesale customers that have or will have facilities on our site. The pleasant home water district, whose tanks and pipes surround our facilities, and the city of sandy, who also has a compliance agreement with Oregon health authority that has the same timeline as our project as they will rely on our project for compliance. I focused on schedule for the last few slides because schedule changes impact will impact costs. If the project takes longer to complete, it can cost more because the labor and equipment will be on site for longer period of time than anticipated. Conversely, trying to complete the project more quickly can also increase costs because that would mean bringing in more people and more equipment, or extending the working hours. The conditions of approval will limit what we can do to make things happen more quickly, but we are working to find the right balance of the of completing the project as quickly as possible, while balancing regulatory, contract and permit obligations. So to reiterate, we're working to get a time impact analysis from each contractor, which takes time for them to work through their 150 subcontracts. And then we'll need time to review and negotiate that with the contractor. Affordability is a priority for the water bureau. We are continuously looking for ways to reduce costs, to mitigate the impact to rates. This slide highlights things that we have done and continue to do to mitigate the impacts of the project's costs on rates. We have already reduced what the cost would have been by $200 million. As we went through the multiple rounds of value engineering that I discussed earlier, we've received energy efficiency incentives from the energy trust of Oregon, and most most significantly, we have moved around other projects within our capital program at the water bureau to give these projects priority to help absorb cost. Looking forward. So some of the existing projects in the capital plan will get done at a later date. After these projects are done as a way to help smooth rates. And then we have the two wifia loans that will help smooth the bill impacts while we continue as a diverse team to manage costs while delivering these critical projects to meet our compliance deadline, we're working just as hard to minimize the impacts of the increase costs on our ratepayers without sacrificing this essential tool that will serve all of our customers and particularly benefit business and the historically disadvantaged members of our community. The bureau continues to mitigate, through revisions of the capital plan and continuing to seek external funding opportunities, balancing affordability, asset management, long term borrowing impacts, credit worthiness are part of the cost mitigation plan that are being developed. The best way for us to minimize costs are to keep progressing the work to meet the current schedule. Beyond that, the team is actively working to limit scope changes and challenging requests for scope changes to determine their merits and reasonableness as they arise. As discussed, we have a diverse, multidisciplinary teams that are proactively evaluating work activities and working to manage the risks of upcoming activities. At this time, director light will summarize our challenges and commitments.
74 I hope everyone sees what they're doing. They leave the challenges to me. So no. As we close, I do want to acknowledge that we do have challenges ahead, but there are challenges that we are actively managing, as david has mentioned, and we're closely tracking the construction progress. The schedule calls all of this so that we can fully understand potential impacts and bring that information back to you as part of your rate and budget decision making. Our focus is on managing those challenges responsibly. That means we need to maintain transparency, control costs where possible, and ensure the project continues to deliver on its promise of safe, high quality drinking water for Portland. I also want to acknowledge the community's experience. We've heard from the neighbors, schools and local businesses about the impacts of this work, especially the noise, traffic and general disruption that comes with a project of this size. And we've been working closely with this community for more than eight years, and we take their feedback very seriously. This slide highlights just some of the measures we've put in place to reduce those impacts. Things like traffic management plans, reduced nighttime work, dust control and direct coordination with schools and emergency services. We know that construction can be disruptive, and we've worked hard to plan and communicate ways that minimize those disruptions as much as possible. And I'll just add that this is another reason why we want to continue making steady progress. The more consistently we're able to keep moving, the sooner we can finish this work and end the disruptions for this community. Beyond mitigation, our goal is to keep the community informed and engaged. We've met with neighborhood associations, schools, and local leaders. We host open houses, provide weekly activity updates, and share direct notifications with residents and businesses that are affected by construction. We also hold coffee chats and site tours so people can see the work and ask questions directly. We know this project touches people's daily lives and we want them to feel heard, informed and supported. So as we wrap up, I do want to emphasize that we have taken multiple steps to plan, communicate, and build this project in a way that reflects care for our community and accountability to our customers. And we do. Thank you for your time today and for your continued leadership and partnership as we move this project forward. And with that, I will turn it back to don paul.
75 Oh, thank you, director light. And david, I think they did a very good job of going over the details. The one thing that I would like to mention is, you know, this is a very important, significant project, not just for our community, but for our entire region. And we must maintain momentum and construction so we can deliver on this critical project to meet safe drinking water regulations and better protect those who rely on our water. While we will never lose sight of our mission to serve excellent water every minute of every day, we also recognize there will be challenges ahead and remain dedicated to carefully managing costs and risks. And we look forward to working with you all to get through those challenges. And thank you again for your time.
76 Thank you. Thank you, mr. Peters and director light. Excellent overview of the report. I know we've got some hands up, some questions. We have plenty of time for questions. I hope you're you can stay with us. So let's start with councilor. Morillo.
77 Thank you chair Clark, thank you all so much for being here and for giving us that very thorough presentation. I just have a few questions on how, you know, it sounds like the cost of this project is in flux, and a lot of that is going to depend on how long it takes to actually build it. But as of right now, do you have any idea how much ratepayers should anticipate the additional increases for the estimated cost of the project? Is that going to directly impact ratepayers?
78 This project will have an impact and is already considered in our rate forecast. So what we have right now is just our standing, our current rate forecast, and that's been the 8.1% rate increase. We know that council has questions around that rate increase, but that is what the forecast is at this moment. Currently we don't have the numbers so that we can tell you if that's changing what that looks like. We don't have those numbers and we won't have those for a little bit. As david mentioned, as they continue to work with the contractors. But we will come back to you once we have those numbers, because if we have to change that guaranteed maximum price, that will require council's approval.
79 Gotcha. Do you have an estimate for when some of those negotiations will be done, so that we will be able to anticipate how much that would increase things for ratepayers?
80 So our goal is been to work with them to get that information as we get towards the end of this year, so that we can incorporate that into our budget conversations as we go into next year.
81 So we want to have everything in the budget ready to go. But so that puts us on a fast timeline to get it done by. That's what late winter, early spring. We've got to have it all wrapped up, which is going to be a challenge, as he mentioned, because you're talking about doing this across a bunch of subcontractors.
82 Gotcha. Yeah. So just to be clear, we don't have right now any estimate for how much this project will impact the increasing rates.
83 No. And and I want to be just transparent with you. Another reason why we're not talking about costs is because we are negotiating. And we don't want to put numbers out right now.
84 Gotcha. Okay. Thank you so much. Appreciate you.
85 Thank you. Councilor councilor Green.
86 Thank you, madam chair. Thanks for the presentation today. This is an important annual report. I councilor Morillo asked some of the questions that I was interested, so I won't repeat those, but I do have some I guess some cost control questions. Does the water bureau is there is there been any discussions on like how to write contracts that hedge material costs? I know there's been a maximum price ordinance in previous years, but it's pretty common in pretty risky infrastructure projects to have a hedging program like as sort of like a sort of insurance for cost escalation that runs out of control. Has that has that come up at all in this discussion?
87 If I understand your your comments correctly, I mean, we do have as we put these contracts together, there are escalation clauses that are part of our contract. So there were as we were developing this throughout COVID times, we saw changes in lots of costs for lots of different materials. And so there are criteria. We have conditions for certain types of escalation that are part of that contract. So they have to exceed certain values before. Before there would be a cost impact.
88 I also think that I think it's important to recognize, too, that we're not necessarily at a point where you're seeing the project impacted because of overruns and all the other things. It's the land use process, right? That's increasing a lot of the cost for the project. And so there are conditions that weren't there. And now that's creating challenges and costs. So I think it's a mixture. Right. We have we have things within the contract to balance it. But then when you have the new things that come that change the scope, that impact that, then this is that's a different reality.
89 Yeah, I fully appreciate that. And thanks for kind of highlighting the importance of the of the land use process and being kind of the primary driver of cost risk. But I think also we in some sense can't really control that. And I wonder if because what will happen during that delay is that you'll have price risk because there will be materials price changes and labor price changes. And there are products out there where you can hedge the commodity price risk. And I wonder, I guess I would ask that maybe that be considered in as we think about where we are at, waiting for those external challenges to hit us to, to wonder if that is a value proposition that might serve the city. Those contracts also come with risks, but just wanted to think about that. Another question I have is and maybe you can confirm this, I don't think we've got anyone from treasury here, but I think our series a water bonds first and second liens are ten year bonds. Is that correct?
90 20 or 30 or 3020, 25.
91 Yeah 25.
92 25 year bonds. Yeah okay. Great. Because I was going to ask for longer terms on those bonds. But I thought they were ten years. So that's.
93 That's one of the things that we're looking. Yeah.
94 And then I guess the last thing I I'll just put out here, I've mentioned this before in certain 1 to 1 conversations or other venues, but I don't expect it from the federal government anytime soon. But if we're ever again faced with another grant opportunity for infrastructure, and especially if we have the the ability to influence the state of Oregon, I would really think it'd be good for us to try to find an opportunity to use new grant money to write down old costs. So to apply to to debt of the bull run project, rather than say this has to be just for new capital and new infrastructure, because that's the only way. I mean, you guys have laid out very clearly what the cost drivers are of rates, right? Much of it's outside the control. We do have to do this project. We do face wildfire risk and our future generations will benefit from having this stability and resiliency. But so they should also maybe think about, you know, what's the value proposition for them down the road. So I just wanted to put that out there. You guys are doing a great job. Appreciate you I'll stop talking. Chair.
95 Thank you councilor Green. Excellent points, councilor Smith.
96 Thank you. Thank you. They answered a couple of my questions, but so you all said that you will not put out a projected operating budget or a you know what you think the maximum, guaranteed maximum price should be on this project yet because you're in negotiations.
97 Right now. Yes.
98 Okay. So. Ballpark because I've been saying, just so that I'm clear, I've been saying that this is a $2 billion project. Am I am I safe to say that.
99 It's a $2 billion project? Yes.
100 Okay. So we're getting $1 billion in loans from the federal government. What is the repayment? What is the repayment on on that wifia loan? How much do we repay back or do they write it off a certain portion of it.
101 We will pay back. I think we have a 30 year term and we start payments in 2033. So what's the full pay? What it will be. Do you have the numbers? You it's the first loan, has a 1.89% interest rate, and the second one has a 4.49 interest rate. So for about 30.
102 Years that's very interesting that we don't have to start paying until 2033.
103 So five years after the completion of the project essentially is when it'll be.
104 That will be way after I'm gone.
105 With your loans and we can give you the debt service payments, the deferred debt service payments, if you're interested.
106 Okay. So I'm what I'm trying to establish is while I understand that. So there the remand that we were in and we are now in appeal again of the remand and we don't have to stop the project this time because we were given approval by the Multnomah county commissioners on June 30th, is.
107 Well, I want to be clear that as of right now, we have not received a filing that has requested that construction stops because they have the potential to file that, but we have not.
108 So that's that's where you know, where I'm going. Right? So I was going to ask you the question, why is it that the first five months we had to shut down and we don't have to shut down on this one? On the appeal piece. That shut down for five months? It really cost a lot of the minority contractors, lots of money. And I'm wondering, with the mayor's new executive order on redoing all contracts as it relates to gender and race, how is that going to impact the minority contractors on the bull run project?
109 That is a great question. I wonder if sylvester is here in the room or maya, if you all can help me answer those questions.
110 Do you want to say anything?
111 See the ladies? They they answer all the tough questions. We know how to do this.
112 Councilor. Your question was, how will the mayor's.
113 State your name, please?
114 Maya, I'm with the city attorney's office.
115 Yes.
116 Your question was, how will the mayor's executive order impact the bull run minority contracts?
117 Yes.
118 My understanding is that we will be honoring. Oh, dear. I'll deal with that later. We will be honoring the. Our existing contracts.
119 Okay, great. And I just wanted to say for the record, again, I was told that our. Our contractor was telling some of our minority contractors that they can redo the, the subs. And so I wanted to make it clear that we are not requiring that, are we?
120 No.
121 We've made it clear to the contractor that we are not renegotiating sub contracts, that we are committed to continuing honoring the contracts in the form that they have.
122 Yes. And I know the mayor he he called me and he told me that he was doing that. I just wanted to make sure that everybody understands that, that there is not going to be any funny business with this. Right? That's right. That we're going to make sure that the contracts that we have that are, that are out there, that we make good on those contracts. And so doing that, I think it lends a lot of credibility to who we are and what our values are here at the city of Portland. And you all may not get the calls first, but let me tell you, I get the calls all time of night. Let me tell you about this. So I just want to make sure that everything is decent and in order, and make sure that all of our, our workers are able to one get the get the apprenticeships, the journeymen get their journeyman status, be able to have a great project. It looks so good that that last picture that you all had up of, of the site on what it's going to look like afterwards. It's an amazing piece and I think we deserve it, and we deserve to make sure that everybody this economy, it may take a little bit, but I want to make sure that we have boots on the ground, infrastructure projects that will keep our economy going. And I want to make sure that all of our contractors are benefiting from this, and that is a priority for me. I know we we put the disparity study on for approval so that we can have backup so we can have backup. Y'all, we already are being targeted by the trump administration on on one level, we need to make sure that we we cover ourselves. And so that was the reason why we passed that. And I want to thank you for all the work that you have done. While luba is our current cost driver, once we get into construction, trust me, I did the Sellwood bridge. We did change orders. Construction change orders. That did change the value of of the project. And it will come. So we need to make sure that we have enough in contingency. And by the way, how much do we put in contingency for major projects like this? Do we keep 1,015% to the side for those change order kind of things?
123 Well, on this particular contract, there's over $150 million in contingencies between an owner's allowance and what the contractor has in their guaranteed maximum price.
124 And we don't have the gmp yet. That's what you're saying.
125 That was in the original gmp. So that was in the.
126 But we're.
127 Renegotiating the the original gmp. Is that what you're saying.
128 We're determining the impacts of the new conditions of the conditions of approval. We're determining the impacts of the riemann, not necessarily renegotiating the gmp. We're determining the impacts of what those costs will be. And could that have a gmp impact? Yes. But yes.
129 Alrighty. Well, thank you so much for giving us all this information this morning. I appreciate it.
130 Thank you, councilor Smith, and thank you for the reminder that both you and I have been involved in major transformational infrastructure projects. And this is definitely a major transformational infrastructure project for future generations, future future generations. And I'm so glad that the city made the decision to to do this, to build this because of climate change, because of the fires, because of the potential earthquake that that this this new facility will address all those issues beyond cryptosporidium, which seems so long ago. But this is sort of it feels to me like all morning it's been a crash course in water conservation and major project management and just a deep dive into water bureau. And it's been excellent. We just really appreciate all this good information. I do want to just raise a concern that I don't want to talk about rates, but it's related to rates is that we don't repeat what we went through with bts with the big pipe, because I think the big pipe, in order to afford that, it kind of cannibalized a lot of the operational dollars for us. And I hope that we don't repeat that with the water bureau, that we find a way through this without cannibalizing operations dollars. I'm just going to put that stake in the ground. I know what it's like to work with opposition. I think you've done an incredible job trying to address all those needs in the mitigation. But it's been, as councilor Smith said, it's been incredibly expensive to all the people of Portland, and I'm not happy about that. But thank you for all of your efforts to mitigate those concerns. And it sounds like some of those restrictions are really through state law. The state law dictates how we address some of those issues around the project, the traffic mitigation and so forth that our hands are tied.
131 But they.
132 They became they were developed as conditions of approval to the land use. So.
133 Okay.
134 They're they're not in Multnomah county codes. They were developed based on the impacts of this project.
135 I see. And so that.
136 That does become doctrine when they issue the land use permits.
137 Okay. Thank you for that clarification. If I have any other questions I'll just email them to you. But I think this has been very thorough and we'll all be prepared then to present this to council on October the 15th, I believe. But at this point I'm happy to entertain a motion.
138 I would like to entertain a motion to have the report document number 2025 383 be sent to full council with a recommendation to be accepted.
139 Second.
140 I'm entertaining the motion to do all of those things.
141 I think I heard a second from councilor Hi, councilor Koyama Lane seconded. It's moved, moved and seconded. No further discussion. All right. Well, will the clerk please call the roll.
142 Green?
143 Hi, Smith.
144 Hi, Koyama Lane.
145 Hi,
146 Morillo.
147 Hi, Clark.
148 Hi. And with five eyes, the motion carries and the report will move to the full council with a recommendation it be accepted.
149 Once again, let me thank all of you for being here today and providing us a very clear, well put together presentation to help us understand all the sides of the issues here and all the great work that the water bureau has done. Thank you so much. We appreciate your work.
150 Thank you. Thank you for all your feedback.
151 Thank you.
152 We are on time. Our next meeting is Monday, October the 20th. At that meeting, we'll be discussing the north northeast parking management plan and maybe other issues to come up. We'll see what happens there. But I think this has been an excellent, excellent overview this morning. Great dialog, great presentations. I feel very good about it. Although we're going to be very challenged, I think in the future when it comes to rate setting et-cetera. So with that, I will adjourn the meeting of the transportation and infrastructure committee.