Transcript
Automatically generated transcript. It may contain errors and includes testimony in languages other than English that is not individually marked up for assistive technology.
Sameer Kanal
Good afternoon, everyone.
I'm going to call this meeting of the Committee of the Whole of the Portland City Council to order.
It is Wednesday, September 16th, at 2:03 PM.
Um, Rebecca, will you please call the roll?
Rebecca Dobert
Koyama Lane?
Tiffany Koyama Lane
Here.
Rebecca Dobert
Morillo?
Angelita Morillo
Here.
Rebecca Dobert
Novick?
Steve Novick
Here.
Rebecca Dobert
Clark?
Olivia Clark
Here.
Rebecca Dobert
Green?
Mitch Green
Here.
Rebecca Dobert
Zimmerman?
Eric Zimmerman
Here.
Rebecca Dobert
Avalos?
Dunphy?
Jamie Dunphy
Here.
Sameer Kanal
Here.
Rebecca Dobert
Smith?
Pirtle-Guiney?
Elana Pirtle-Guiney
Here.
Rebecca Dobert
Ryan?
Dan Ryan
Here.
Stacy Jones
Uh, Councilor Avalos?
Elana Pirtle-Guiney
Here.
Rebecca Dobert
President and Kanal?
Sameer Kanal
Here.
Christopher, will you please read the statement of conduct?
Unidentified speaker
Welcome to the meeting of the Finance and Governance Committee of the Whole.
To testify before this committee in person or virtually, you must sign up in advance on the committee agenda at www.portland.gov/council/agenda/committee-whole or by calling 311.
Danny Dacelle
Information on engaging with the committee can can be found at this link.
Unidentified speaker
Registration for virtual testimony closes 1 hour prior to the meeting.
In-person testifiers must sign up before the agenda item is heard.
Public testimony will be taken on an item.
Rebecca Dobert
Individuals may testify for 3 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 results in ejection from the meeting.
Anyone who fails to leave once ejected is subject to arrest for trespass.
Additionally, the committee may take action your testimony should address the matter being considered.
When testifying, state your name for the record.
Unidentified speaker
If you're a lobbyist, identify the organization you represent.
Virtual testifiers should unmute themselves when the clerk calls your name.
Thank you.
Sameer Kanal
Thank you, Christopher.
All right, we're going to get into, uh, everything in just a moment.
I just wanted to give a, a quick announcement, um, regarding the CEI Hub item.
So on September 1st, 2026, the Bureau of Planning and Sustainability sent legislative notice via email announcing that the recommended draft yes.
Second.
Matthew Forgue
Motion passes.
Justin Holt
Thank you.
Sameer Kanal
Consideration of the draft of the Critical Energy Infrastructure Hub policy project, including comprehensive plan policy and Title 33 regulatory amendments, was scheduled for the City Council Committee of the Whole meeting today, September 16th, 2026, at 2 PM.
Consideration of the ordinance for the recommended draft of the CEI Hub policy project has been referred to the full City Council by request of 4 city councilors without objection and has been continued to a City Council work session on Thursday, Thursday, September 17th, 2026.
That's tomorrow at 2:00 PM.
The work session on September 17th will include a presentation by city staff and a council question and answer session with staff.
Additionally, council has requested brief informational presentations from the Oregon Department of Environmental Quality and a balanced panel of representatives from engaged environmental and industry organizations.
Council will not take other public testimony, vote, or take any action at the work session.
A public hearing to take oral testimony for the ordinance— I think it's ordinances actually— is scheduled for Thursday, September 24th at 2 PM.
Consideration of the ordinance for the bulk— I think I'm going to say the same thing here.
Consideration of the ordinance for the bulk fuel terminal capacity reduction requirements, amendments to Title 17, has been referred to the full City Council by request of 4 councilors without objection and is being continued to a City Council work session on Thursday, September 17th, 2026 at 2 PM.
The work session on September 17th will include a presentation by city staff and a council question and answer session with staff.
Additionally, council has requested brief informational presentations from the Oregon Department of Environmental Quality and a balanced panel of representatives from engaged environmental and industry organizations.
Council will not take other public testimony, vote, or take any action at the work session.
A public hearing to take oral testimony for that ordinance is scheduled for Thursday, September 24th at 2:00 PM.
The testimony period for both of these items is open, and testimony can be submitted in writing or orally at the public hearing, both in person and virtually.
You can register Uh, to testify orally, either online or by calling 311.
The agenda and a link to the oral testimony registration will be available Friday, September 18th at portland.gov/auditor/council-clerk/events.
All right, uh, thank you to the city attorneys for that information.
And with that, we're gonna— about to get into the, um, uh, the items today.
Just to, to be transparent, we're intending to get through the committee chair updates as well as our 2 items together on fire and police disability and retirement financing, then take a break and then come back and open items 4 through 8 together, which are items, uh, regulatory program update, uh, changes from Councilor Novick, um, after the break and get as far as we can into those today.
Um, and so with that, I'll ask if we can call agenda item 1, please.
Caleb Schlesinger
Second.
Rebecca Dobert
Item 1, Committee Chair Updates, document number 2026-324.
Sameer Kanal
All right, so I'm not going to read through everything on here, but, um, I passed out the item.
It is also attached to the legislative item online.
Um, I did want to flag that, uh, there have been a couple things that have moved around a little bit, but the one that I wanted to highlight is we are still planning to do the Future of Downtown, uh, conversation in November.
And we've started, and I appreciate the administration helping us to chunk together the appointment items for our Wednesday meetings of this committee.
For those who don't know, we meet, you know, Wednesday right before the evening council meeting.
That's once a month, and trying to do appointments at that meeting has been really helpful.
The other item I wanted to flag, and I think I mentioned this last week, is we're currently planning— it's tentative yet— an oversight hearing on Urban Alchemy on November 5th.
Everything else is in here.
Feel free to read that.
I've also updated part 2 and part 3 of the report, and I just wanted to be more transparent adding in the other work groups that have been there.
But I don't really have a whole lot today that's, that's different from last time, so I'm just going to stop talking and see if there are any questions before I pass it over to Councilor Clark to give an update on the Public Works Committee.
Seeing no one in the queue, Councilor Clark, please give us an update.
Thank you, Council President.
Olivia Clark
Thank you, Mr. Chairman and colleagues.
I apologize I'm not there.
I am treating a tooth with an antibiotic.
I'll explain all the details later if you want to know them, but I'll be there for the council meeting hopefully tonight.
The Public Works Committee at our last meeting had a great overview of the potential for encouraging more community-based partnerships for we're calling it Portland Public Spaces Partnerships.
We had a great panel conversation with people from the Portland Arboretum, the Community Music Center, the Interstate Firehouse Cultural Center, and the Parks Foundation.
And it was a great conversation.
I think it hopefully will result in potentially a resolution coming to you, but it's definitely about the culture change that's going on within the Parks Bureau, which we all really appreciate.
Next week, the Public Works Committee is going to be taking care of some housekeeping items from PBOT on property rights acquisitions and the Montgomery Park Streetcar Extension CMGC approval.
But we're also going to hear an update on the implementation of the transportation utility fee and the street damage restoration fee.
And that update is going to be focused on things that we're very concerned about, the non-residential methodology, And the financial assistance options that will be available for people under the TUF.
Then in October, drum roll, we're going to hear the long-awaited asset management strategy plan, and hopefully, hopefully we're going to get to meet the city's new Chief Asset Management Officer who will be in CA Lee's office.
We're looking forward to that.
But the big lift, the really big lift for Public Works in the upcoming months is going to be working to develop a regulatory framework for automated or autonomous vehicles.
You know, the technology we all know is coming and we need to get in front of it.
I'm very concerned, and I know many of you have heard from me about this, concerned about what's going to happen in the next state legislative session when it comes to autonomous vehicles.
So we need to lead by example on this work and make a case against preemption on the part of the legislature.
So stay tuned for that.
I know we're all very, very interested in the future of autonomous vehicles in Portland.
We're also planning to have a briefing around utility rate setting, which addresses the budget note from Councilor Koyama Lane, hopefully in late October or at least this fall.
Thank you.
So with that, uh, Chairman Kanal, that's my report.
Sameer Kanal
Thank you, Chair Clark.
Um, any— anyone have any questions for Chair Clark?
All right, uh, Councilor Novick's on deck for next week.
I've been bad at giving people the reminder, so I want to start doing that.
And, um, thank you so much.
And that concludes the chair's update.
Um, Rebecca, will you please call agenda items 2 and 3 together?
Rebecca Dobert
Item 2, Fire and Police Disability and Retirement Finance Discussion, document number 2026-330.
Item 3, Fire and Police Disability and Retirement Financing Public Input, document number 2026-331.
Sameer Kanal
All right, thank you, colleagues.
Today we'll be discussing how we finance and pay for police and fire disability and retirement and whether any alternative financing options might be viable.
We'll first hear from the City Attorney's Office about the charter governing FPDR.
Then we'll hear from our Chief Financial Officer and the FPDR Deputy Director to learn how the program is currently financed.
Finally, we have a special guest from the Pew Charitable Trust State Fiscal Policy Project who'll be joining us online, sharing their research and recommendations around public pension funding practices.
And I want to thank Principal Officer David Drain for being willing to join us today.
It's important for this council to understand how we pay for the public safety pensions and discuss the options available to us in line with the city's core value of fiscal responsibility.
However, I also want to note that some of our public safety partners have expressed concerns to me that this conversation, which is strictly confined to how we finance FPDR, will veer off track.
And so I want to take this opportunity to clarify.
We're not here today to discuss any changes to FPDR benefits or the funding provided to FPDR.
The city's City Attorney's Office is going to explain to us in part that we legally cannot change any of these things.
And as committee chair, I want to be clear as to what's within the scope of this conversation and what's not.
So I'll call to order any councilor who veers outside the scope of the financing discussion today.
And I want to also say, as a councilor, obviously people can talk about those issues elsewhere if they so choose.
It's a, you know, free council, free country.
But I want to be clear as a councilor that I'm fully supportive of maintaining robust disability and retirement benefits for our city's first responders.
First and foremost, I support the will of the voters and will always defend the city charter, which includes voter-approved text around FPDR.
And additionally, it's just a moral issue that the first responders who have served the city deserve their pensions.
I've been thinking about this in light of the fact that last Friday was the 25th anniversary of 9/11, and I was at the fire memorial ceremony that was held by Station 1, and we remembered the sacrifice made by first responders across the country, but in particular in New York and D.C. Those who served in this way have earned their disability and retirement benefits.
And while I will continue to talk about transparency, accountability, and fiscal responsibility, speaking as a councilor, I want to be clear that I'll be fighting for the benefits our workers have been promised, that they have earned, and that they deserve.
As part of helping frame this conversation, I'm going to hand it over to Councilor Green, and then we'll invite up our guests.
Thank you.
Mitch Green
Thank you so much, Chair Kanal.
I don't have much to add beyond just I'll start.
I'll start by just saying, really appreciate the level setting that this is not about benefits.
This is not about breaking any promises.
It's not about any of that.
This is about just kind of looking at the long-run actuarial forecast and having an honest conversation about the intergenerational equity on who bears the cost of this.
And we've gone down this road before.
Some of you in the audience have been down this road before, and these are tough conversations.
But I think we owe it to taxpayers, both present and future, to really make the best effort we can to really exhaust all of the options available to us and be honest about what the lifecycle cost of our current approach is.
And if there's a way to save taxpayers money, we should try it.
We should always try to do that.
So really appreciate this conversation.
It's not easy, um, and, uh, let's get into it.
Thanks.
Sameer Kanal
All right, thank you.
To start us off, I'm going to invite up from the City Attorney's Office Franco Lucin.
I think we're going to do this sequentially, but if you'd like to also, uh, at any point, if you want to have, um, the next presenter up too, let me know.
Franco Lucin
Okay, uh, good afternoon, Council, Committee of the Whole, uh, President Dunphy, and I— there's you seem to be the chair today, Councilor Kanal.
Kevin Matches
Good afternoon.
Franco Lucin
Thank you for asking our office to present on this.
I've been asked to present for 5 minutes, so I'm going to honor that.
And I've got about a dozen slides focused on the charter.
And at the very end, I have a slide about the ballot measure in 2006, which is one of the amendments to Chapter 5 of the charter.
Thank you.
I'll refer to that throughout, but I've listed out some of the things that that ballot measure accomplished with respect to funding.
And Leslie's been kind enough to help me with the slides.
So next slide, please.
So just very high level here, Chapter 5 of the charter is the fire and police disability retirement and death benefit plan.
It's known as the FPDR Plan, defines what the FPDR benefits are.
It sets forth the requirements for FPDR to have a board of trustees and what the authority of that board is.
It includes the fund administrator's authority and probably most germane to this discussion, how the FPDR levy operates.
And the slides track this.
Next slide, please.
So here, I won't, I won't get too far into the, uh, the details here, but, uh, just basically the, the plan has disability benefits.
The 2 main categories are service-connected, uh, and that can be thought of as the workers' comp, workers' compensation benefit for sworn police and fire employees who are injured at work.
And then the other category is the general disability benefits.
And then there's the non-service-connected benefit, which is a little bit more limited in terms of the members who can access it because they have to have at least 10 or more years of service.
So it's also paid, as the slide indicates, at a lower level.
And just for the record, the capitalizations here are because these terms are defined in the charter.
They're not just random capitalizations.
Next slide, please.
And also in the plan, in addition to disability benefits or retirement benefits, there are 3 tiers, 1, 2, and those are both paid from the levy.
The pension is paid from the levy and paid from this plan.
And then there's FPDR Okay.
And from the levy, the employer contribution is paid to PERS.
And as indicated there, the FPDR 3 members are those who are hired on or after— or actually, I'm sorry, I think the charge says sworn on or after January 1st, 2007.
There's also death benefit for surviving spouses, which is a term defined in the plan, and for surviving dependent minor children.
The death after retirement benefit is only payable for FPDR 1 and 2.
And then there's a funeral benefit available for all 3 tiers, all 3 programs.
Next slide, please.
The composition of the Board of Trustees, and this is another product of the 2006 ballot measure, the board was changed from an 11-member board to a 5-member board comprised of the mayor and mayor's designee as the chair.
An elected active member from the Fire Bureau, elected by the active members of the Bureau.
And the same for the Police Bureau, a police trustee elected by active members of the Police Bureau.
2 citizen trustees.
And the enhancement here from the reform in 2006 was that the— the slide doesn't indicate it, but the charter says the citizen members are required to have relevant experience in pension or disability matters.
And then, as indicated there, the mayor would nominate these citizen trustees, and they would come to the city council for a vote on whether to approve.
And then the charter has a prohibition on the mayor, mayor's designee, citizen trustees, none of them may be active or past members or beneficiaries of the fund, or none of them can ever have been employed by the Portland Fire or Police Bureaus.
Terms for the trustees, as indicated there, are 3 years, and the charter indicates some staggered terms that were necessary in order to implement these amendments at the beginning of 2007.
Next slide, please.
The The Board of Trustees has the power to, under the charter, to adopt administrative rules for administration of the FPDR plan.
The board may pay its administrative expenses from the fund and may borrow from the general fund.
The charter says the board may, but has no obligation to pay other financial incentives that demonstrate a reduction in disability costs.
They may purchase bonds.
They may—.
I have a question.
Approve the appointment by the mayor of the fund administrator, subject again to confirmation by the city council, and they have the authority to determine the cost of living adjustment annually for FPDR plan retirees, and that's capped at 2%.
Next slide, please.
The fund administrator's authority— I have to correct myself on this first yes.
So the first bullet, it actually— that actually derives from the Portland City Code.
But the code has the fund administrator serving as the director of the FPDR Bureau.
But the charter sets forth the powers of the fund administrator to make disability and retirement benefit claim decisions, to decide approval of a settlement brought by an FPDR member against a third party for subrogation, like A car accident is kind of a classic example of that.
And to settle any claim up to the maximum amount that the FPDR Board prescribes through its administrative rules.
It's at $35,000 currently, and it's been that way for— I'd have to look back, but it's been several years, maybe more than 10.
Next slide, please.
Okay, and here's how the FPDR levy operates.
This is all just straight out of the charter.
And so on an annual basis before the deadline that the City Council sets, FPDR's Board of Trustees is tasked with preparing and transmitting to the Council a statement that includes the following items.
It's the amount of— number one is the amount of money required for the next fiscal year to pay and discharge all the requirements of the fund.
The vast majority of those would be retirement benefits.
And that's the estimated revenue to the fund during the next fiscal year from all sources except the levy, plus the balance estimated to be in the fund at the beginning of the next fiscal year.
My understanding is the— that represents probably about— the non-levy revenue represents about 2% of the overall fund liabilities.
A statement of all payments made.
And here's a typo here.
It should say thank you.
The total amount paid into and estimated to be paid into the fund from all sources except loans from the general fund and advances from the reserve fund during the current fiscal year, plus the balance of the reserve fund at the beginning of the current fiscal year.
The reserve fund is capped at $750,000.
Next slide, please.
And then the last item required for the levy is a statement setting forth the total amount of money required by the fund to discharge its obligations.
And there's a formula in the charter explaining how that works.
And then the other source of funding for FPDR in the charter is referred to here.
It's actually in Chapter 5.
There's pardon me.
This cross-reference to Chapter 7, which provides for another— in addition to the 2.5 mills, which a mill is like a thousandth of a dollar or a tenth of a cent.
Yeah.
In addition to those, that maximum allowed under Chapter 5, Chapter 7, 110.5 allows an additional 3 tenths of a mill on each dollar.
Of assessed valuation to be levied.
Next slide, please.
Straight from the charter again, minimum levy has to be no less than $1 mil per dollar valuation unless that levy— unless levying the minimum would cause a reserve fund to exceed $750,000.
The levy is not subject to the limitation of Section 11— or sorry, I should say Article 11, Section 11 of the Oregon Constitution.
Um, and the proceeds of the tax levy, to the extent of the amount required by the fund, shall be paid into the fund.
Uh, any balance, uh, should be paid to the reserve fund.
And there's also, um, any, uh, assets of the fund, uh, Are to be deposited with the city treasurer.
So there's some theoretical opportunity to invest those within the legal limitations.
Next slide, please.
So the authority to change the plan when required by law, and this has happened over the years, council may extend to FPDR members additional benefits not described by Chapter 5 of the charter by ordinance.
Charter also allows council to include reductions in corresponding benefits as another authority under the charter.
Charter requires council to seek the advice of the FPDR board before taking action to change benefits, even when required by law.
And then any other changes to the FPDR plan would require a ballot measure.
Uh, next slide, please.
I think this— I think I've got maybe 2 left.
Um, so the 2006 ballot measure, um, was referred to voters by the City Council, and a lot of what I've described, um, were amendments that resulted from that ballot measure, which passed.
Um, for funding, the significant changes were creation of the FPDR 3 program for sworn fire and police employees.
And under the plan, FPDR 3 currently only gets the disability and death benefits.
That's what that first, or one of the sub-bullets there is intended to mean.
The way it's written is a little confusing.
But now that they're in PERS, in other words, for FPDR 3, The FPDR plan applies to them with respect to disability and the death benefits.
Including the FPDR levy, PERS contributions on behalf of sworn members involved— I'm sorry, enrolled in PERS.
That was another change from the ballot measure.
And it also— the ballot measure also allows the fund to pay PERS contributions on behalf of sworn employees enrolled in PERS.
Um, man, I may have one.
Is there one more slide?
That's the end.
That's it.
I, I hope I stayed within my 5 minutes.
Stacy Jones
Thank you.
Dan Ryan
Thank you.
Sameer Kanal
Thank you so much.
I'm going to open this up for questions before we, um, we'll probably— we might end up asking you back up if there's no questions now as well, but, um, I'll just open it up, so feel free to get in the queue.
Uh, Council President Dunphy.
Thank thanks, Franco.
Jamie Dunphy
Maybe you can tell me a little bit of the history regarding the most recent ballot initiative to improve this.
Do you know what ultimately the impetus for this update was?
Was it just that like an improvement to the model, improvement to oversight?
What was the reason why we did a ballot, a second ballot initiative on this in the 2000s or whatever it was you said?
Franco Lucin
See, I brought a copy.
There was a, uh, an election in November of 2012.
Pardon me, it's just hard to keep all these straight from memory.
Um, So there have been, there have been a number of, uh, well, the ballot initiative in 2012, um, I can't tell which of these amendments is by ballot measure.
Let's see, there was a special compliance amendment, but I don't know that that went to the voters.
Um, I might have to get back to you on that, President Dunphy.
Jamie Dunphy
No problem.
Franco Lucin
Apologies, there's, there's a number, a number of amendments.
Jamie Dunphy
You're not expected to be a historian and a lawyer, so thanks.
Dan Ryan
Thank you.
Sameer Kanal
Thanks, Council President.
I, I might maybe— would, would the same answer apply to a slightly different question, which is, can you explain not the 2012 change but anything about why 2006 happened?
Franco Lucin
Why 2006 happened?
I think, um, I mean, it preceded me, but I do think that there was an examination of the The structure of the plan and how it was funded and how could, um, how to minimize the risk to the, to the plan, the participants, and the taxpayers, um, by virtue of how the, how the plan was funded.
And so the, uh, you know, the result obviously was the creation of FPDR 3 and less, less of the beneficiary population as being subject to the pay-as-you-go funding.
Sameer Kanal
Okay, thanks.
Seeing no one else in the queue, I'm going to say thank you.
We might ask you back up at some point, but I'm going to welcome up the Deputy Director of FPDR, Stacy Jones, as well as our Chief Financial Officer, Jonas Beery.
Thank you both for being here.
Acknowledge that we have a director in the back there, and I want to acknowledge him for his service.
I know that he's On his way to retirement, if I hear soon or not.
I don't know exactly your date, but I just wanted to say thank you for the service as well.
But take it away.
I don't know who's going first.
Danny Dacelle
Great.
Jonas Beery
Thank you, Chair and committee.
And yeah, thank you for acknowledging current, for a few weeks anyway, current Director Sam Hutchinson, who's, I believe, leaving us as the longest-standing bureau director currently at the city.
And so appreciate Sam for all your commitment to the city.
So we'll start.
Just the quick slide.
Yeah, thank you, Leslie.
So just quick run of show for the next few minutes with Stacy and I, and then get to other speakers and questions.
We just want to share a little bit about the current FPDR plan and funding expectations under the current circumstances.
We'll probably skip past a couple slides because Franco covered a couple of these in greater detail than we have.
And then also want to end with a quick snapshot of why kind of potential funding alternatives May present some challenges that council should be aware of.
So let's move forward, Leslie, and I think we'll skip through— we have just for reference a couple of slides that summarize the plan and the fund, but this is largely similar to the information City Attorney just presented.
So we'll move on to a couple slides further in the interest of time.
Yeah, so just wanted to talk a little bit about very generally kind of standard pension funding models.
And we can go to the next slide, please.
The standard The standard model for most pension funds, public pension funds, is to pre-fund or at least partially pre-fund for future costs and liabilities.
That typically can be less expensive, aligns to the principle of intergenerational equity.
And acknowledging this is, I think, where the question— line of questioning a moment ago was going.
Since 2007, FPDR has been transitioning to a partially pre-funded model via that charter change in 2006.
Thank you.
That moved sworn employees to be covered by PERS and the prefunded, partial prefunding model of PERS.
So that is underway, and I think Stacy will talk a little more about that.
Next slide, please.
The FP&R plan, at least the legacy model of the FP&R plan, is a pay-as-you-go plan.
A few decades ago, this kind of a plan was very common for public pensions.
I think today, other than Social Security, there are very few.
Strictly pay-as-you-go plans, public pension plans remaining.
And again, the FPDNR system does— was historically and partially remains pay-as-you-go while the long tail of transitioning to state PERS is completed.
Also really important to note, as was previewed in the City Attorney presentation, FPDNR system is extremely unique among public pensions in that it, despite it being pay-as-you-go, Also has extremely unique one-of-a-kind payment source, which is the dedicated charter-approved property tax levy.
So just acknowledging that that unique element makes it a little difficult to do apples-to-apples comparisons to other pension systems.
Just a— uniquity is a word someone used recently, a uniquity that we have to consider as we think about that.
And happy to dig into this more, but in the interest of time, we'll just go ahead and hand to Deputy Director Jones for the next few slides.
Stacy Jones
Thanks.
Good afternoon.
Thanks so much for having me today.
For the record, I'm Stacy Jones, Deputy Director/Pension Manager/Finance Manager over at FPDR.
Can we go to the next slide, please, Leslie?
So as Jonas and Franco have both mentioned, the FPDR pension plan was closed at the end of 2006.
So what does that look like in a chronological yeah.
Well, the good thing about operating a closed plan is that you have very predictable and obviously finite time horizon.
And we also have some really clear demographic and financial markers as we close out the plan.
It is a long process, and that is because pension plans are very long-lived things, which is because human beings are long-lived things, which is probably a good thing, or at least I'm sure we all think it is.
So I just want to point out a few things on this.
Number one, where are we now?
Here in 2026, a little over 4/5 of our legacy FPDR plan members are retired, and those remaining active employees are going to retire over the next few years.
Second, just want to point out that the FPDR plan benefit costs and the FPDR tax levy— and I'll talk a bit more about why those are slightly different— are going to peak in the next 5 to 10 years and then start declining.
Thank you.
And then last, just the total plan closeout will likely happen by the 2070s when the last FPDR beneficiaries pass away.
And at that point, then the FPDR levy will only fund PERS contributions for active sworn employees and FPDR disability plan costs.
If we could bump to the next slide.
So let me talk a little bit about how the FPDR fund itself works.
Thank you.
Costs, the tax levy, and projections for both of those over the next few decades.
So I promise I won't read every word on this slide, but let me just point out a few things.
The levy is stress-tested every 2 years by an independent actuarial firm, and that testing shows near certainty that the levy will always be an adequate resource for FPDR costs within that charter cap.
Essentially, you know, the odds of ever needing resources beyond what the FPDR levy can provide to cover FPDR costs is very, very low, like lower than the probability that I'll ever get through my email inbox.
It's never going to happen.
Another thing I just want to point out is that like all permanent levies, the FPDR levy is both a victim and a perpetrator of tax compression, and we can talk more about that later if you like.
I do think this slide is also a good place to mention, although it's not on the slide, Yes.
So I just wanna remind that the total FPDR plan liability is $3.6 billion as of June 30th.
And you will sometimes hear people talk about that as an unfunded liability.
And it is an unfunded liability in an accounting sense because governmental accounting standards require us to book all those future benefit payments all the way out until the very end of the plan as a liability today.
But we cannot— governmental accounting standards prohibit us from booking all those future tax revenues that will pay for those benefits We cannot book those as an asset today.
So in an accounting sense, it is indeed unfunded.
But in a sort of practical cash flow sense, there is no funding gap.
The projected resources from the levy are sufficient at projections to fully offset those future benefit payments.
So just wanted to mention that kind of important point.
Next slide, please.
I'm going to make you look at charts.
Well, they're kind of pretty anyway.
Thank you.
This chart illustrates projected FPDR plan benefit costs.
So this is plan benefit costs through 2063 in nominal dollars.
And this was prepared by an independent actuarial firm.
And so you can see that we're still in like the climbing phase of the plan closeout, although we're almost to the top because we expect those plan expenses to peak in about 10 years.
Unfortunately, there's no quick like gondola ride down the other side of the mountain when we get to the top.
Yeah.
But once all the legacy plan members have retired, then mortality will start to have its impacts, and then we'll have this long continuous decline in expenses throughout the 2040s, 2050s, and 2060s.
So this is just, you know, kind of a good visual of the natural bell curve trajectory involved in closing a pay-as-you-go plan in a dollars and cents sense.
If we weren't starting at 2024, it would really look more like a bell curve if you could see those earlier years.
Thank you.
Ramping up.
I mean, it actually looks a lot like the amortization of an unfunded liability in a prefunded plan, but this is happening over a longer period of time.
Next slide, please.
So this chart shows a 20-year projection of total fund costs, not just plan costs, also prepared by an independent actuarial firm.
So the costs on this slide now include the prefunded PERS contributions for sworn employees hired after 2006 who are in PERS, not in the FPDR plan, as well as the costs you saw on the previous slide for the pay-as-you-go FPDR plan benefits as the plan closes out.
But it shows a similar pattern with total FPDR fund costs peaking in the 2030s and then starting to decline.
The decline is a little more gradual because we've folded in those PERS contributions and those PERS contributions are never going away.
So that's why the decline is a little more gradual.
So I think this slide is a better depiction of the whole transition, and I think it shows best why this moment in the transition is so expensive.
Current taxpayers are intentionally bearing the full or almost full double burden of both funding current pay-as-you-go pension benefits for an entire cohort of legacy retirees and prefunding the sworn pensions of almost an entire cohort of the current active sworn workforce.
So you can kind of see that in this slide.
I mean, of course they're doing that to secure long-term savings for future generations of taxpayers, but that double burden is there right now.
I mean, it's kind of like paying for your kids' college tuition while you're paying off your student loans, if any of you have ever had that experience.
So I think that's a good way to think of it.
Next slide.
Sameer Kanal
Sorry, can I just—.
Yes.
When that thing that you just described with the double payment, what is the time-bound— like, what is the era in which people are paying double?
Stacy Jones
I mean, I would say that it is roughly across 2 generations.
Starting in 2007?
Starting in 2007, and then and then fully winding down in the 2070s when those last beneficiaries die.
So earlier I mentioned, hey, this kind of looks like what you would do with an unfunded liability in a prefunded plan, but normally you'd pay down a liability in 20 or 30 years in a prefunded plan.
We're doing the same thing, but over a longer period of time.
Exactly.
Does that make sense?
Okay.
So this slide shows some historic actuals and projections for the FPDR tax levy.
So I want to make sure everyone understands this is the RMV rate, the real market value rate levy, not the AV assessed value rate.
We pay very close attention to the RMV rate because that's what the cap is on in city charter.
But I can also talk to you about the AV rate, which is what property taxpayers actually see.
So this slide shows the actual RMV levy rate for the last 5 years, the city projected rate for the next 5 years.
And the last 5 years.
Next 5 years, and then a rate projection for the following 15 years that has been prepared by an independent actuarial firm.
I mean, so again, it's kind of a similar visual to the last 2 slides.
We expect the RMV levy to peak in 5-ish years at $1.75.
I think that peak may push out and up a little bit when this model is updated in a few months.
This data is from the 2024 financial model, which is the latest one that we have.
Thank you.
But the takeaway is that this trajectory, you know, aligns with what was described in the 2006 ballot measure and is the result of the 2006 ballot measure.
But just for reference, the current assessed value rate— so this is what taxpayers are actually looking at in '26-'27 when they get their bills— it should be about $3.19 per $1,000 of assessed value.
And I can talk about the history and projections for that as well if you would like.
Thank you.
But for now, I'm going to hand it back over to Jonas for the last slide or 2.
Jonas Beery
Great, thanks, Stacy.
So the last slide— yeah, and you go ahead and bump one forward, please— is just a quick snapshot.
I think we're probably going to hear more about this, but just a quick snapshot of some general different strategies that could be explored and sort of our quick view of key trade-offs.
So the first option would be to create a cash reserve, to cash fund.
That's likely unviable.
It requires significant one-time resource that, to my knowledge, does not exist.
A second option would be to adjust the rules and the levy so that we could have sort of a one-time increase in that levy rate, the levy resource, and create a one-time funding source.
But of course, that would be pretty disruptive to current year or whatever year we implement that tax yes.
Taxpayers in that year would have pretty severe tax compression impacts, including impacts to the city and overlapping jurisdictions.
So we characterize that as highly disruptive.
Third option would be to increase the levy rate, the FPDR levy rate within the charter limit over a period of time.
So increasing the burden on near-term taxpayers to mitigate those costs in the long term.
Again, would have similar impacts to the second option, just at a lower level, but still fairly disruptive to current circumstances and near-term taxpayers.
And then the fourth option is one that sometimes is used for pension systems, public pension systems, has been used by the city in the distant past, and that's issuing pension obligation bonds to provide that prefunding resource.
I think that's a good option.
And I'll note, while technically that is feasible, it does increase risk to the city's financial system.
It relies critically on achieving investment earnings that are higher than the cost of borrowing on those pension bonds.
It impacts the city's debt limitations and the city's broader credit risk profile.
The GFOA, Government Finance Officers Association, actually has a best practice that advises against issuance of pension bonds, largely yes.
Because of that risk elevation rate.
And just noting as well that similar to kind of maybe the third option, one of the trade-offs of pension bonds is likely that it would reduce the levy rate in the near term, but extend that tail, increase some of those levy rates in the longer years as we pay that off, or at least if we pay off whatever amount we're sort of pushing through the debt service.
So short of— To quickly summarize from our perspective, short of some sort of fundamental shift in the financial reality or fundamental shift in the projections or someone offering the city a low-risk windfall resource, it does seem like from the seat I sit in that the viable strategy is to stay the current course, To recognize that we are on a pathway of moving towards long-term levy rate reductions to taxpayers, that that was implemented in '26, and accept that sort of reality so we can get to a place of long-term financial stabilization and get those levy rate decreases for the next many decades through 2070 and beyond.
Last note I'll make is appreciate appreciate the space for the conversation.
As, as I've acknowledged in this room and with folks here, I absolutely love anything that can help save the city money, that can help reduce costs, costs to the city, costs to our residents and taxpayers.
So value the space for the conversation and look forward to hearing any other ideas or options about how we might achieve that.
Sameer Kanal
Thank you.
I'm going to open up the queue before we get to our 3rd, uh, presenter for any clarifying questions.
Um, I'm going to go to Councilor Pirtle-Guiney, then Council President Dunphy.
Elana Pirtle-Guiney
Thank you, Chair Kanal.
Um, so just to clarify, the levy is set to continue paying for our PERS contributions for this group of workers in perpetuity, essentially, at this point.
The levy doesn't go away or reduce dramatically to just cover the retirement Or the, I'm sorry, the disability pieces or death benefit pieces, we continue to assess that levy for our PERS payments.
Is that accurate?
Stacy Jones
Yes, that is correct.
So that is the funding source for the city's sworn PERS contributions in perpetuity.
I mean, the levy will still reduce dramatically once we've gotten rid of these legacy pay-as-you-go costs, but the levy will continue in perpetuity funding those sworn PERS contributions as the charter is written now.
And also the very minor costs of the FPDR disability plan.
Elana Pirtle-Guiney
Okay.
And I want to ask a question about when this double payment period ends, because on the 2 charts you had on pages 12 and 13, the cost of the FPDR plans extends out to almost 2070, it looks like.
And so you really see that full taper.
We don't We don't get to see that on the other chart because it ends in 2044.
If the second chart had extended, would we see a dramatic reduction when we stop prepaying, or would we not see that dramatic reduction?
Stacy Jones
You would see a dramatic reduction.
I mean, our actuary just didn't prepare that slide as far out as they do for the pension plan piece, but you would see a similar reduction.
It's more gradual, as I mentioned before, because So we're not getting rid of those PERS benefits or the PERS contributions.
And I should also mention that you would see it getting more and more volatile.
You'll see the volatility in this kind of box and whiskers chart, and the volatility is increasing as we go on in time.
And that's because of all the uncertainty around PERS investment returns the further out you get, which creates uncertainty about PERS contribution rates the further out you get.
Elana Pirtle-Guiney
That's just normal uncertainty with actuaries predicting further out?
Stacy Jones
Just normal uncertainty that any finance person would yes.
Elana Pirtle-Guiney
So when we changed to Plan 3, do we call it Plan 3 or do we call it Tier 3 like PERS?
Stacy Jones
We call it FPDR 3, but—.
Justin Holt
Okay.
Elana Pirtle-Guiney
When we changed to FPDR 3, was there conversation about the fact that we would see a massive rate spike because we would be double paying both the pay-as-you-go and the prefunding at the same time?
Stacy Jones
Well, that predates my time, but I can tell you, I mean, we do have the ballot measure language.
The ballot measure itself did say that.
So let me read, like, here's a sentence from the 2006 ballot measure: Changing the retirement system for new public safety officers is expected to increase the existing property tax levy rate in the short term and decrease the rate in the long term.
Okay.
So I can tell you that.
Elana Pirtle-Guiney
Maybe we weren't clear on the extent of time, but it was transparent.
Jonas Beery
Yeah, and Councilor, I would add too, I mean, I don't know exactly how long we've been working with Milliman, but we have continued to have we have for decades that forecast report that would've also been a resource to show that.
We know, at least in the time Stacy and I have been around, there have been moments where that levy adequacy report did suggest there was risk of being higher than the charter limit.
That was a concern a decade or so ago.
And so, A, it has been known and opportunities to communicate out what was happening with the projection of the levy.
We've certainly done that in the context of prior year budget conversations and acknowledging that the current profile, cost profile and risk profile is actually lower today than it would've been, say, a decade ago.
Angelita Morillo
Okay.
Elana Pirtle-Guiney
I think that might be helpful information to be able to share.
Thank you.
Sameer Kanal
Thank you, Councilor Pirtle-Guiney.
Councilor President Dunphy.
Jamie Dunphy
Thank you.
Jonas, at the beginning you mentioned that the pay-as-you-go model was a pretty common way that municipalities paid for these things a while ago.
And, you know, obviously the State of Oregon has moved towards PURS.
And we are now in this vaguely uncomfortable and very expensive double-paying situation.
How are other cities in other places that used to do these things?
I mean, I assume there has to be an example somewhere that they have figured out a path forward on how to not double-pay this way, or is there any other good national— I'm just— I don't want to reinvent the wheel, and Portland loves to reinvent the wheel all the time.
Do we know if there are cities that have figured out a way to not well, I guess my initial answer would be—.
Jonas Beery
Would probably be no.
And also, you know, I think that the cost relationship between a traditional— well, there's a couple factors at play.
One, because that transition happened so long ago, I mean, 3 decades ago essentially, the scale of benefit payments, both because of smaller payrolls and lower expectations around long-term benefits, And frankly, probably not great math assumptions that were made in the '80s and '90s made it a less difficult lever to turn.
So that's probably the biggest issue, biggest delta.
I think the second really important thing is just the uniqueness of the levy funding model, right?
That even those prior systems that made that kind of a transition didn't have the benefit of getting a dedicated property tax.
And so they had a little different ability to sort of already be planning ahead for those long-term costs in a way that we just didn't as a city because we were, we were so reliant for, I don't know, 50 or 60 years on that existing property tax levy that is really one of a kind in the country.
Jamie Dunphy
Okay, so it's like short of Phil Knight dropping a billion bucks and being like, here you go, we'll pay for it, based on the slide that has the different sort of options of potential models.
Am I hearing you correctly that basically you think we are on the best path right now?
Jonas Beery
That is my assessment.
I mean, certainly this has been something that's not a new conversation and something that we've been paying close attention to.
And yeah, I mean, I think the viable alternative would be to accept the different risk profile around pension obligation bonds, which would, And I don't know that I have math handy at the moment, but the general assessment is we would probably be able to thin out some payments for the short term, kind of up until the peak.
And the trade-off would be extending those payments down the road.
And so that's viable.
We just need to be eyes open that that's probably the trade-off is we're getting a little bit of short-term relief.
And I would say a little bit, like, Thank you.
Sameer Kanal
Thank you.
I am last in the queue, so I got a few questions.
The bell curve that's shown in slide 12, is it adjusted for inflation?
Stacy Jones
That one is nominal.
We decided not to throw too many charts at you.
I do have that chart in inflation-adjusted form.
I mean, in terms— but it shows the— it has a similar curve to it.
Elana Pirtle-Guiney
Sure.
Stacy Jones
It's a more dramatic curve.
Sameer Kanal
It shows that in nominal terms that our costs don't level out back to today's level until 2055.
So even though it peaks then, it's still above what we're currently at.
Yes.
Till 2055.
I just think that's important to know.
In the 2006 ballot measure, in response to Councilor Pirtle-Guiney's question, you said that the ballot measure text said it would increase the tax in the short term but decrease it in the long term.
In retrospect, was the short term till 2070?
Is that—.
Because that's when you've said it, it seems to be.
Stacy Jones
I have absolutely no idea what they meant by the short term.
I wasn't here then, and I, I, and I don't know if there was additional explanation around what short term meant, or, or I don't even know If, if people had sort of done a projection of when that would happen.
I'm sorry, that was—.
Sameer Kanal
With the knowledge we have now, would it be fair to say that, that, you know, if they could have seen into the future what, what increasing and decreasing tax time frames— you're talking about 2070, right?
Stacy Jones
For 2070 for total closeout of the plan.
Angelita Morillo
Okay.
Yeah.
Sameer Kanal
Um, can you explain— we haven't really heard this for FPDR 1 and 2 versus 3, is there a difference in the benefits or is it just the finances?
And if so, what are the differences?
Stacy Jones
Yeah, that's a great question.
There is a difference.
There's a difference in the financing mechanism.
You know, PERS is the prefunded.
We've kind of beat on that horse.
But there is a difference in the benefits, and I'd have to go and dig up for you.
But essentially, FPDR 2 members can get a maximum of $84,000 of their final pay if they work for 30 years or more as their pension, their final pay that doesn't include overtime.
The formula in OPSERP, which is the 3rd tier of the PERS plan for public safety, which is what most of our folks are enrolled in, is I believe it is 2%.
Boy, I'd have to— no, I don't wanna hold myself to that.
It is less.
Yes.
It is.
They get a little bit less out of— it's a lower percentage.
I'd have to go look it up to be sure I'm not saying the wrong thing.
But they are allowed to include overtime earnings to some degree in that final pay.
So it's a very difficult— and then they have an IAP, an individual account program that the FPDR fund also contributes 9% of their pay into.
And that is on top of what they're getting out of the ops fund.
Or public safety plan.
So we have never done, that I'm aware of at the city, a comparison of how those benefits line up.
Milliman does a test to make sure that our plan is at least equal to or better than the PERS plan, and we pass that with flying colors every time we take it.
But to tell you exactly, like, well, which plan is better, but they are definitely different benefits.
I don't know if Jonas has anything to add.
Sameer Kanal
Is it possible to answer the question as to whether or not On net, it was a reduction when FPDR 3 was created in benefits, reduction in benefits?
Jonas Beery
I mean, it's a good question.
Is it possible?
Probably.
It would be a challenge.
We'd have to kind of— I'd have to kind of try to wrap my head around how we would do that lineup.
I mean, I think one of the, The clear benefits of that was that, A, the long-term cost trajectory began to bend down, right?
And so I think that was a clear— it's maybe hard to quantify, but that was a clear benefit.
And then both the trajectory of cost and obviously moving to the prefunding model away from the current model was a benefit.
But yeah, I think we'd have to do some thinking about the effort involved to do that kind of a comparative analysis.
Stacy Jones
And as a pension, you know, policy person, I just want to point out the difficulty of comparing the PERS hybrid plan to the defined benefit FPDR plan, because the FPDR benefit is defined benefit, which means we have promised these people benefits and we will pay those benefits until the day they die, and then we'll pay their spouses until the day they die.
And the PERS plan has a yeah.
Has a defined contribution component in that IEP, which means that the member or the employee bears some risk.
You know, the IEP, like maybe it goes up, maybe it goes down, it is what it is at the end of the day.
That risk is on them instead of the employer for the IEP portion.
So the hybrid plan, I mean, and actuaries can do that, they can price that in and they'll quantify basically that risk factor.
So it can be done.
But those are some of the complexities involved in saying definitively, is one of these better or worse than the others?
And I did wanna say, I looked it up really quickly and the formula for OPSERP Public Safety is 1.8% times years of service.
So at 25 years of service, you would get 45% of your final pay, plus you have whatever's in your IP.
That's why it's a hybrid plan.
At 25 years in our plan, you get 78% of your final pay.
Thank you.
But there's no IEP.
And again, our final pay doesn't include overtime, and PERS final pay does.
So those are some of the, the wiggly differences that make straight comparison pretty hard.
Sameer Kanal
Yeah, that makes sense.
I, I know that there's also how people observe and perceive, uh, changes as, as a positive or negative.
That is hard to, um, for us to guess how each individual person last question.
In response to Councilor Pirtle-Guiney, you said that the box and whiskers graph has uncertainty, and you mentioned due to general uncertainty around returns from PERS.
I wanted to ask if there are two— about two other potential reasons, and if that adds to or changes uncertainty in any way.
One is that we don't know how long people will live.
Does the uncertainty around lifespan length create uncertainty as it goes further out?
Olivia Clark
Yes.
Stacy Jones
It does create uncertainty in a pay-as-you-go plan.
So for the FPDR plan components, yes.
I mean, it creates uncertainty in a prefunded plan too, because you have to put enough in to cover people's benefits until the day they die.
Mm-hmm.
So yes, there is uncertainty around that.
It's much, much, much less uncertainty than around investment futures.
Actuaries are— it kind of blows my mind, honestly, every single year.
Yeah.
You know, we— this sounds very morbid, but we assign a probability of death to every single plan member every single year and a probability of retirement based on what our actuaries give us for the data.
And of course, there's a lot of variability in individuals.
I mean, that's the whole point of statistics.
But on the overall level, pretty much the exact same number of people they tell us are going to die in a year die in a year.
It's really— it's kind of the magic of— it's the magic of statistics.
Now, can I promise you that that will continue?
Like, if we have massive longevity, I mean, the actuaries do build in longevity increases.
Like, they've seen that, wow, humans keep living longer and longer, so we're going to assume that continues.
They actually build that into their models.
Sameer Kanal
So it does create uncertainty, but we've modeled out uncertainty fairly accurately in the past and have a lot of confidence.
Stacy Jones
That is a great way to summarize what I just took a long time to say.
Yes.
Justin Holt
Okay.
Sameer Kanal
I mean, actuaries are, y'all are a different breed.
I just want to say the way that that was.
Yeah.
But the, I guess the other thing is, does the size of the workforce make, create uncertainty?
If the size of, like, let's say there's way more or way fewer firefighters or police officers in the future, would that not also create uncertainty?
Stacy Jones
That is a really great question.
All of this assumes the size of the sworn workforce doesn't change a bit, not an iota.
If we get into, council decides to add 100 new police officer positions or take away 100 firefighter positions, All these numbers have to change.
They're all—.
They just hold that static.
They don't even try to factor in that the size may change.
Tim Mercer
Got it.
Sameer Kanal
And it's, it's, um, it's, it's a, it's a direct relation.
It's not inverse, right?
If it goes up, it goes up.
Stacy Jones
Yeah, I mean, yeah, like how much and, you know, all of that.
But yeah, you hire more people, it's going to cost us more, and you hire fewer people, it'll cost us less.
Yes, I can confidently say that.
Jonas Beery
And I would just also acknowledge that's true of all, of all systems, not just the, not just the sworn police system, right?
But any system at the city any employee is a member of PERS.
And so that's true of any circumstance where we're making those personnel changes up or down.
Justin Holt
Great.
Sameer Kanal
Thanks.
I'll pass it to Councilor Green and then we're gonna welcome our last presenter up.
Mitch Green
Thanks.
Just real quick on that, you've kind of piqued my interest on that question, Chair Kanal, just to make sure I fully understand this.
So the source of all 3 tranches of FPDR Payments 1, 2, and 3, that, that all comes from the FPDR levy?
Stacy Jones
Yes.
Mitch Green
Okay, so even if we would be hiring more police officers, for, for example, and they'd be under FPDR 3, it still comes from the same bucket of money that pays for all 3 of them?
Danny Dacelle
Yes.
Stacy Jones
Yes.
Mitch Green
So if we were to contemplate pre-funding and all that, that would— okay, I think I've got it.
Okay.
All right, thanks.
Stacy Jones
Great, thank you.
Sameer Kanal
Thanks.
I see Councilor Novick also got in the queue, so we'll, we'll wrap up after him and go to the next presenter.
Justin Holt
Sorry.
Steve Novick
So Councilor Kanal, for a minute there I was worried that you were going to propose a Logan's Run-style mandatory death date idea in order to eliminate the uncertainty of people's death.
But I'm glad to hear that the actuaries have taken care of that for us.
Stacy Jones
Councilor Novick, you would enjoy the morbid humor that exists at a pension plan office.
Steve Novick
I'm looking forward to hearing more of it.
Sameer Kanal
Thank you.
All right, next up we're going to welcome, and he's online, David Drain, who is is the Principal Officer for State Fiscal Policy Project at the Pew Charitable Trusts.
Thank you so much for being here, David, and please take it away.
David Drain
My pleasure.
It's always an exciting opportunity to share our research and our work.
My name is David Drain.
I'm going to try to get the full slideshow presentation.
Great.
So yeah, my name is David Drain with the Pew Charitable Trusts, a nonpartisan nonprofit that works on a wide range of public policy issues, but with a particular focus on topics that affect state and local governments on fiscal health, economic policy, and government performance.
And we've been working for, you know, since 2007 in our first report on the funding and policies around managing liabilities for public pension plans.
And the through line for our work has been the importance and value of actual prefunding and making sure that consistent and adequate funding is available to support the pension promises made to workers and retirees.
In addition to us, you know, groups like the Government Finance Officers Association and the National Association of State Retirement Administrators, you know, likewise have identified the importance of actual prefunding to the sustainability and affordability and long-term success of public retirement benefits.
And just to talk about what our data shows on the state level, we've seen significant improvement over time at states achieving this.
When you go back to 2003, We saw the majority of states were falling short of actual contribution benchmarks.
Now in 2023, the majority of states are achieving this, and the contributions coming into public pension plans, both from the states as well as the local governments participating in public pension plans like Portland with OPERS, are more than sufficient to pay down a portion of the pension debt that these plans have accumulated.
So then this gets to the question of how does this apply to Portland and FPDR?
You've heard a bunch about it.
Paygo since inception.
Current property tax receipts are paying for benefits today.
But as of 2006, newly hired police officers and firefighters in the prefunded OPSRP plan for their pension benefits.
And so then the question I think is, at least we see it, is how can Portland most effectively sustainably manage the cost of their legacy liabilities, given that they've got an actuarial prefunding approach for On the topic of why prefund and why, you know, we and others recommend this as kind of a general best practice: costs less over the long term.
You can set money aside today and have it generate investment returns for when those benefit checks come due.
Supports intergenerational equity.
Right now, Portland taxpayers are paying for service delivered years ago, and the prefunding approach lets you pay for both the salary and the benefits of the people doing public service today.
Thank you.
Councilmember Herbold.
And it provides a cushion for both employer and employee, helping reduce cash flow risk, because right now retirees are dependent on Portland's property tax receipts being sufficient to pay their benefit checks in the year they come due.
But also, prefunding has costs, and it costs more to save money today because you're going to, in those initial years, pay above that pay-go rate.
And then it exposes the sponsor, in this case Portland, to volatility from investment markets.
Dan Ryan
So we're going to be looking at a couple of different options.
David Drain
You're investing, you're hoping that money will grow.
Exactly how much it grows and, you know, what's the trajectory will— is uncertain and will depend on what markets do.
So I think from our research, from our recommendations, Portland would be better off today if they'd prefunded from the start.
I think that's, you know, something that has been said a bunch.
It's not clear.
And then the question is, what information would help the council and stakeholders make a decision about this?
Thank you.
But what, what should be done now?
And so I think we would talk, you know, we recommend for questions like this where there's uncertain trade-offs and, you know, a decision about what's best over the short term, the long term, and for Portland's needs, using forward-looking analysis.
What are the costs?
What are the benefit payments for pre-funded plan?
What are the funding levels over time across a range of investment scenarios?
Thank you.
And the reason we emphasize forward-looking estimates is that your point-in-time estimate doesn't tell you you're on the right track.
And so having a forward-looking assessment helps you understand both whether current policies lead to acceptable or unacceptable outcomes, and then would an alternative be better.
One thing that we really wanted to cite as we're, you know, kind of sharing, sharing some comments is that the levity adequacy analysis that Milliman does for FPDR is is an example of what we think is a best practice.
Having these projections, having them incorporate investment and other risks, and giving a forward-looking analysis.
So wanted to commend that practice as something we recommend generally.
We've seen greater usage in state and local governments, and Portland's example is an example of what we think should be done.
I think what would be helpful to these conversations is having similar analysis of different prefunding approaches.
So if instead of the current pay-go approach, you had either full prefunding or partial prefunding as an alternative model, what would that look like in terms of costs for the next 10 years, next 20 years, and next 70 years?
You saw this chart already.
So I'll just quickly note that the benefit payments on a nominal basis peak in 2038.
At that point, the cost of those benefit payments from you know, Portland's property tax receipts is going to go down in nominal terms, let alone in real terms.
But also that in 2063, you know, property taxes will be required to pay, you know, $100 million plus to pay for benefit payments once again for service done, you know, years and decades prior.
And then will the current levy be adequate?
It's an important question, and I think one that the Milliman's approach offers a useful lens on.
I think we'd echo what, you know, was said in a prior presentation.
You know, they did, you know, a number of economic scenarios.
They asked the question of, in what share of these scenarios do we have the bad outcome?
Do we exceed our $2.8 mils on real market value?
And found that it exceeded that cap in less than 2% of scenarios.
And even in those scenarios, it's not, you know, if those So obviously that's good news.
And then the question is, is there something that Portland could consider that would be better than this approach for, you know, long-term fiscal needs?
And just, I'll finish out with an example of a state that went through a similar process, Indiana, for their teacher retirement system, their TRS plan.
So as mentioned, you know, past presentation, you know, the— by the '80s, the bulk of public plans had transitioned to prefunding.
But Indiana for TRS was one of the late adopters and was still pay-as-you-go in 1995.
And when they were looking at the challenge ahead of them, they did not feel that they could immediately switch to making the full actuarial contribution.
That, that was going to be a cost burden higher than they could manage, but they still felt the need and the benefit of moving towards actuarial prefunding.
And so they split the TRS into 2 accounts.
The 1996 account was for new hires after that point.
It was going to be prefunded and would follow a traditional actuarial funding path.
And the pre-'96 account would be largely pay-go initially, but with a goal of getting towards actuarial funding and prefunding for that as well.
Okay.
And in particular, they set aside a $425 million stabilization fund at that initial point to both smooth out, you know, the cash flow challenges of making benefit payments, to kind of cap the amount that was required from the general fund, and then to provide a base for eventual prefunding.
And as you can see, their plan trajectory was to switch to, you know, full prefunding and relying on the assets in their In their trust in 2030, 2038.
And then in terms of how they've done, looking at actual data, we see that they're able to get their 1996 plan to a high-funded ratio, you know, about 2006, and kept it fluctuating based on investment market returns and other actual factors since.
And it took a while before they were able to see similar progress with the pre-1996 plan, but were likewise, you know, in recent years able to set aside extra volatile revenues when they had it, put aside a portion of lottery funds, and then use the available base that they had created to get it to close to 80% funded.
So just to quickly wrap up, and then excited to have the opportunity to answer any questions.
Actuarial funding is an agreed-upon best practice for paying for promised pension benefits.
Portland is doing that for new hires.
And so then the question is, is there a better approach to manage the existing legacy liabilities?
Than the current PAYGO.
There's trade-offs, there's costs of doing one way or the other, and ultimately good decisions require good data.
And so I think the next step, if the council and the committee are interested in exploring this, would be to get actual analysis that compares the short-term.
And, you know, I think kind of reiterating from the previous conversation, I think a number of people in the pension field, including myself, when we say short-term, we're talking over, you know, many years.
And long-term funding costs for both the existing approach, potentially a full prefunding approach and switching to an actual contribution rate.
We know that there's kind of preliminary estimates from the Milliman valuation, and then maybe some blended approaches that try to mimic what Indiana did in terms of having something in between.
And then ultimately, state and local governments have a range of models to consider when they're making decisions about pensions.
And the goals, you know, there's not a one-size-fits-all policy, certainly not from our research, but finding something that matches Portland's policy needs, policy objectives, and fiscal situation is what we would recommend that City Council look to.
So once again, appreciate the opportunity to share our research and happy to answer any questions.
Sameer Kanal
Thank you so much, David.
I'll open the queue back up, see if anyone has questions.
I'll also note that, um, while we're going to start with questions for David, we can also start to ask questions of other, uh, folks, uh, in a minute.
Um, but I'll, I'll just start with David and then we'll do public testimony in between.
There's a couple folks signed up.
Seeing no one in the queue just yet.
And David, we might have questions for you after testimony, so, uh, I'll hang out there.
But let's go to Councilor Green first.
Mitch Green
Thank you, David.
I appreciate it.
Um, obviously it's a huge challenge and and obviously every jurisdiction has its own peculiarities that then would influence the myriad cost and benefit tests that would need to be applied.
I'm kind of curious, and I don't know how familiar you are with Portland or the Multnomah County tax structure, but one of the things I think through is when you're thinking about this intergenerational trade-off problem, and you're thinking about how to pay for a prefunding, one question— well, it's like, okay, if you have a gift of manna from heaven or something like that, great, that's awesome.
Like, if there's a windfall, great.
But what if you don't?
Would you seek to think about another financing strategy or tax strategy?
And then you would ask the question, how does that interact with the current tax strategies?
Because where I'm going with this is the entire obligation for this falls on the property tax structure.
And we can have a debate about whether or not homeowners should pay for that entirely or not, but that's, that's only 53% of households in the city of Portland.
And also, our property tax obligation is largely arbitrary and wildly inequitable, and it's just based upon where your house was and when it was built, at what point in time and which zip code in the city of Portland.
So with all that in mind and thinking about— I guess where I'm— let me get to my point.
Have you ever encountered anything like that where a jurisdiction has this really weird qualitative problem with its tax structure and it's had to think about not only whether you should prefund or not through time, through generational equity, but also thinking about opportunities to change the I mean, when we've been part of conversations, you know, we've worked with a couple local—.
David Drain
A lot of our work focuses on states, but we work with a number of local jurisdictions thinking about their pension issues.
And who pays and what's the most fair way of allocating costs, you know, is not something that, you know, we can answer with pure numbers, but it's certainly something that people within you know, these stakeholder and community groups have 100% thought hard about.
I'd also add that I think we've, in some of the places that we've watched, you know, undergo, you know, trying to reform the funding and managing their pension liabilities, you know, we've certainly seen examples of them going to the State House to, you know, ask for changes in how they can raise revenues and the funds they can bring to bear to the challenge.
On the financing side of things, you know, pension obligation bonds, you know, were mentioned in the previous presentation.
But then kind of there's a dual challenge.
One is simply, you know, they add risk.
They add your— the goal is to borrow low and invest high.
If the borrowing costs are higher than you want and investment returns are lower than you want, you can end up falling short of where you want to be.
And you know, at a minimum, kind of having, having an actual stress test of what is the likelihood of ending up positive, and if you end up negative, is that going to lead to an unacceptable outcome for your community, is, is a necessary first step.
It's also, you know, if you have an existing pension trust that you are investing and kind of a robust setup for that, it is easier to then take the money from a pension obligation bond proceed and have It's, I think, adds a technical challenge beyond the risk challenge if you're trying to, you know, build that out while issuing a bond.
Dan Krollowitz
Thank you.
Mitch Green
That's helpful for us to think through.
Appreciate that.
Sameer Kanal
Thanks, Councilor Green.
Um, Rebecca, can we please call up our testifiers?
Rebecca Dobert
Uh, we have Kevin Matches who's coming to the table and Justin Holt who's online.
And Kevin, you can go ahead when you're ready.
Kevin Matches
Thank you.
My name is Kevin Matches.
I'm a CFA charterholder.
I've submitted some written testimony that I just don't have time to get into everything.
I'm just trying to address the presentation from staff that was just given here.
You know, they laid out these 4, you know, what they called options.
You know, just taking them at face value, I don't really know where they come from.
I don't think they're consistent with what the actuary's analysis has been or analysis that I've I've done and submitted as written testimony.
Uh, I, as written, I wouldn't support any of those 4 options.
Um, but to get into the, um, you know, some questions that came up here, you know, your, your staff describes each dollar of levy revenue that you get as a benefit to you as stewards of the city.
You know, the problem here is that each dollar of levy revenue is a dollar of cost It's a lot of costs for taxpayers.
It doesn't come from nowhere.
You asked why was the plan changed in 2006.
There are 2 main areas.
First was governance around disability.
Second was a projected financial crisis.
I worked with the city archivist to find that analysis from the actuary.
Yeah, we were projected to breach that cap.
The only alternative revenue source anyone has identified thus far is the general fund.
That's where you'd have to go if you were to breach that cap.
Why did it— first of all, did it cut benefits?
Yes, it did cut benefits.
Why?
Because only new hires were impacted.
Unions only represent current members.
That's who they're elected by.
Thank you.
Not hypothetical future members.
They were the ones that took the benefit cut.
Current members took no cuts as a result of that '06 reform.
The actuary in '06 recommended that members contribute to their own retirement, but that never happened.
What's the difference between what Portland does and what other plans in the United States do?
Negative amortization.
Negative amortization occurs because you have pension normal costs, the cost of an active member completing a year of service, a firefighter putting out fires.
It's like taking a vacation in Italy one year and putting it on your credit card, then the next year to Spain, and on and on.
Then you have pension interest costs, just like interest on your credit card.
Contributions are how you pay for all of that.
The contributions today are not sufficient to cover those costs.
You engage in negative amortization each year that goes by, uh, as the actuary's assumptions play out the unfunded liability grows.
It doesn't stabilize, it doesn't shrink, it grows each year.
You just saw in the Pew presentation a metric called the funded ratio.
In case anyone is still unaware, the pension plan run by the City of Portland is at 0% right now.
I'm out of time.
Thank you very much.
Sameer Kanal
Thank you, Kevin.
I note the written testimony is available We have our other person online from not just you, but a couple other folks as well.
We have our other person online.
Rebecca Dobert
Justin Holt.
Justin Holt
Yes, can you hear me?
Rebecca Dobert
We can.
You can go ahead.
Sameer Kanal
Okay, thank you.
Justin Holt
So just to start with, I am a private citizen of Portland.
I live in District 3.
I was raised here in Portland, and I'm contributing to this because 15 15 years ago, I joined the New York City Mayor's Office on a special task group to, as a policy contributor, to help shore up their then underfunded pension systems and try to better safeguard them for the future.
In that capacity, I sat as an ex officio investment trustee, voting trustee on those systems.
One thing I learned in the course of that is that that cities and pension systems, you know, the vital services that cities provide to the taxpayers and pension beneficiaries, it can become an uncomfortable, I guess, trade-off between the two across the economic cycle when things become a little bit more challenging in the economy.
And, you know, a big burden that those pension systems were having to go through was reducing the benefits of new beneficiaries into the system.
So this topic of generational equity has come up multiple times.
And, you know, this outcome of lower pension beneficiary classes was, you know, could have been avoided with a bit more upfront planning and foresight.
And I think that this proposal that Kevin is providing is a good step in that direction.
It will help, you know, the best way to safeguard a pension for all generations is to have it funded, ideally well-funded, but, you know, just to get the ball rolling and funding it in the first place will really safeguard these pension benefits for future generations.
All right.
Younger generations in this.
And this is, you know, as well as help safeguard the vital services that, you know, taxpayers in the city rely on, such as parks and, you know, public sanitation and first responders.
So yeah, I just contributed to this because are giving testimony because I think that the proposed, uh, the proposal by Kevin is a good step in the right direction.
Thank you.
Sameer Kanal
Thank you.
Rebecca Dobert
Uh, that was to conclude testimony.
Yes, we had one other person to register.
Sameer Kanal
He's coming up and, uh, say your name for the for the record.
Angelita Morillo
Hey, y'all.
Dan Krollowitz
My name is Dan Krollowitz.
I've been doing some work on this and trying to report on kind of both sides of this issue.
The main question I actually have on behalf of the folks who are here who are actually experts on this, it seems to me that the prefunding decision can be made at any time, but there are risks with prefunding.
We want to make sure thank you.
I have a question for the city attorney.
You mentioned earlier that the interest that we get, if we do prefund, we make certain interest rate or certain return rate on what we prefund.
My question is, is there a best time to do that?
If now is not the best time to do that, is there a best time to do that so that we can be sure that when we are making that decision, we can get those returns?
And also, if, you know, if we just take the historical return rate on yes.
If we miss that on any given year, would that then put extra strain on the general fund or, you know, make it so that we can't actually do that?
So basically, I want to ask the question to the experts here of if now is not the right time to prefund, when would be the right time and how do we kind of make that decision?
I would love to understand a little bit more from the people who have studied this more than I have.
Rebecca Dobert
That concludes testimony.
Sameer Kanal
Thank you, everyone.
I'm now just going to open up the queue in general.
I did want to flag— so the written testimony has been referenced.
You can all find that online.
One other note that I wanted to put into this is that last year in August, there was a report yes.
There was a report which came out from the Portland Central City Task Force called Strengthening Portland's Future: Options to Address Economic, Fiscal, and Service-Related Challenges in Portland, Oregon.
It had 20 recommendations in it, and number 14 of those recommendations was prefund the city's legacy police and fire pension program.
And I think that's worth looking at.
It's available online as well.
I'll try to make sure it gets connected to this agenda item so you can read it.
Obviously Metro Chamber involved in that pretty significantly.
So there's a lot of folks from a lot of different backgrounds who are interested in this, and I hope the next time— there was an availability concern this time, but I hope next time we're able to talk about this, we have someone who's affiliated with that who can come and present as well.
With that, I'm going to open up the queue.
Please feel free to ask questions as well as just give opinions, and I'll start with Councilor Green.
David Drain
Thanks.
Mitch Green
I don't mean to monopolize conversation, but if folks want me to yield, I can.
Um, I was going to make that kind of point.
I want to piggyback on what you were just saying, Chair, about the, the broad conversation about affordability and about, um, whether or not people stay in Multnomah County.
That's been the topic, that central topic conversation of the Central City Task Force, the Prosperity Council, um, basically any I think we need to do a better analysis on economic competitiveness in the city of Portland.
And so if we're going to think about people leaving because they might pay a marginal tax on, you know, incomes above $125,000 or more, a couple hundred dollars a year, then we should also be very concerned about a situation where property taxpayers are going to see their property tax burden for FPDR grow from like a third to to 40% of their property tax bill over a decade.
And if it is true that those folks are leaving and we might have fewer payers, the obligation doesn't go away.
And so that means the need to spread the levy across— I think what I'm saying is you get higher to that $280 million limit.
And so you start to spread the fixed cost of this pension obligation over fewer payers.
And that will then enhance a doom loop cycle that I think is very worth our— well, we need to be very serious about thinking that as a risk is all I'm trying to say.
So I'm glad that I heard that in the recommendations from that body, right?
Because if we're thinking about regional resources or even statewide resources to increase Portland's competitiveness, helping us out with this could be one of the The lowest-hanging fruit opportunities I think the state of Oregon could have, or multi-jurisdictional parties could have.
So I don't think we've talked about that in this way yet.
But at the end of the day, it's all about what is the net cost to taxpayers and workers in the city of Portland.
And if we can— there's a lot of things that we have some— we have limited tools on how we can turn those dials.
But do the math on the— I mean, I'm looking at 2030, 2037 maybe is where it peaks.
That's almost $240 million a year in today's dollars that we need to bring in at the peak of this cost.
So it's going to be a very expensive property tax bill is what I'm saying in a decade.
It's already a really expensive property tax bill.
So I'm glad we're talking about this, and I wanted to make sure we really firmly connected that migration competitiveness and affordability conversation to this as well.
Thanks.
Sameer Kanal
Thank you, Dr. Green.
We'll go over to Councilor Pirtle-Guiney.
Elana Pirtle-Guiney
Thank you, Chair.
Councilor Green's comments were interesting to me because I think there's 2 through lines that I am hearing, not just, Councilor, from your comments, but they, they reinforced these 2 through lines to me.
One one is, should we be prefunding the portion of our system that is currently a pay-as-you-go system?
And the question there is, is prefunding cheaper or more expensive than what we do now, and when and for how long?
And that's something that, you know, to the question from the person who spoke last, prefunding is often often a better choice earlier and a worse choice later, right?
Not always, but often.
Interest rates are very high right now.
I wouldn't want to guess, but I suspect that we would hear that this is a very bad time to think about pension bonds, and we don't have a lump sum payment.
So the conversation about should we prefund or not, I don't know where the breakpoint is.
Rebecca Dobert
I think the point is that we have to make a decision.
Elana Pirtle-Guiney
When it's too late.
But the question that I would ask if we're going to continue down the path of this discussion is when is that breakpoint where it doesn't pay off any longer, and have we passed that point or not?
I think the other conversation, the other through line that I've heard is how do we pay and who pays, which is a little bit different from do we pre-fund or not.
And I want to name that because nobody has explicitly called that out and if the conversation that folks are trying to set up, and I don't know the why on why this is coming forward at this point in time, if somebody has legislation coming or something like that, or if this is just we needed to tackle this topic at some point.
But if the conversation we really want to have is who pays, let's name that.
And let's talk about the payment type and source and if folks are suggesting we change that or not, because that to me is a very different conversation.
Thank you.
Line of conversation than have we passed the point at which prefunding is worth it or not.
Matthew Forgue
Thank you.
Sameer Kanal
Thank you, Councilor.
I'm next in the queue.
I, I did want to say I, I, uh, I'm not aware of any legislation, so I think it is the latter of your 2 options of we just said we needed to talk about this at some point and it was ready, um, at this point.
And I appreciate the staff who've been, uh, supportive of, of getting it to this agenda, um, as well as Councilor Councilor Green, uh, and I who are on the work group for this.
Um, the— I, I think you're right that there is a separate conversation around those 2 things and they're related.
And so I'm, I'm, I'm very glad that you, you raised that question.
Um, I had a question, uh, sort of rhetorical one, and then one for, um, the deputy director and, and CFO, if, if you're, uh— I don't know if Jonas is still here.
There you are.
Um, it's actually more for Jonas I'm sorry.
I'm sorry, I didn't mean to interrupt you, Ms. Willis, but it may be helpful in a follow-up.
So the rhetorical question is more for David, which is, you know, as you look at— and for those who've been looking at the written testimony, there is this $425 million example from Indiana, that investment that was made up front.
There's also in Kevin Matches' written testimony an analysis that shows $200 million upfront would save $2 billion, and it's basically higher cost for 7 years.
That's slide 14 of the attachment to the written testimony.
And so I think it's, it's, uh, the rhetorical question is, can we over the next couple months kind of come up with what is the thing that we're asking our staff to evaluate at the city?
Um, or what are a couple things that we can specifically go back to?
I know that many have said that it's already been suggested, but obviously that was before Councilor Beery, how are the pension obligations into PERS paid for by employees outside of these 2 bureaus?
Jonas Beery
Uh, yeah, Councilor, that's a good question.
Um, so those, um, are factored into this when we talk about sort of fully loaded personnel costs.
Uh, those, um, obligations for the sort of employee-specific PERS component is folded to that.
So we make sure that we have the ability to cover that as part of our budget related to the personnel cost center.
Sameer Kanal
Okay, so if— let's imagine a bureau that's 100% general fund funded that is not police or fire.
Its budget includes the PERS contributions for its current employees, is that correct?
Jonas Beery
Correct.
Yeah, there's some nuances there are some nuances around individual circumstances, but generally that's correct.
Sameer Kanal
Okay.
But if I look at the dollar amount for the Fire Bureau, let's say, what of that is included?
Because I know that the FPDR— and this is the follow-up part— the FPDR budget has internal transfers and also not.
And so if you could speak to what actually goes into the budget and what doesn't, that would be very helpful.
Stacy Jones
Yes, very good question and super confusing from the outside.
So those PERS contributions for the employees who were hired 2006 and later, they are in the police and fire budgets.
You will see them there.
Those expenses are there because they do pay those expenses directly themselves.
Then we turn around and reimburse them every month for those contributions.
So you would also see, if you knew where to look, revenue coming in, interagency revenue coming into police and fire from FPDR to perfectly exactly offset those expenses.
So it kind of winds up being a pass-through expense for police and fire, but it is in their budget.
What you don't see, obviously, because it's a pay-as-you-go plan, are the costs of the legacy retirees.
So that little bit of the active workforce that's still in the FPDR plan, I mean, there's no pension costs for them in the police and fire budget.
Okay.
Does that make sense?
Sameer Kanal
Yeah, so let me repeat it back and you tell me if I'm right.
If you are looking at just the portion of personnel costs for people who started after January 1st, 2007, everything is in the police budget, everything is in the fire budget.
Is that part correct?
Stacy Jones
Yes.
Sameer Kanal
If you're looking at the part that relates to people who started before January 1st, 2007, And the legacy for people who've already retired that we're doing pay-as-you-go for, that would not show up in police and fire, but it would show up in the FPDR budget?
Stacy Jones
Yes.
Although I do want to point out the nuance that like in a normal plan, like let's just imagine that, you know, we just were normal and in PERS, you wouldn't see any costs for already retired people in either plan.
Yeah.
Okay.
Angelita Morillo
Then yes.
Sameer Kanal
But those are in the FPDR budget.
Stacy Jones
But they are in the FPDR budget.
Sameer Kanal
And all of it is paid for by the FPDR levy.
Stacy Jones
And all of it is paid for by the FPDR levy.
Sameer Kanal
Okay, thank you for clarifying that, because that's something that comes up to me a lot when I talk to folks out who are interested in this, which is a small but dedicated group of community members, that there is a— there's not been as much understanding as there could be about what is covered in the fire budget for firefighters or police budget for police officers.
So thanks.
The other piece I think is worth pulling on here, but I'm gonna follow up in writing on it with a couple questions on how we measure certain things for this.
But can you estimate, not the part for people who've already retired, how much is not going into the police and fire budgets, but is held on for, um, in the FPDR budget for the people that started— that are active but started before January 1st, 2007, how many, how many dollars are we talking about?
Stacy Jones
We would have to come— we would have to go back and look at that because that is actually a completely hypothetical thing because the FPDR plan is, is pay as you go.
So, so we're, we're living in this sort of pretend world where we say, oh, for that little you know, whatever it is, 10%, 15% of the sworn workforce, we're pretending they don't cost us anything right now.
We're just like, nope, they don't cost us anything right now.
They don't cost the Fire Bureau and the Police Bureau anything, and they don't cost FPDR anything.
Then the minute they retire, now they start costing us money.
Of course, could we estimate that using some, you know, actuarial technique?
Yes, we could do an estimate of it, but I don't have it off the top of my head.
Matthew Forgue
Okay.
Sameer Kanal
All right, thank you so much.
I'll go to Councilor Morillo.
Angelita Morillo
Thank you, Councilor Kanal, and thank you all so much for being here.
And to the community folks that always show up for this issue, it means a lot to have your perspective here as well.
I'm guessing this is a question that you— we won't have the information for, so I'm just sort of posing it as a general thing that I've been thinking about since reviewing the materials and looking at this.
But we have yes.
So we have, you know, some folks up here have stated that they want to hire hundreds of more officers, and the current actuarial analysis says that we can stay within the levy amount if we do not hire any new police or firefighters.
And so the question I have is, what is the squish room within that?
And maybe it's a lot, maybe it's nothing, because if we were to actually hire 350 I think the question I have is, does that put the levy and the city at risk?
And like I said, I don't expect you to have those numbers, but it's something that people have posed up here as a goal.
And so I'd like to know what the impacts of that would be if it were actually to materialize.
Jonas Beery
Yeah, yeah, I'll just say it's a good question.
And I think as Stacy said earlier, you know, that's part of the— that would be implemented in the next actuarial evaluation, but it's a good flag and question.
I mean, there is, based upon the current circumstance and the slide that was shown earlier with the levy rate approaching the $2.80 level, and given that new employees would be under the PERS system, there frankly is probably a lot of headroom under the $2.80 charter limitation.
That's not to say there isn't an increase.
There would certainly be an increase in a change in the dynamic.
But I don't know that we've done the math, but we could probably come up with some rough estimate.
But my guess is— I think it's a good question.
Given the transition in motion, it's probably, there's a lot of squished room.
I forget the term you used, but a lot of capacity if that choice was made.
Elana Pirtle-Guiney
Gotcha.
Angelita Morillo
Okay, thank you so much.
Sameer Kanal
Thank you.
Seeing no one else in the queue, pausing for dramatic effect.
Jonas Beery
Chair, sorry, I'm sorry to interrupt, but I just was thinking about the path forward.
I actually have a question.
Great.
It would be really helpful to get some direction I think that's a good question.
I think that's a good question.
I think that's a good question to get direction on as we think about the path forward.
Because I understand and have been doing this work for a long time, so I understand the math around prefunding.
What I'm not understanding and would love, not today, but just as this discussion comes back, is a better understanding of where that prefunding resource comes from.
Because I heard an example in Indiana, I think it was Indiana, there was a $425 million seed that provided that prefunding.
I heard an example in the public testimony of a $200 million seed, and I don't see where that resource comes from.
And so that's just a critical component as we think about the prefunding pathway.
We've heard a lot about investment.
Great.
What are we investing?
And so I just wanted to flag that for consideration by this council as the conversation goes forward, because I'm not clear on As we do that analysis, what our expectations should be about what that resource is.
So I wanted to just make sure that was daylighted and dialogued as this moves forward.
Sameer Kanal
Yeah, I think maybe there may be a challenge in terms of what comes first.
Like setting up the structure that could allow for potential future investment seems in my head like a first step.
And then looking around and figuring out, I can also see like what's the point of doing that whole structural change if there's no potential to get money.
So I appreciate the question.
Councilor Green, did you want to add anything on that?
Mitch Green
Yeah, I'm glad that you asked because it's important to be really clear.
Um, we don't have an extra pot of money sitting around, and so if we're going to go down this road, even to explore it, we have to be honest that it, it would need to be a tax or a fee or something.
We would have to— we'd have to levy something like that.
And we'd have to communicate that to the public that we would obviously need to refer it to them.
But the idea would be if we were to contemplate another fee or tax or something, who would we tax?
What would it be on?
What would be the structure?
And then is that better or worse than the alternative?
I think to Councilor Pirtle-Guiney's points, we absolutely must have a break-even concept in our mind.
And that's the cost-benefit I just want to make sure everyone reads the written comments from Mr. Matches.
He's done it.
He's done some analysis.
We should check his homework, but he's got a chart on page 14 of his written comments where he shows us that math, and he says that if you can come up with a source to pre-fund this, it's going to cost you, what, 2027?
Let's say that's the first year that you start doing it, an extra $100 million.
Yeah.
On top of what you're currently doing-ish, based upon my squinting.
But that then crosses up— you reach a threshold where you no longer are— you're paying less than you would have in the status quo, and then you break even, and you— on the net life cycle cost, it's a $2 billion savings.
And so the idea is, for a few years, if you can levy a tax on a term basis, you can do that.
I think that's a great idea.
And so, but we shouldn't pretend like there's not a tax that would need to be levied.
That's the thing.
If we don't, if we're not going to be honest about that, then we're just hoping to get a big windfall in our laps, which is not going to happen.
I don't think we should go out and try to bond against this in this market without something there, because I don't think— I mean, we're also, you know, we're not going to get returns from the market that are going to outweigh the cost of the debt service.
And so it would need to be a tax.
Thank you.
That's, that's how I'm thinking about it.
I'm just one of 12 councilors, but, um, I really think people should read the written comments in the record today because that's, that's what I'm reading and thinking through.
Um, and, uh, yeah, that's, that's all I have there.
Thanks.
Sameer Kanal
All right, thank you to everyone for this conversation.
Thank you to Franco from the City Attorney's Office, to, uh, CFO Beery, Stacy Deputy Director Johnson, APDR, and to David Drexel.
Um, I'll keep everyone posted as this comes forward, and we'll circle back on, on any future steps.
There's nothing planned at the moment, but we'll, we'll get to it.
We're going to take a short break, come back at 3:59, and we'll get going with everything else.
Thanks so much.
Matthew Forgue
Thank you.
Rebecca Dobert
Councilor Clark, if you're online in Zoom, please turn your camera on.
Sameer Kanal
And we're back, as predicted by the council president, 4:06.
Uh, so that's, uh, you win the pool.
Um, not going to, not going to malign the folks who are here on the other Slackers, we'll get back to.
But, uh, with that, I will ask if Rebecca, if you could please call items 4, 5, 6, 7, and 8 together, please.
Rebecca Dobert
Item 4, amend Regulation of Payday Lending Code to update program fees, amend Code Section 7.26.030, document number 2026-325.
Item 5, amend Pay and Park and Non-Pay Private Parking Facilities Code to strengthen compliance and public notice requirements and update program fees.
Amend Code Chapter 7.25.
Document number 2026-326.
Item 6, amend Secondhand Dealers Code to strengthen compliance requirements and update program fees.
Amend Code Chapter 14B.90.
Document number 2026-327.
Item 7, amend Social Games Code to strengthen compliance requirements and update program fees.
Amend Code Sections 14A.70, 0.060, and 14A.70.070, document number 2026-328.
And item 8, repeal Amusement Devices, Games, and Machines Code, repeal Code Chapter 14B.110, document number 2026-329.
Sameer Kanal
All right, thank you so much, and I'll pass it over to, uh, Councilor Novick.
Steve Novick
Thank you, Mr. Chairman.
So to use another of my outdated cultural references, my office is on a— like the Blues Brothers, on a mission from God.
In our case, the mission is to find and root out silly requirements that unduly burden small business in the city.
All of you joined me in eliminating one such silly requirement, the requirement for a permit to put up a simple sandwich board outside your business.
It turns out that the city also has silly requirements that establishments that have pool tables and pinball machines have to have special permits to have pool tables and pinball machines.
I believe that stems from an era when pool and pinball were considered unsavory activities, and politicians might have thought, well, if you're going to conduct this unsavory activity, at least you should have a permit.
But that was always silly, and it's not as if we do active regulation of pool tables and pinball machines.
We're not going out to inspect them.
So we were talking with the revenue office about that.
Thank you.
And they said, well, they agreed that that was silly, and they also— but they also said that there's a number of other activities for which we do undertake active regulation, and those— and the permit fees for those activities haven't been updated in forever and don't actually pay the cost of regulation.
And conveniently, everything we're talking about today starts with P: payday lenders, pay-to-park operations, and pawnbrokers.
Although there I'm taking a bit of poetic license because yes.
The language that we really use is secondhand dealers.
Before I ask the revenue folks to come up and explain further, I want to note that I passed out an amendment to the secondhand dealers portion of our proposal, which is based on feedback we got in the past couple of days.
There's various provisions that apply to every employee of a secondhand dealer, and the feedback we got was, well, wait a minute, What if you operate in multiple jurisdictions?
Does the City of Portland really need information about every employee in all jurisdictions, or do we really only need information about the employees operating in the City of Portland?
And that made sense.
So the amendment which we're proposing would in 3 places refer to employees in the City of Portland as opposed to just employees in general.
And we're going to hear some public testimony about that.
So with that introduction, I'd like to ask the thanks for being here.
Sameer Kanal
Please introduce yourself for the record, either altogether or when you start.
Tim Mercer
Good afternoon.
My name's Tim Mercer.
I'm the Tax Division Manager within Revenue.
We're here to talk to you today, as Councilor Novick alluded to, to talk to you about our regulatory stuff.
So Revenue Division's known for, you know, collecting taxes.
That's the bulk of what we do, as I'm sure you well know, but We also have a small number of regulatory programs that we administer within Revenue, and that's essentially a 1 FTE portion of our shop, and that's what we're going to talk about today.
Here's a brief summary of the changes that we're proposing.
The headliner is the discontinuation of the amusement device program that Councilor Novick referred to.
Coupled with that, we have some, some kind of small updates to a few of the other programs like Pay and Park and Secondhand Dealer, and then kind of across the board updating the fee structures that haven't been updated in quite a while, and then tying them to future updates to the CPI.
So with that, I'm going to turn it over and you'll hear the bulk of the presentation today.
Danny Dacelle
My name is Danny Dacelle.
I'm the Business Income Tax Section Manager.
This FTE, the Regulatory Program Coordinator, Leila Taylor, sitting next to my right, she reports to me.
I'm going to try and present these ordinances to you folks in the order that I believe those were just read out.
I'll do my best, but if you have questions and we need to jump I'm going to start with payday lenders, as it was mentioned.
The ordinance establishing the payday lender program was first passed back in February of 2006 to provide local consumer protection— oops, sorry about that— local consumer protection framework to partner with the established state guidance.
That's important to emphasize that this is primarily a state-guided program.
Payday lenders must first and foremost be licensed by the state, and regulation of these entities focuses on personal consumer lenders that lend amounts under $50,000.
Making sure that these folks are kept to strict interest caps is really the focus there.
The focus of our effort on the city side is as a local protection for borrowers, establishing the ability for them to do things like cancel agreements, create payment plans, and file complaints locally for bad practices for these lenders.
The broader enforcement of these still occurs at the state level, and at the time of the original passage of this ordinance for this program, there were— the landscape for these lenders was a lot bigger.
There was upwards of 50 to 60 lenders at the time in Portland, but most of these, the vast majority of these, were not able to renew their permit with revenue within the first year because of the interest rate caps that were established and the other regulatory guidance at the time.
So we're now at the place where our current landscape has about 5 of these folks left over.
And I think this slide touches on the fact that since that point in time, we have not updated their registration fee since 2006.
So it's a little bit out of date at this point in time.
We can jump to the next slide.
This just highlights a summary of the proposed changes.
It's pretty simple for this program, is just to increase that application fee to an amount that keeps up with this, the inflation index since that point in time, and then it ties future updates to the CPI indicator going forward.
I'll note that we did receive just a little bit of feedback in our public comment period, which was focused on just resistance to that fee change.
It's pretty straightforward.
We can jump to the next slide.
The pay-and-park program is the next one on our list.
This program was implemented and exists to protect the fairness and the convenience for the parking public, to avoid predatory ticketing practices for these private lots, and to put caps on penalty maximums that can be assessed.
Only the lots that are registered and in compliance with our program are able to issue penalties for these violations.
And the main differentiator that makes a parking lot fall under our purview is that they enforce permit through issuing citation notices, as I mentioned.
Only the lots within the city— sorry, other lots within the city that you may see pay-on-exit lots or other lots that use towing as an enforcement mechanism, that would not be under our program.
Thank you.
I'll also emphasize that this, this code section does not apply to public parking that's enforceable strictly through PBOT.
And as noted by the amount of lots on this slide, there's about 164 permitted lots that are under our purview.
That takes up a substantial amount of time and effort and energy per week from LILA, but we have not increased or updated the rates that are assessed on an annual basis for these folks for quite some time, about 2009.
And just a high level, I know we had sent a summary of these proposed changes or have already been sent over to council, but just wanted to give a high-level table here.
I don't know if— I don't want to stop too long here because I know we're time-limited.
But we can go to our next slide.
Our public process involved sending letters out to the impacted businesses to notify of prospective changes.
We opened a public comment period starting in August, and then we held an in-person listening session at City Hall with Commissioner Novick's office on the 24th.
A summary, just a high-level summary of some of the comments that we heard from folks centered around concern on the definition of what made a large lot.
Yes.
Yes.
And the potential impacts to the ability to assess penalties related to the grace period that we proposed.
We wanted to establish that for the ticketed public.
There was also concerns around the caps that are set on penalty maximums that can be issued because those have not changed in quite some time either when you're factoring in CPI increases.
There's also a concern around the lack of definition on the ability for certain and operators to issue penalty notices to vehicles that occupy multiple parking spaces.
So think of a tour bus that takes up 10 spaces in one of these private lots.
There's a little bit of lack of clarity in the code on what they can do there.
The changes that implemented here, if passed, would not take place until next year.
So we're talking about changes that would occur next calendar year.
We can jump to the next slide.
We'll move to the secondhand dealer program.
So this—.
The original establishment of this program dates back to the 1980s, and for the purpose of controlling the flow of stolen property within the City of Portland.
The current program focuses and regulates business activities that are considered at high risk for passing off stolen property.
So most often you can think of these as pawn shops, jewelry shops, sporting goods stores, and some others.
The compliance effort for this program, same with the Pay and Park program, involves a significant amount of time and resources each week for, again, the one FTE.
This involves consistent coordination as well with PPB.
We have a liaison that works with Leela pretty closely.
But it's similar in time and resource use to the Pay and Park program, and the permit fee increases, as mentioned with Pay and Park, has not really kept up with CPI.
Adjustments or inflation over the past decade or so.
And I'll note, just a quick note, because this slide differentiates between— I'm trying to head off a potential question just in case that comes.
But the distinction between what you see as an occasional dealer and a regular dealer is that incorporates folks who acquire 50 items or less of regulated property per year.
That makes them an occasional dealer.
So.
Thank you.
In case that question comes up, go to the next slide.
And this is just a another summary of the high-level changes here.
I'll call out.
I don't need to linger too long here, but I'll note that revenue had initially proposed increasing the the fee for all businesses here to about $600, and about after our public comment period.
And our listening session with owners and operators on this, from this aspect, we adjusted that down to $450 across the board as just the standard one-time fee per year.
Tim Mercer
So it's also worth noting here that this is the call-out that Councilor Novick made about the language change that you all have in front of you with this program.
Steve Novick
Can I ask, um, what— I just want to underline that what we're proposing here would eliminate the distinction between the fee for occasional dealers and non-occasional dealers, and that's because it doesn't take any more effort to regulate the non-occasional dealers than the occasional ones.
I was just wondering, Leila, if you could sort of explain what you have to do with relation to each and why there's not a real difference in effort between the two.
Leila Taylor
Yeah, absolutely.
I'm Leila Taylor, the Regulatory Program Coordinator.
When a secondhand dealer application comes in, It's accompanied by a fee.
I have to review the documents to make sure that they're all complete.
Thank you.
Any background check forms or personal history forms that— for each employee that are submitted with the application have to be reviewed for completion.
And then once I've reviewed those, I create the account within our system and submit that to Portland Police Bureau for review.
So the administrative process is, is identical regardless of how many items they acquire.
Sameer Kanal
Thank you.
Leila Taylor
Yeah, of course.
Danny Dacelle
Okay, um, our public process here was very similar to what, uh, what you saw with Payne Park.
Letters went out to the impacted folks, uh, in July, and public comment, um, portal opened in early August.
Online listening session was held with, with some of these folks, again we had a meeting with Commissioner Novick's office on the 24th.
That's where a lot of the general feedback that we heard here, a summary of those comments centered on concerns on, again, that elimination of that occasional dealer permit, the overall fee increases given the market factors that are present currently, as well as just an overall opposition to tying things to the CPI index moving forward.
We can go to the next slide.
Next slide.
So we'll talk about social games.
So our local social games program stems originally from ORS statutes that were focused on gambling that were enacted in 1974.
This is meant to regulate activities between players.
This excludes lottery that takes place in a private residence.
In the absence of our program and the enforcement of the regulations, Without authorization, social games of any kind would be considered illegal within the city.
But our local authorization stems from the ORS guidance, again, enacted around 1974.
You'll hear a theme, which is that the fees have not been updated since the origination.
That dates back to 1974 for this one.
Social games, in case anybody is wondering, includes poker, blackjack, cribbage, dominoes, any other games of that nature.
And the current time commitment of this program for our program coordinator is fairly minimal.
It's mostly a complaint-driven program, and the revenue generated stems from permit renewals from the existing business that are already registered with us.
Go to the next slide.
And just again, a summary of the high-level changes here, just increasing the fee, tying that to the CPI indicator for any future adjustments.
As well as trying to mandate business tax compliance for these folks as well, which was a— that was a theme of most of our changes also.
And we did not receive any public commentary for this one.
Amusement devices.
We put this picture in just for Commissioner Novick.
I'm just joking.
This program focuses on and has been in existence— I'll date the history back.
It dates back as far back as the 1930s.
In its original form, because a distinction was decided was needed between amusement devices or innocent amusement devices like pinball, pool tables, other things of that nature versus gambling devices, and there was not any sort of enforcement or compliance of that activity at the time.
Throughout the course of this program, Revenue and PPB have maintained a partnership agreement around inspection authority in order to manage the social and neighborhood effects associated with coin-operated amusement.
Thank you.
Thank you, Mayor.
This is Councilor Mitch Green.
I'm here to talk about the Entertainment and Gaming Devices, and particularly their effects on minors while generating revenue.
I just, I just want to throw in that distinction because that's— that language is— this program should not be confused with state lottery gaming at all, as it's completely separate.
But it does regulate and permit devices within the city like pool table, shuffleboard, pinball, other things of that nature.
And again, minimal time commitment for LEILA on this one.
It's a complaint-driven program, and revenue comes from, again, the annual permit requirement for these folks.
Next slide.
And just briefly, I'll touch on— I know this is not— this is under our suite, so I'll talk about it.
But this is the newest program under our regulatory umbrella.
This was established in 2023, and that's the third-party food platform program.
And it exists strictly to provide an outlet for local restaurants and delivery drivers to file complaints if violations of existing caps that were established for delivery and other fees that get charged to these folks.
It tries to restrict the ability for predatory practices there by those third-party food platforms, DoorDash and other things like that.
Again, pretty minimal time commitment for our coordinator per week.
This is minimal complaint-driven.
This is also non-revenue generating.
Thank you.
And then our last 2 slides, just a high-level summary of the yearly changes that we'd be talking about for each of these programs, the summary of current and then proposed for each one we talked about today.
And then our very last slide was just a summary of the annualized revenue collection for the current status of this program as of, I guess, as of FY24-25, and then what we project with these changes going into next fiscal year.
I think that's, that's the end of what we—.
Tim Mercer
Yeah, that concludes the presentation.
Dan Ryan
Thank you.
Sameer Kanal
Anything else you want to add?
Okay, thanks.
Um, so colleagues, before, uh, opening it up for, for, uh, clarifying questions, um, just— we do have public testimony, so we will do the distinction between clarifying questions so are there any clarifying questions for either Councilor Novick or for the presenters?
Councilor Green.
Mitch Green
Yeah, thank you.
Thank you, Councilor Novick.
Uh, tidy presentation, by the way.
Um, thanks for the good presentation, easy to follow.
I just want to make sure I understand this correctly.
So on slide 18, overall in the aggregate, you're saying that we currently lose $40,500 a year in revenue from the with our current status quo.
Um, and in your proposal, your package of proposals, we would basically cut in half that loss, correct?
Okay, so we'll hear some testimony that sort of contextualizes that.
It's not all just dollars and cents, but I just wanted to make sure.
Sometimes the signs on the, on the tables can be a little misleading, but I got it.
Caleb Schlesinger
Thanks.
Sameer Kanal
Thanks, Councilor Green.
I'll, I'll just, uh, add my question.
It's about the secondhand dealer one, I just want to make sure I understand correctly that, um, because the, the, the paper version has— doesn't have the, the earlier part, but my understanding is right now the proposal would make it so that there's every employee who operates in the City of Portland would need to do a background check and all that.
Who is currently required to get a background check?
Leila Taylor
Currently, each employee that acquires regulated property, so buys things that are defined by LIC 10.01.
They have to have a background check that's been approved by Portland Police Bureau, and we're suggesting that there's also a background check fee accompanying that.
Sameer Kanal
Okay, so, so no new human beings would be covered by this rule?
Leila Taylor
I mean, if, if you are a business owner and you hire a new employee that you intend to have them buy jewelry or whatever, then that new employee would have to have the background check, and that's current practice.
Sameer Kanal
Okay, so if you work at a pawn shop but you're not the buyer, correct?
Are you—.
This says, and each employee.
So if you're at a pawn shop but you are not the buyer right now, you don't need to get it, correct?
And going forward you would?
Tim Mercer
Exactly.
That's the change here.
Yeah.
Okay.
In addition to the fee, the changes that, uh, currently business owners could sort of, uh, dictate who is buying and who's going to go through the process to be on the list, um, whereas now we're saying all staff at that location would be on the list and go through the process.
Sameer Kanal
Thanks.
Councilor Ryan.
Dan Ryan
Chair, um, first, just at the very beginning of your presentation when you mentioned the taxes that we and I appreciate that you put all the ones that aren't directly just for the city but for the metro area and for the county.
This isn't a complete list, and you know that, correct?
Correct.
Okay, just wanted to note that the children's levy is not on here, the cannabis tax is not on here.
So you really focused on the ones that were beyond the city for the most part.
Tim Mercer
Just, just trying to point out kind of who we are in general.
Dan Ryan
Yeah, and you have taken on a lot.
A lot of new responsibility, and I've always questioned how that has been difficult on our capacity for the ones that we already have.
My way of saying I have empathy when anytime there's a cut to your bureau because of taking on all these responsibilities.
Okay, back to topic.
Councilor Novick, I'm so sorry I didn't call you this morning.
It's a— I think it's a softball, and you're very good at these.
I can't imagine that— I'm trying to imagine where the why came from.
And where this list came from and how much more digging can be done.
So I'm trying to get at, were these items or funds or whatever we want to call them, 'cause they really go all over the place, is it something the revenue division was chomping at the bit to bring cleanup to us anyway?
Like, I'm kind of confused on how we got to this moment.
And I respect that Councilor Novick creatively dug in there with you.
Clearly there's ones like the amusement, which is kind of a no-brainer and actually was entertaining.
Makes me think of the musical Music Man and some of the lyrics in that.
But then there's others that I think have some consequences that probably need a little bit more discussion.
But I respect you and I wanna just hear a little bit more about how this all came to fruition.
Sameer Kanal
May I respond?
Dan Ryan
Yeah, it's directly to him.
Steve Novick
So the revenue folks could maybe, you know, give us some more context to our discussions.
But really, we were having— we were talking about following up on eliminating the permit requirement for putting sandwich boards out in front of your business.
Right.
We were talking about the fact that there are these permit requirements for having pool tables and pinball machines.
And the Revenue Bureau folks agreed that that that's kind of, you know, outdated and unnecessary.
But they also brought to our attention that there are several other activities which are regulated and require permits which actually take the time of the bureau to do the active regulation, and that the fees for those had not been updated in a long time.
We're not covering the cost of— really, it's just Leela's time.
So we decided to bring those together, saying that we're going to update these fees that haven't been updated forever and don't pay the cost of regulation.
At the same time as we are eliminating the permit requirement for activities that don't actually really require active regulation.
Dan Ryan
Okay, I understand.
I appreciate that you did the sandwich board item and that that led to more dialogue.
I guess I'm just kind of perplexed why this was always under the mayor's bureaus, if you will, and why some of these hadn't come up.
In the last 10 years or 20 years with some of them, 30 years even.
So anyway, I was just entertained by this legislation and had to hear a little bit more about the motivation.
Thanks.
Sameer Kanal
Thank you, Councilor Ryan.
I realized I forgot one more question.
It's on slide 8.
You had the comments, and maybe this is just generally, how should we view your— as you're saying there, these are the comments we received.
Are these feedback on the proposal we're seeing now?
Or were—.
Was the proposal we're seeing now shaped based on these comments?
Tim Mercer
That's a great question.
Thank you for asking that.
Um, it's a little bit of both.
So, uh, we had a comment period open.
We were able to make some modifications to what you're seeing right now based on that comment period, and then we've continued to receive feedback all the way up to as, as Councilor Novick alluded to, I think, um, one of the, the comments that, um, precipitated the amendment you have in front of you, uh, came into us yesterday or something like that.
So there's— it's probably fair to say that there's some stuff that we've heard, heard feedback on that we haven't gotten into the package, and there's some other things where we made, um, some tweaks here and there to what's in front of you.
Sameer Kanal
Did anything change with relation to the people who park in more than one parking spot?
Tim Mercer
No.
Sameer Kanal
Okay.
Um, I, I will be following up on that afterwards because that's an area of interest of mine.
Um, seeing no one else in the queue, uh, we're gonna call all the testifiers together on, on all of these, and I don't think there's any duplicate signups anyway, but I will call the first testifier.
Rebecca, if you could please call our panel of testifiers, and thank you to the presenters.
Rebecca Dobert
Kevin O'Connell, Caleb Schlesinger, and Matthew Forgue.
You can go ahead at the table.
Caleb Schlesinger
Uh, my name is Caleb Schlesinger.
I guess I represent one of the 11, uh, parking operators that currently work with the city.
I do have some additional concerns that I think weren't fully addressed, but I did submit in writing as well.
I think what also is missing is the fact that this code, from my understanding, having worked with it for over 15 years, is also geared towards providing people with an alternative solution to towing, which is hard to undo.
We issue parking penalty notices that we are gracious the city allows us to do, and working with the revenue department, which I think we've had 3 complaints get escalated that far this year, we resolve these things.
So I'm not sure how much time this portion requires, but I think that there's a lot of burden being put on the operators, including costs that I haven't personally had time to even quantify with the signage changes as well As well as the required photography that's being, you know, put my— I have to train my staff on how to do it, when to do it, de-escalation, because that can be a contentious moment.
I now have to do like almost a video around a car based on this.
And there's just so many challenges that I don't think have been fully vetted.
And if there's only 11 of us doing it, I think there could be some dedicated time with those 11 people to work through what the problems and challenges that need to be addressed I've worked and served on the city's parking planning commission before, and that was a great opportunity.
We had, you know, multiple sessions to work through these things, and a lot of the changes were data-driven, which I don't think this so much is.
And I am gracious and grateful that they did bring up the fact that the penalty fee, which is $44, hasn't gone up since 2011.
So 15 years on that, and I would love to see that go up.
Thank you.
Get escalated as well to at least create some balance so that these additional fees and charges being passed on to me and my other operators can at least be somewhat recovered.
Because our job isn't to go out there and find people violating, it's to protect private property, make sure that it's used by the intended user, which could be a clinic visiting, you know, patient visiting a clinic, and make sure that someone at the coffee shop isn't taking that parking spot.
And that might be for a 20-stall facility which is being treated the same as a 200-stall facility.
So I just think that the intent of this might be well driven, but there's just some work that could be done to, to really make this a better proposition to you all.
And I think they've also written some stuff too, but I think that sufficiently covers my gist of my concern.
On time.
Leila Taylor
Thank you.
Rebecca Dobert
Matthew, you can go ahead online.
Matthew Forgue
Thank you, Chair Kanal and members of the committee.
First, my great appreciation to Councilor Novick and to your staff for responding quickly to my last-minute concerns about the secondhand dealer amendment language that I sent just yesterday.
Second, I understand that there was a public comment period for this amendment.
I apologize for not participating in that.
We only became aware of the proposed amendment yesterday.
My name is Matthew Forgue.
I am the Director of Regulatory Affairs at EcoATM.
EcoATM is a nationwide electronic recommerce company.
We operate over 7,000 automated kiosks located inside retail storefronts around the country, including several here in the City of Portland.
Our kiosks make it simple and convenient for consumers to sell unwanted electronic devices.
This keeps devices out of the waste stream, provides cash to local communities, And gives consumers around the world access to used devices that they might not otherwise be able to afford if they were trying to buy those devices new.
My appreciation again for the recent edits to the language of the amendment.
Those edits would relieve the burden for our company of an overbroad definition of employees.
However, I just want to point out that the updated version, which ties the personal background questionnaire to employees located within the City of Portland, done would still affect employees of businesses opening multiple locations within the city.
So if you had a location with 20 employees and then you opened another location and you wanted to have 20 different employees in that location, a strict reading of the amendment language might require all 40 employees to be background checked under, uh, or for the application for the second location.
So my suggestion would be to tie the language more closely to employees who work actually at the location being licensed.
And with that, that's my only comment, and I thank you all very much for your time.
Rebecca Dobert
Kevin O'Connell.
That concludes testimony.
Sameer Kanal
Thank you.
Thank you everyone for testifying.
With that, we will open up public comment.
The queue.
Um, feel free to do questions or comments on it before we get to it.
And I'm going to start with Council President Dunphy.
I did want to note that, um, we can do 2 things at the end of this, um, to this end of this conversation, which may not occur today, but, um, we can move to refer them as a package, or if there's not consensus around all of them, uh, move on each one individually.
Um, and it may be helpful if people have, as you're taking your time If you're not commenting on something because you don't have a concern about it, it might be worth raising, just noting that so we know where there's consensus and where there's not.
Council President Dunphy, followed by Councilor Novick.
Jamie Dunphy
Thank you.
Sameer Kanal
I'll be very brief.
Jamie Dunphy
I'm generally supportive of all of these efforts.
I think all of this makes a lot of sense, and the effort to broadly try and update things that have been sort of lingering in revenue, you know, I helped lead the effort to overhaul the arts tax.
I'm glad for this.
This looks great.
My one thought that came to mind was around the park and pay component.
During the comprehensive 2030 or Comp Plan 2035 conversations, there were conversations by the then City Council about the hope to eventually get rid of surface parking lots in the downtown core.
And so I'm wondering, like, and additionally, I am dealing with some constituent services issues around the area of Burnside and Third.
Specifically, the owners of Dante's have reached out to me a couple of times, and there is a parking lot, a surface parking lot near Dante's that is too expensive for most people to— who go to Dante's to use.
There's no public nuisance containment options.
And so it has become a place where actual violence has been happening, not only to vehicles but to individuals.
And so I was wondering if there is an opportunity under this program to either have obligations for these property owners To have certain standards if they are going to be licensed to operate open parking lots in downtown core.
And the other question was around the fee structure that we are specifically charging to these folks.
I would like to see personally moving towards a variable fee structure based on the underlying FAR.
If a building— if a piece of land has a lot of value as a building, To the city, to the, you know, to us as a society.
We want to disincentivize that just being a parking lot.
There's some of those in Old Town.
There's some along the waterfront that I think are interesting.
But so, Councilor Novick, I guess to you, was there any conversation about variable fee structures on any of these?
Steve Novick
I don't think that there was.
I think that a lot of I'll ask the revenue folks if this is true, but my assumption has been that the purpose of the fee structure is to cover the cost of regulatory activity, and to have fees based on FAR would sort of depart from that, that model.
I understand the incentive desires, but I mean, revenue folks, is that true?
Tim Mercer
Basically, I think that's a fair statement, generally speaking.
Again, this is a one FTE program, You know, we're kind of in the game of trying to cover costs as best as possible.
So there's potential here to, I think, for council to, you know, under their purview, to kind of do some additional things with any of these programs.
However, just recognize that it is a 1 FTE program.
Any of those things that might come with additional work would be additional expense.
Jamie Dunphy
Yeah, it sounds like I'm asking for an upgrade and y'all are asking for a car.
Like, let's, let's get the car washed first, get our, you know, basic before we start eyeing those expensive upgrades.
Tim Mercer
Yeah, we're, we're, we're trying to empty the ashtray because it's, it's been filling up.
Jamie Dunphy
Fair enough.
Okay, thank you.
Sameer Kanal
Thank you, Chair.
Thanks, Council President.
Councilor Novick, and then Councilor Pirtle-Guiney.
Steve Novick
Thank you, Chair.
I just, uh, wanted to give the revenue folks an opportunity to address the regulatory changes in the parking program that Mr. Schlesinger referenced and explain the rationale for the changes and signage requirements, et cetera, since we didn't really get into the details of that before?
Leila Taylor
The majority of the signage requirement changes are complaint-driven.
People indicating that they didn't see signs or that signs were not visible.
And so that's really largely driving the signage requirements.
Steve Novick
Can we go over what some of the changes are?
This quickly.
Leila Taylor
Yes, absolutely.
Elana Pirtle-Guiney
Can you pull that?
Sameer Kanal
You have that.
I don't know if I have the signed returns.
Danny Dacelle
I would need to just catch on.
I can go through the slides here.
Sameer Kanal
I think I don't have pulled up.
Jonas Beery
I have them.
Stacy Jones
All right.
Danny Dacelle
Just minimum standards, but.
Sameer Kanal
I'm pulling it up.
Angelita Morillo
There we go.
Okay.
Leila Taylor
Um, so looking at the signage requirements, um, specifically the ADA payment stickers, um, on ADA signs, that, uh, there is within the code— excuse me, uh, within the code there's a requirement that ADA signs have a sticker that says something to the effect of permit holders are responsible for payment but there's no size requirement.
And so often that sign or that sticker is— the letters are less than 1 inch high and they're very hard to see unless you're standing directly in front of it and, you know, leaning forward.
Or some of the signs are up high on a wall, and so they're very difficult to see.
Um, uh, uh, the no park— no pay, no park signage again is this is just complaint-driven, people not recognizing that if the payment machine doesn't accept payment, they think they can park there for free.
And there's no— so I am suggesting adding a note, if you are not able to make a payment, then you should not park sign.
Again, complaint-driven.
And then for the miscellaneous signage that's not specified in the code, just adding a minimum.
There are some signs that are required to be 7 inches tall or 3 inches tall.
And for the things that aren't specified, just adding that size requirement again for visibility and complaint-driven.
Steve Novick
Thank you.
Great.
Sameer Kanal
Councilor Pirtle-Guiney, then Councilor Ryan.
Elana Pirtle-Guiney
Thank you, Chair.
Um, you all spoke a little bit to the, the why of rolling in the occasional secondhand dealers with the, the other folks and the fact that the cost of doing the work is the same.
Can you speak to the feedback you received on that though?
Because I'm guessing that there was some pushback since the revenue they received from operations for doing that work is presumably much lower.
What did we hear from that community and were we able to figure out something in what we have before us that works for both the occasional and the more full-time dealers?
Or did we end up with something where— I think we did.
It's likely going to be a controversial solution.
Tim Mercer
So we didn't hear a lot of feedback.
We heard from, I think, maybe 3-ish business owners.
Elana Pirtle-Guiney
Out of how many that we have registered?
Tim Mercer
I'm sorry, what?
Elana Pirtle-Guiney
3 out of how many that we have registered?
130-Ish.
130 occasionals or—.
Oh, I'm sorry, 34 occasionals.
3 out of 34 occasionals.
Tim Mercer
Well, uh, 3 total out of the $134 or whatever, $100 and what?
$30, $40.
Yeah.
So the general feedback about the pricing was just really about the price increase more than anything.
So, you know, the cost of doing business is going up all the time.
This feels like too big of a jump is what we heard from them.
So we tried to meet in the middle with, um, uh, that $450 price point, whereas we had planned a $600, um, price point, which the $600 is just the, the CPI increase since the fee was last, um, updated.
So we're— we were trying to, you know, feather that and, and thread the needle there a little bit.
Um, but we didn't hear, uh, correct me if I'm wrong, I don't think we heard from any occasional dealers that I want to keep paying the occasional dealer fee.
Is that true?
I think we just heard general feedback about— or did we hear from—.
Leila Taylor
We heard from— okay, an occasional dealer who did not agree with the fee increase.
Elana Pirtle-Guiney
Yeah, so we're essentially raising the occasionals to be at the level that the, um, the other dealers were previously.
We're not raising it for the other dealers.
We heard pushback about the extent of that fee increase.
Did we hear pushback though about regulating them together generally or just the extent of the fee increase?
Just the fee increase.
And that you didn't end up raising the total fee, just the fee for the occasionals in order to address that feedback that you had heard?
Leila Taylor
Correct.
Elana Pirtle-Guiney
Thank you.
I appreciate that.
Justin Holt
Yeah.
Sameer Kanal
Thank you, Councilor Pirtle-Guiney.
Councilor Ryan's next in queue and then I'll follow.
Finish the, the D2, I guess.
Dan Ryan
Okay, um, thank you, Chair.
I'm going to try to do your advice, which is, um, the tolerance of these changes, and if there's any that we think deserve more airtime than moving this along quickly.
Um, payday lenders, social games, amusement devices, uh, Councilor, those seem pretty easy to move along.
I—.
We were not suggesting any changes to third-party food platforms.
Kevin Matches
No.
Matthew Forgue
No.
Tim Mercer
That's great.
Dan Ryan
Just looked into.
Leila Taylor
Correct.
It's part of the suite of programs I oversee, and so we included it just as a—.
Danny Dacelle
Okay.
As a review.
Dan Ryan
People go pick up your food so you can help them out, the local restaurants.
The one where I'm taking pause is the one that I mentioned earlier.
It's the pay and park, and there was some public process, and I appreciate the testimony.
And there's a couple things on this one.
One is when you listen to the storefront restaurants, especially in Pearl and Slabtown and such, they have a lot of issues with workforce.
It's difficult for their employees to find places to park, and many of them do need to rely on their car to get to those jobs.
So we have the— PBOT has a program with our parking lots in the hours, the swing shift hours, if you will, That's very accessible rates.
And so when we've— when I've had this socialized, this conversation, they said you'll have to talk to the private parking lot owners when you get into Pearl and Slabtown.
So I was hoping to have some dialogue about that.
So I just wanted to put that out there as another issue.
But I also recall when the mayor suggested meter rate increases in downtown and in these areas, there was a pretty big pushback.
So this would, of course, increase rates of parking.
And I'm not— I don't have my mind made up on what this is or what we do with it.
But of the ones presented today, it has more complexities, I think, is what I'm trying to get to, Councilor Novick.
Steve Novick
Mr. Chairman, may I respond?
Yes.
Um, I just want to say that the amounts that we're talking about here are quite small, and they just can't imagine they will significantly impact the cost of parking.
You're talking about implementing a new operator application fee of $400, increasing the annual lot fee from $200 to $400.
Um, I just don't see how that those small amounts could possibly affect the cost of parking overall.
Dan Ryan
And then also the other one that I don't have as much of an opinion that we should take more time with secondhand dealers, but I was just taken with the testimony and trying to get more information on that.
But I'm just— we're letting you know, with not having much time to be briefed on this, um, I wanted to offer the ones that I thought were really easy to move on and those that I thought deserved some more dialogue.
That's all.
Thanks.
Sameer Kanal
Thanks, Councilor Ryan.
Uh, I'm next in the queue, um, and I agree completely with, uh, Councilor Ryan's assessment I have a request for a roll call vote on the 3 that I think are probably the ones I haven't heard anything about so far.
Those are agenda items 4, 7, and 8.
I'm noting that there was no testimony on any of the 3 of those, and that there was today, and that there was no public comment on 7 or 8 at all.
So that's not the only reason, but that's a reason.
So I'll raise that.
I have a couple questions with relation to the parking one.
Yes.
That have similar— that relate to the testimony.
I also am interested in making it easier to deal with people who park over the line in both privately held garages and lots as well as smart parks eventually.
As an interim step towards firing giant pickups into the sun, I think we should do something to try and regulate yeah.
That's being, you know, that's incorrect because someone's taking up more than one spot in a garage during an event or something like that.
So that's of interest to me.
Also, I have— I think those are things that may be easily navigable with conversation on that one.
I have more concern about secondhand dealers with relation to the background check requirement and a few other things as well.
I don't want to make it harder to operate a music instrument store in the city.
I have a lot of time spent talking to folks who work there and have a lot of experience buying things at musical instrument stores in this town as well.
So I definitely don't want to complicate that, and that's my entry point to it.
But I'm also curious, have— has there been conversation or engagement with anyone who is in that category of people that would, um, would, uh, are currently not required to get a check but would be?
That's— and then the other question I have is a process question, which is either way you answer this, Councilor Novick, it's still going to be first on the agenda next week, um, at our next meeting, I should say.
But, um, is— would you like us to refer the things that are consensus Do you mind if those are separated, or would you prefer to have the conversation continue to next week?
Steve Novick
I would prefer to do everything all at once.
I would note that it's the secondhand dealers and the parking facilities that take up the bulk of LILA's time.
So if we're going to have a program that comes as close as possible to paying its expenses, then we should address those.
Sameer Kanal
Okay, so effectively separating them runs the risk of creating higher deficits in the future.
In the program or changing it?
And yeah, okay, fair enough.
Um, but then I, I'd still ask my question about, um, have we talked to the folks that currently don't need a background check but would?
Steve Novick
I'll, I'll ask the team, but we've talked to the businesses that hire people.
I don't know if we've like gone to people who are currently not listed as buyers but, um, but might have to have background checks.
Um, that's can the team respond to that?
Tim Mercer
Yeah, we did outreach to business owners who are in the program, not specifically to employees of those businesses, if that's the question.
Sameer Kanal
Yeah, so my ultimate concern here is the idea of just for the privilege of having the job in any of these types of businesses, the idea that you'd have to give, not only give over all this information, To the police, but also have to pay for the privilege of doing that.
That to me just seems like treating it like being a security guard or one of those other types of roles, which it's not.
So having worked in a different type of retail, I can't imagine that it— but I sold watches, so it wasn't secondhand, but I sold watches, and I guarantee that that would have been a factor for me in taking on a role like that.
Thank you.
Um, so that's, that's sort of what's on my mind right now.
Thanks.
I'll pass it over to Councilor Zimmerman.
Eric Zimmerman
All right, thank you.
Uh, just a quick question in terms of, since these are fee increases, um, they're directly related to the cost of administering of the program?
Is that how I should understand them?
Danny Dacelle
Correct.
Tim Mercer
Uh, I mean maybe directly is a little bit too strong of a word.
I don't know that we know exactly the way the initial fee was come up with at the origin of these programs, which vary over many decades.
But what we did, what we're proposing in this package, is to basically take what the fee is and and multiply it by the CPI increase that's happened since the last time the fee was adjusted.
Eric Zimmerman
Sure, I see that.
I guess that's where I'm actually struggling a little bit because I saw that and I understand fees to really be related to program cost recovery.
Otherwise, they're taxes.
And so for some of these things, I have to always ask myself, what was the purpose of that fee, right?
It sounds like in the history of Portland, they've wanted to know about certain types of games that occur, know about certain types of lots that occur.
Okay.
I think I'm holding a different mindset of I'm not sure if that our knowledge is the thing that's important.
And and so if if knowledge of a place is the thing that's important, I'm not sure about the fee programmatic costs.
So I saw that inflationary stuff in some of the the documents.
Keelan McClymont
Yeah.
Eric Zimmerman
And I felt like, gosh, I don't know that that's directly related to cost recovery for implementing of whatever the program is.
So I'm struggling a little bit in that sense and certainly do believe that things have a way of trickling to the cost of parking.
And I go back to Councilor Ryan's comments a little bit.
$1.60 change is a small number.
$1.60 change per hour for an employee who is there having to do that multiple hours on a shift, these are real changes.
So I do think they have a way of trickling down.
But going, for instance, like from 500 to 1,000, it kind of seems like a revenue grab more than a programmatic need.
And that's where I'm struggling because I'm not sure if I'm in— if it's appropriate for a revenue grab.
But I'm digesting all this.
I know I had to step out for part of it, but I was also monitoring but I'm digesting this and we'll— I'm not quite sure where I'll go yet.
Thank you, Chair.
Sameer Kanal
Thank you, Councilor Zimmerman.
So just programming note, we're going to hear from Councilor Novick and then we're going to continue the items to next week.
Councilor Novick— or next meeting, I should say, of the committee.
Steve Novick
Councilor Novick.
Yes, just to respond to Councilor Zimmerman, what we're— although there might not be like a precise, like, minute-by-minute calculation, it is a fact that Leela's time, the vast majority of her time, or the biggest chunk of it, goes to administering the parking and secondhand dealer programs.
And the combination of these fee increases together and the elimination of the fee for the amusement devices would be to come somewhat closer to covering her, her, the personnel cost of her.
So we're talking about a program that's administered by by one person, and we're going to have, you know, fees that add up to almost the cost of, you know, her annual costs.
And again, I think that the difference that we didn't— I don't think that we had any of the parking permit people actually complain about the fees, did we?
That none of them said this is going to raise the cost of parking, is that correct?
Leila Taylor
No, that is correct.
Danny Dacelle
We didn't hear that.
Sameer Kanal
Thank you.
Okay, thank you.
I'm seeing Councilor Pirtle-Guiney has a question.
We're at 5, so if you could please be brief, um, or a comment, I'm not sure which.
Justin Holt
Yeah.
Elana Pirtle-Guiney
Thank you, Councilor.
I'm understanding that there's concerns about the policy changes for the pay and park by some folks within the community and possibly some of our colleagues up here, but I am wondering why you're holding this over when I think I've only heard 2 people express a desire to wait, and I haven't heard any concerns about the budgetary side, instead of perhaps amending out the policy pieces of Pay and Park to come back to that later and moving forward the other 4 items in full and the budgetary piece of Pay and Park.
Sameer Kanal
I think I'm going to let Councilor Novick speak to that because I— it was based on my question to him.
Elana Pirtle-Guiney
Or I should say perhaps just moving all of it forward, because I certainly haven't heard concerns from the bulk of our colleagues with moving anything forward.
Steve Novick
I'd be happy to move all of it forward with the caveat that we first— I'd have to get a vote on the amendment to the second-end dealer provision.
But let's say not all of us are here, so I wonder if that yeah, I want to be respectful of the council—.
Sameer Kanal
The evening council meeting tonight.
I would try to get done as quickly as possible.
So recognizing that there are a lot of colleagues who haven't even gotten in the queue yet, and I don't want to assume that silence means support or opposition, there is no motion at this moment.
So I'm going to pause and allow there to be a motion if someone would like to make one.
Elana Pirtle-Guiney
Second.
Sameer Kanal
And then if— but if not, you know, I don't want to run over because we're asking our staff to stay pretty late tonight.
Steve Novick
I would like, if I could, to quickly move the amendment that changes the reference to all employees to employees operating in the City of Portland.
Jamie Dunphy
Second.
Sameer Kanal
There's a motion to amend the third— I think it's number 6.
Yeah, 2026-327 with the amendment that we have here.
Clerk, do you— Clerk's Office have what they need for this one?
There's a second from Councilor Dunphy.
Is there any further discussion on the amendment?
Seeing none, Rebecca, could you please call the roll on the amendment?
Rebecca Dobert
Motion to amend Exhibit A in 2026-327 as shown in Novick 1.
Koyama Lane?
Tiffany Koyama Lane
Aye.
Rebecca Dobert
Morillo?
Angelita Morillo
Absent.
Rebecca Dobert
Novick?
Steve Novick
Aye.
Rebecca Dobert
Clark?
Olivia Clark
Aye.
Danny Dacelle
Aye.
Mitch Green
Aye.
Sameer Kanal
Aye.
Aye.
Rebecca Dobert
Absent.
Angelita Morillo
Aye.
Mitch Green
Aye.
Matthew Forgue
Aye.
Rebecca Dobert
And the amendment is approved with 10 aye and 2 absent.
Sameer Kanal
Okay, seeing no one else in the queue, I'm going to continue this item onto the— these 5 items onto the next meeting.
And with that, we'll adjourn the meeting of the Committee of the Whole at 5:03 PM and look forward to seeing you at 6, uh, for the council meeting tonight.
Thank you.
Rebecca Dobert
Thank you.