After Dozens of Layoffs in Portland’s Permitting Bureau, Industry Groups Try to Strike Bargain With City

In recent months, the Portland Bureau of Development Services laid off 72 permitting employees in an effort to slow down how quickly the bureau was burning through its dwindling financial reserves. The bureau had to tap into those reserves because it couldn’t cover its operating expenses as revenues plunged due to slowing development activity. Permit fees make up about 98% of the bureau’s budget.

Now, the city’s most powerful industry and business groups are trying to strike a bargain with the city of Portland to stabilize the bureau’s staffing, as developers voice concerns that future layoffs could further slow the city’s permitting process.

“We propose a plan of action that will ensure a stable and predictable permitting agency in Portland—one that doesn’t experience volatile swings in its own solvency with every change to interest rates,” nine groups wrote in a March 20 letter to the Portland City Council. “We are confident that if both builders and city officials are willing to stretch themselves to accomplish shared policy and process objectives, then we will see stronger housing production in Portland.”

Signatories include the Portland Metro Chamber, Oregon Smart Growth, the Columbia Corridor Association, and the Home Building Association. The coalition says it’s willing to pay higher permitting fees to BDS, so long as the City Council agrees to allocate an additional $6 million to BDS in the upcoming year’s budget to prevent further layoffs.

There’s just one problem: The signatories have no say in setting permit rates.

That’s up to the discretion of the City Council this summer; if the city wants to hike permitting fees by 10%, it can do so without permission from development groups. That gives the letter’s signatories little leverage to make demands of the city and how it funds BDS.

But the coalition’s decision to put its demand in writing shows its willingness to fight the city down the road if it doesn’t meet the group halfway on BDS, and the signatories are some of the most deep-pocketed and influential developers in the city. They’re also integral to the city’s economic comeback.

“For several weeks, our coalition has been in good-faith discussions with BDS leadership and council offices about how to stabilize permitting budgets amid challenging market conditions,” says Preston Korst, director of policy and government affairs for the Home Building Association of Greater Portland. “But if general fund allocations and efficiency measures are not included, years of progress by the Permit Improvement Taskforce will backslide, and the city’s recent business development incentives will likely fall flat. This translates to more BDS layoffs, and deteriorating permitting functions.”

Every summer the City Council sets permitting fees. The city has not yet released its proposed fees for the upcoming fiscal year, but sources close to the discussions say the city is looking at between a 5% and 10% increase in permit fees. The industry groups in the March 20 letter did not specify what percentage increase they would be willing to pay, instead proposing a “modest” increase.

WW first reported BDS’s dire financial straits in October as it prepared to lay off dozens of employees. Nearly all of the bureau’s budget comes from fees paid to the city for various permits, but as the city’s construction market slowed and fewer developers sought permits, the bureau found itself burning through its financial reserves at an alarming pace. The bureau estimated it would run out of reserves within the year if it continued at its summer and fall burn pace, the bureau told WW in October. The bureau’s current annual budget is $97 million.

City Commissioner Carmen Rubio told WW that maintaining the health of BDS is a top priority.

“They are right to ring the bell for City Council,” Rubio said. “I’m working hard on a plan to avoid further layoffs so that the city retains this expertise and continues to process permits in alignment with timeline goals, which the bureau is meeting. General Fund for the bureau is part of our plan—but we are just at the beginning of the budget process and it won’t be clear for a few more months given all the citywide needs. The mayor and City Council are aware that this is a priority of mine.”

Regarding the $6 million general fund ask, a spokesperson for Mayor Ted Wheeler said, “We’re still in the process of developing the budget and will hold off on commenting on various proposals for now.”