City-Ops-FYFP-Combined_0 — Intro — Part 1 of 4

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FY 2025‐30 Requested Budget Five Year Plan Fund & Bureau Name: Facilities Operating Fund, Bureau of Fleet and Facilities. Plan Overview Background Information Facilities Services owns and operates 1.5 million square feet of space in 18 facilities that support core City operations. Fifty percent of Facilities’ portfolio is used by the public safety bureaus to house 911 operations; police precincts, training, and logistics; and citywide emergency coordination activities. Forty‐eight percent of Facilities’ portfolio is downtown office space. The remaining two percent of the portfolio is occupied by Facilities’ sister organization – CityFleet – at the Kerby Garage. Facilities’ services include long‐range facility planning; execution of major capital projects; space planning, moves, and tenant improvements; capital asset replacement; building maintenance and repair; and building operational support. As per code, Facilities is also an authorized negotiator of real property transactions. The Facilities Services Operating Fund accounts for all facilities‐related programs and capital projects managed by the Bureau of Fleet and Facilities. The fund is required to achieve cost recovery by GAAP, state law, and City financial policy. Operating expenses are generally able to be recovered through rental rates, although several departments that provide services that the City either needs or that bureau customers have expressed a desire for are short the FTE required to fully deliver on these needs and expectations. Regarding capital, Facilities has for many years under‐withheld the funding required to meet both City policy and best practices in asset management and capital asset replacement. As a result, expenditures for capital asset replacement are primarily debt‐funded, with the principal and interest repaid via increases to bureau rental rates. At times, Facilities also receives one‐time allocations from the general fund to close the gap on large, unanticipated capital projects. In 2024‐25, Facilities also received a grant from the Portland Clean Energy Fund to support select capital asset replacement. The fund's primary source of revenue is inter‐bureau allocations for space rent. A very small percentage of Facilities’ portfolio has third‐party commercial tenants; these tenants also pay rent. Lastly, some facility services, such as moves, new furniture procurements, or tenant improvements initiated by bureau customers, are reimbursed on a time and materials basis by the benefiting bureau. Key Issues Staffing Levels for Key Departments Facilities has made huge strides in fleshing out its organizational chart over the last few years. Critical gaps that had long existed, and that had clear legal ramifications if not addressed – such as a safety manager trained in OSHA rules, a space designer/planner to support ADA accommodation requests, a contracts manager to oversee fire and life safety system and elevator inspections, and an administrative coordinator to process vendor and utility invoices for payment – were finally addressed due to the CBO’s recommendation to add several FTEs to Facilities’ budget in FY 2023‐24. Once approved, those positions were created and hired for and are greatly benefiting the overall functioning and compliance of the organization. That said, there are several departments that still have too few permanent staff and that need more FTE to make either make permanent current temporary staff or add additional capacity.

FY 2025‐30 Requested Budget Five Year Plan Specifically, two temporary staff are back‐boning Facilities’ technology team to support organizational software, hardware, and data management needs, and need to be made permanent. Another two staff are working in temporary positions to augment the capacity of the one permanent FTE that is bootstrapping the creation of a Building Operations team. This team provides daily building support just under 3,000 downtown employees across six City buildings, including building event setup and management (Portland Building and City Hall serve as the “front door” for the visiting public and are home to the City’s primary event spaces), BHR wellness program implementation, commercial furniture warranty management, council meeting support (e.g., overflow setup/take down), occupant compliance with building regulations, and customer communications. Employees in the downtown core expect high levels of service and it is anticipated that the workload of this team will only increase beyond the three staff already fully engaged in this effort if and when downtown employees return to the office full time. Facilities’ Moves, Additions, and Changes team would also benefit from one new FTE to help manage space planning needs, as its existing space planner (1 FTE) is oversubscribed. The Planning & Portfolio Management team would benefit from one additional FTE to lead the integration of the organization’s long‐range facility master plans into citywide infrastructure planning and budgeting conversations, and support further citywide long‐range facility planning. Additionally, BFF needs one FTE (shared between Fleet and Facilities) to handle the PBEM‐directed emergency planning and response workload. Lastly, it is speculated that the O&M department has too few field staff to fully address building maintenance and repair needs, although the FTE deficit is not yet known given ongoing process improvements. Excluding the unknown O&M FTE deficit, Facilities requires 6.5 additional permanent FTE to meet its known service level demands. At present, 4.0 FTE of this need are being met with staff whose temporary positions fully expire in FY 2025‐26, and whose costs are being funded by the fund’s operating reserve and/or billings to projects. The remaining 2.5 FTE of need is being addressed through work delays or through extra hours from existing staff. Downtown Restack Prior to COVID‐19, the City required multiple third‐party leases to augment its owned office space in the downtown core and sufficiently house all its downtown workers. In the years since COVID‐19, most downtown employees have been hybrid; the City’s FTE count has grown; all but one of the City’s long‐ term leases were cut to save costs and consolidate space in owned facilities; and Charter Reform passed, suggesting that different workspace adjacencies are likely needed to support collaboration between teams. Under Mayor Wheeler, the 50% hybrid arrangement for most downtown workers resulted in buildings that felt empty given varied work schedules. However, Mayor Wilson recently announced a full return to the workplace for all managers/supervisors starting April 1, 2025, and has suggested that non‐managers and supervisors may need to do the same starting in 2026. Should this occur, Facilities will need to plan and carry out a restack of the downtown office buildings, and additional leased space may be needed. These actions will incur costs for moves, additional furniture, and new leases for which no one‐time or ongoing funding currently exists. Facilities anticipates launching the restack planning effort in Spring 2025 to help ascertain what would be needed. Major Maintenance Withholding Rates As with staffing, Facilities made major strides in FY 2023‐24 and FY 2024‐25 in its effort to replace high‐ risk City facility assets. CityFleet’s move out of the Kerby Garage was approved by Council, and will take place in FY 2026‐27; City Hall was remodeled to support Charter Reform, which allowed for upgrades to the building’s security and technology backbone, and much of its mechanical system; Justice Center

FY 2025‐30 Requested Budget Five Year Plan received full funding to replace its end‐of‐life electrical bus duct; and a large PCEF grant was received to help fund the replacement of a multitude of obsolete mechanical, electrical, and plumbing assets in Facilities’ buildings over the next 5 years. That said, Facilities’ major maintenance accounts have long‐term, structural funding problems. Rental rates paid by bureau tenants do not reflect the full cost recovery requirements of addressing routine capital asset replacement needs with cash as these needs materialize (i.e., as assets reach the end of their known service life, or as they fail‐in‐place). Facilities collects via rent an average of 0.8% of a building’s replacement value each year for major maintenance withholding, which is far less than the 3% industry standard. The City does not currently have a straightforward process to increase internal service fund rates to meet known financial obligations; however, recent attempts to increase Facilities’ rates to correctly fund major maintenance have been unsuccessful given overall bureau cost pressures, and the fact that Facilities’ downtown rental rate is already very high as it includes debt service for the rebuild of the Portland Building, the construction of Vanport, and the remodel of City Hall. Land, Due Diligence, and Capital Investment Funding for Public Safety Facilities In January 2025, Facilities finalized it first Public Safety Facilities Master Plan, which defines the geographical and functional needs that the public safety bureaus have of their facilities and identifies what their existing facilities actually provide. This gap analysis – conducted for all Police, BOEC, and PBEM needs and assets, as well as Portland Fire and Rescue’s “back office” needs and assets – also provides recommendations for asset disposition, redevelopment, and acquisition. The capital required to implement the plan is difficult to ascertain as a primary need (prior to design and cost estimating) is land that can accommodate the space‐intensive needs of the public safety bureaus. Once land parcels can be assembled or acquired, design and cost estimating could reasonably occur. Of note, engaging in the property search and due diligence activities required to vet potential land purchases (or existing building acquisition opportunities) requires funding in its own right, and no such funding exists within Facilities’ approved cost structure and rates. Overall, the needs of the public safety facility portfolio are very high, speculatively estimated at $400+ million given the very poor condition of many of the public safety bureau sites. Facilities is truly starting at “ground zero” in addressing this situation. Kerby Garage Disposition CityFleet will be leaving the Kerby Garage in Fall/Winter 2026. Given this, major questions exist about the future of the garage, as well as the Stanton Yard (the PBOT‐owned and occupied facility located underneath the mezzanine portion of the garage). Additionally, questions exist about the parcel that Kerby and Stanton sit on, and whether the City should retain it, as it is suboptimal from a resiliency standpoint. PBOT has expressed interest in purchasing the garage from CityFleet, which may allow for their expansion within the broader complex; the Albina Trust has also signaled general interest in the area. Facilities is currently testing the soil under the main floor of the garage for contaminants, which would clearly impact the value of the property for either an intra‐bureau or third‐party sale. The condition of the facility is also very poor – specifically the roof over the main garage – which limits the lifespan and utility of the garage for other bureaus (even though the departure of CityFleet will eliminate many of the site’s current risks given that welding activities will cease). Fundamentally, the future of the garage, the parcel, and the complex is likely a leadership‐level decision beyond BFF. As more information becomes available, BFF will prompt this discussion with City leadership. Revenue Assumptions

FY 2025‐30 Requested Budget Five Year Plan Facilities’ revenue forecast is based on current service levels. It assumes revenues will grow at the level of inflation. As a result, it does not include increases in revenue from additional services requested from City bureaus, nor an increase in the quantity of facilities. The plan does reflect passing thru to tenants savings from debt service that lapses in the five‐year period. This includes debt service for the ECC ending in FY 2025‐26 and the Archives Center in FY 2027‐ 28. Expenditure Assumptions For all but major maintenance costs, Facilities’ expenditure forecast is based on average historical costs of each facility. Major maintenance costs as per the plans developed for each building and funded thru rental rates. The fund has no other capital projects planned for the five‐year period. The plan does reflect debt service that lapses in the five‐year period. This includes debt service for the ECC ending in FY 2025‐26 and the Archives Center in FY 2027‐28. Revenue Risks to the Forecast and Confidence Level The primary risk to Facilities revenues is if the financial condition of key customers continues to deteriorate. This could lead to rate reduction requirements without well defined expense reductions. Overall, the revenue risk to the fund is medium. Expenditure Risks to the Forecast and Confidence Level The primary risks to Facilities’ expense fund are threefold: 1) Funding temporary positions not included in rates to maintain existing service levels, as well as adding positions needed to meet the demand for new services; 2) Funding the complete replacement of several public safety facilities, which are in poor condition and serve a critical public need; 3) Funding ongoing major maintenance needs, particularly those that will not be met via the recently‐received PCEF grant. Overall, the expense risk to the fund is high.

FY 2025‐30 Requested Budget Five Year Plan

FY 2025-30 Requested Budget Five Year Plan Fund & Bureau Name: City Fleet Operating Fund, Bureau of Fleet and Facilities Plan Overview Background Information The CityFleet Operating Fund accounts for the revenues and expenditures associated with CityFleet operations. CityFleet manages approximately 3,600 fleet vehicles and pieces of specialized equipment. CityFleet's services include vehicle and equipment acquisitions, rentals, and lifecycle management; vehicle outfitting; vehicle and equipment maintenance and repair; parts management; fuel procurement and fuel station management. CityFleet is responsible for transitioning the City’s fleet operations to “net zero” by 2050, including market forecasting, inventory planning, vehicle procurement, and all activities associated with electric vehicle charging design and installation. CityFleet also administers a small motor pool for City employees who need short-term transportation and provides several municipal partners with fleet services via Intergovernmental Agreements. The fund's major source of revenue is service reimbursement from City bureaus and outside agencies. For each vehicle in the City’s fleet, with limited exceptions, the fund charges a class-based Maintenance & Repair rate for comprehensive vehicle maintenance services. These rates are set annually using historical average maintenance costs resulting from normal use as the metric for allocating a rate budget. Additional services are charged on a time and materials basis. The fund also charges bureaus a renewal fee for each unit in a bureau’s fleet, which covers the eventual replacement cost of that unit, as well as a rate fee to cover the cost of CityFleet’s acquisitions team. The fund also administers a motor pool rental program. Key Issues CityFleet Relocation and Corresponding Work Design and Operational Improvements For five decades, CityFleet’s maintenance and repair headquarters have been at the Kerby Garage, which is functionally obsolete for modern fleet needs, and in very poor condition. In FY 2024-25, the Portland City Council authorized BFF to sign a long-term lease for an alternate facility on Swan Island, and authorized the issuance of debt service to fund tenant improvements. Contracting for design and construction of the tenant improvements, under a Construction Manager/General Contractor model of procurement, is underway now. Design and construction will occur throughout 2025 and 2026, with CityFleet’s departure from the Kerby Garage and move into the Cutter Garage scheduled for Fall/Winter 2026. (Please see Facilities’ 5-Year Plan for information on Kerby Garage’s disposition). Moving out of Kerby will provide CityFleet with a meaningful opportunity to improve maintenance and repair workflows, and thus productivity and throughput. Such changes were physically impossible within the Kerby Garage due to its exceedingly small and congested footprint. CityFleet is currently identifying and assessing key organizational improvements designed to improve service delivery when the organization moves. The following concepts are being vetted by staff: • Garage Operations Workflow/Throughput Target Setting (goal: Take advantage of overall capacity and design of the layout to create standardized work areas to promote new process

FY 2025-30 Requested Budget Five Year Plan workflows and increase efficiency of garage maintenance staff. Ability to set general productivity targets and goals for maintenance staff within their perspective group). • Establishment of “Crews”: (goal: Crews revolves around addressing a few systemic issues prevalent to the current work process in place: o Turn – Around Time: The ability to address equipment issues in a timely manner and reduce the amount of down time in the garage. Predetermined staff will be assigned to a crew and be responsible for repair and maintenance of a select amount of equipment. Crews will Implement cross-shift coverage to ensure continuous support and facilitate efficient knowledge transfer. o Allocation of Resources: With the determination of selected equipment responsibility per crew it will make it possible to understand resources given the plethora of critical equipment each bureau has identified. The crew’s concept will properly allocate staff to tend to bureau demands and ensure that resources are equitably distributed across all bureaus. o Crew Support Staff: With each crew a Fleet Service Coordinator will be assigned to manage the intake of work needed by the bureaus. Coordinators will work close to Crew Leads to manage downed equipment and priority of equipment needing to come into the garage for repair. As well with proper allocation coordinators will facilitate correspondence with bureau stakeholders to include updates, status, and projected completion dates in a proactive manner rather than reactivate as it currently is now. o Supervisor Oversight: With the current work process supervisors manage the detailed inner workings of all staff assigned to their shift. At Kerby Garage this ranges from 19-22 technical professionals. Staff will be broken into crews consisting of no more than 6 technicians. Each crew will be assigned a crew leader to manage the crew’s throughput at the ground level and assist technicians where they work. Leads will be working leads to act as “HOT-SHOT” or a quick service staff to triage repairs for their crew or attend to quick repairs that would be in and out. Supervisors can then directly manage the day-to- day of the leads leading to a more strategic oversight of the operation. • Efficiency through Decentralized Parts Management: Productivity and efficiency is the main design concept of moving into Cutter Garage. Moving to a de-centralized parts management work process allows technicians to remain where they are most efficient – at their work bay. Each crew work area will have a parts storage location that houses the needed parts the crew members have ordered. This will reduce the amount of time technicians need to walk to and from the parts department and keep them within their assigned work area where they are most productive. Green Fleet Initiatives Over the last several years, CityFleet architected and onboarded a “Path to Net Zero” to reduce the carbon emissions of the City’s fleet in alignment with the Portland Climate Action Plan and the Climate Emergency Declaration passed in June 2020. CityFleet has also received substantial funding from the Portland Clean Energy Fund (PCEF) to help effectuate these goals, focused predominately on paying the “premium” between the base cost of an internal combustion vehicle and the cost of that same vehicle’s electric equivalent, and paying for electric vehicle charging at bureau fleet depots. With this financial support, and given the overall progress of the market in terms of developing functional, reliable, and cost-effective electric vehicle options (a foundational requirement for bureau operations), CityFleet

FY 2025-30 Requested Budget Five Year Plan forecasts that it will have reduced its carbon emissions over FY 2024-25 levels by 30% by FY 2030-31, and 50% by FY 2035-36. Key remaining challenges include the lack of viable heavy and medium duty equivalents in the market, and bureau operator discomfort with using electric vehicle equivalents. Charter Reform: Priorities and Efficiencies BFF believes that Charter Reform is an opportunity for the City to more meaningfully assess, identify, and prioritize its “core work.” As all work – irrespective of its priority level – impacts City Operations, stratifying and limiting (or eliminating) non-core work would reduce the overall demand on nearly all City Operations functions. For CityFleet, this includes tasks like acquisitions and upfitting, preventive maintenance, and parts management. Improving the efficiency of City field operations could similarly result in a lessened demand for fleet vehicles and equipment, thereby allowing for a more value-driven fleet operation. CityFleet attempted to prompt a movement toward greater City efficiency in the development of its FY 2025-26 budget by identifying vehicles that appeared, on paper, to be underutilized (defined as being driven less than 1,000 miles/year). However, some bureaus struggled to participate in the exercise of eliminating what appeared to be underutilized vehicles because they had insufficient clarity on the overall strategic priorities of the City (capacity cannot be cut until the bureaus understand what is and will remain “core work” for the City), and because there was not enough time to sort through the separate but also important question of operational efficiency. As the City Operations bureaus have historically struggled to keep up with the steep growth in bureau program expansion and thus demand, such an exercise would allow for more thoughtful internal services organizational planning. Revenue Assumptions CityFleet’s revenue forecast reflects an increase in rates in FY 2026-27 as the Cutter Garage is in full operation. This will result in an increase in costs, and rates charged to customers, as the fund will be fully funding a major maintenance program for the new facility. Other than this the forecast is based on current service levels. Expenditure Assumptions CityFleet’s expense forecast reflects the completion of the Cutter Garage project in FY 2026-27 and an increase in expenses in FY 2026-27 as the Cutter Garage is in full operation. Capital costs are based on the lifecycle replacement plans for vehicles reaching the end of their life in the five-year period and plans for the replacement of shop equipment. The remainder of the expenses in the fund are projected to grow at the rate of inflation.

FY 2025-30 Requested Budget Five Year Plan Expenditure Risks to the Forecast and Confidence Level Facilities costs until the Cutter Garage project is complete in late 2026 are a significant risk due to the condition of the fund’s main facility, the Kerby Garage. Although CityFleet has stopped authorizing any non-critical capital investment in the garage, the failure of a core building system – e.g., the roof over the main garage – could demand a response and funding. Overall, the expense risk to the fund is high. CityFleet Fund 702 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Resources CY Estimate Plan Plan Plan Plan Plan Beginning Fund Balance 44,197,738 40,862,839 37,845,529 34,602,340 34,561,884 33,709,467 Taxes 0 0 0 0 Licenses & Permits 0 0 0 0 Charges for Services 0 0 0 0 Intergovernmental 1,062,079 850,000 900,626 982,519 1,038,178 1,131,253 Interagency Revenue 55,720,954 62,046,066 65,741,557 71,719,394 75,782,213 82,576,272 Fund Transfers - Revenue 1,700,000 0 0 0 0 Bond & Note Proceeds 45,201,873 0 0 0 0 Miscellaneous 2,203,519 508,720 0 0 0 0 General Fund Discretionary & Overhead 0 0 0 0 0 0 Resource Total 104,884,290 149,469,498 104,487,712 107,304,253 111,382,275 117,416,992 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Expenditures CY Estimate Plan Plan Plan Plan Plan Personnel 11,604,645 14,239,724 15,089,507 16,461,131 17,395,584 18,954,704 Personnel - Salary and taxes 7,337,016 12,158,498 12,827,215 14,008,806 14,737,264 16,073,085 Personnel - Health Benefits 4,267,629 2,081,225 2,262,292 2,452,325 2,658,320 2,881,619 External Materials and Services 17,778,420 26,819,154 28,551,436 29,293,773 30,055,411 30,836,852 Internal Materials and Services 3,534,538 3,523,690 6,836,016 7,261,640 7,719,086 8,211,453 Fleet 0 0 0 0 0 0 P&D 21,346 21,175 21,789 22,421 23,071 23,740 Facilities 1,844,679 1,747,680 4,943,257 5,239,852 5,554,243 5,887,498 EBS 261,914 286,142 301,880 318,483 336,000 354,480 BTS 484,643 448,676 473,353 499,387 526,853 555,830 Risk 250,212 327,227 382,856 447,942 524,092 613,188 Business Ops IA 541,461 568,068 584,542 601,494 618,937 636,886 DCTU Training 447 9,482 9,757 10,040 10,331 10,631 PBOT IA for 1st and Jeff 103,933 90,550 93,176 95,878 98,658 101,519 Parks IA for landscaping 25,903 24,690 25,406 26,143 26,901 27,681 Capital Outlay 27,916,050 58,408,608 10,525,269 10,585,070 13,096,890 13,613,032 Debt Service 5,332,629 6,805,564 7,002,925 7,206,010 7,414,984 7,630,019 Fund Transfers - Expense 1,753,149 1,827,229 1,880,219 1,934,745 1,990,853 2,048,588 Contingency 36,964,859 37,845,529 34,602,340 34,561,884 33,709,467 36,122,344 Debt Service Reserves 0 0 0 0 Expense Total 104,884,290 149,469,498 104,487,712 107,304,253 111,382,275 117,416,992 Planned FTE Total 83.0 90.0 90.0 90.0 90.0 90.0

Parent: City-Ops-FYFP-Combined_0 · Part 2 →