Portland City Manager Jon Jennings delivered a proposed $212 million budget for fiscal year 2022 to the City Council Monday night.
If enacted, it would reduce residential property taxes by 4 percent, despite a 4.6 percent spending increase of $9.4 million and continuing revenue challenges.
One of the factors driving the proposed reduction is federal funding from the American Rescue Plan. Jennings said it is likely the city will receive $48 million from ARP, and that this preliminary budget uses nearly $9 million of that funding. Without ARP, he said, the proposal would have had a 4 percent property tax increase.
“Our goal was to create a measured and moderate budget,” Jennings said.
The city manager said there is optimism that Portland is beginning to see the “light at the end of the tunnel” after more than a year of the coronavirus pandemic. But he also warned that the city is far from a full recovery.
“We expect it will take a few budget cycles to get back to (the revenue levels) of 2019,” Jennings said. “But this begins the rebuilding process.”
Despite Jennings’ proposal, property taxes may still increase because the city is in the midst of a property revaluation. City officials have said it’s likely about a third of property owners will see their taxes increase as a result of the revaluation.
In a memo to the council, Jennings said the city has seen revenue losses of nearly $28 million directly related to the pandemic. In his budget for 2021, which was approved late because of the pandemic, Jennings called for eliminating 65 city jobs. He said this budget restores 20.5 full-time positions.
The 2022 proposed budget, if approved as presented, would require a municipal property tax rate of $11.16 per $1,000 of assessed value. The final tax rate for 2021, including the school budget, was $23.31 per $1,000 of assessed value.
The School Board on April 13 sent the City Council a proposed fiscal 2022 budget of more than $125 million that would result in a 5.5 percent increase in the school portion of the city tax rate, or 64 cents per $1,000 of valuation.
Jennings said one of the biggest drivers in the budget continues to be the Health and Human Services Department, which is the largest municipal department with around 350 employees. Jennings said a spending increase of $2.7 million in this department is more than three times any other department’s increase.
Mayor Kate Snyder said the next steps for the budget will be to have a first reading and public comment at the council’s May 17 meeting. Public comment will also be allowed during a May 20 Finance Committee meeting on the proposal.
The council is slated to hold a second reading, hear more public comment, and vote on the municipal budget on June 7. It is scheduled to hold a public hearing May 3 on the proposed school budget before voting May 10. The annual school budget referendum will take place June 8.
Council to consider plan for $55M downtown apartment building
A distressed parking garage at the corner of Brown Street and Cumberland Avenue would be transformed into a new garage and 282 apartments under a plan before the Portland City Council.
Councilors heard a presentation on the proposal for 45 Brown St. during a workshop before their regular meeting Monday night.
Greg Mitchell, the city’s housing and economic development director, said the existing building is a dilapidated garage, which went into foreclosure in 2016 along with the Time & Temperature Building at 477 Congress St.
Mitchell said Presidium Real Estate plans to demolish the existing building and build a nine-story building with a new parking garage and rental housing above.
This proposal has been circulating among council committees since last June and most recently at a March 2 Housing and Economic Development Committee. The committee voted 3-1 to recommend it to the full council, with Councilor Andrew Zarro opposed.
Councilors will have a first reading of the proposal on May 10, with a second reading and vote likely on May 17.
Mary Davis, director of the city’s Housing and Community Development Division, said half of the 282 units will have affordable housing restrictions for 30 years. There would be 81 units for households at or below 80 percent of the area median income; 27 units for households at or below 100 percent AMI, and 33 units for households at or below 120 percent AMI.
In total, there will be 116 studio apartments, 126 one-bedroom apartments, and 42 two-bedroom apartments. While the studios and one-bedroom units will have various levels of affordability restrictions, the two-bedroom units will all be rented at market rate.
Davis said the developers worked to reduce the size of the two-bedroom units to allow more total apartments, and which dropped the expected cost of the two-bedroom units from more than $3,000 per month to around $2,600.
Parking will be available for $175 per month. Davis said the income-restricted units will not be assessed various fees, such as pet fees or late fees.
Mitchell said the development team is trying to use two different tax increment financing districts for the project. TIF districts are used to encourage major construction or renovation projects, and essentially refund a portion of the taxes to help finance the development.
The developers hope to have the apartments designated as an affordable housing TIF development district. The garage would remain in an existing downtown TIF district.
Davis said the estimated value of the new project is $54.5 million, which would create more than $866,000 in annual assessed property tax revenue for the city.
— Colin Ellis