By Don McIntosh
A remarkable coalition is converging around what might seem like a surprising cause: Saving the jobs of building inspectors and construction plan examiners at the City of Portland’s Bureau of Development Services (BDS). About 98% of BDS revenue comes from building permit fees, and those are down sharply since the pandemic began, prompting the bureau to plan for layoffs. As you might expect, unions representing the workers are appealing to Portland City Council to avert layoffs. But they’re being joined by building trades unions, construction contractor associations, developers, realtors, minority contractor groups, even the Portland Business Alliance.
Above all, the union and business groups want to avoid what happened after the 2008 recession hit. Faced with a similar drop in permit revenue, BDS radically downsized its workforce from 315 to just 147 staff by 2010. When construction demand returned, it took half a decade for BDS to replace those laid-off inspectors and plan evaluators. That created a years-long slowdown in processing permits, which delayed construction starts and resulted in thousands of construction workers being out of work longer than they needed to be.
The reason BDS had a hard time recruiting is pretty basic: Electrical inspectors are electricians; plumbing inspectors are plumbers; architectural plan examiners are architects. In each case, workers with those skills tend to earn more in the private sector than they do working for the city.
The work BDS does is important and necessary. Construction contractors may complain about fees, wait times, and complexity, but no one wants to be the city where buildings collapse on their occupants or burn because of improper electrical work.
BDS has accumulated $64.3 million in reserves, but that’s not enough to get to the end of a two-to-three-year construction downturn, which is what some economists are predicting for the local market. Permit applications for new commercial construction have dropped to near zero, and overall permit revenue has dropped about one-third. The bureau has been drawing down reserves at about $2.1 million a month since the pandemic began.
So far, 13 nonunion employees of BDS have been notified that they’ll be laid off March 1. That’s out of 358 total full-time equivalent employees at the agency. But another 30-40 layoffs could come later in the spring, unless City Council steps up to support the bureau with one-time funds.
AFSCME Local 189 represents most BDS employees, and its president, Rob Martineau, says union members are working with management to come up with cost saving measures.
Local 189 Secretary Treasurer John Duran is the lead accountant at BDS. Duran says when he started in 2015—five years after the official end of the great recession—BDS was still working through its permit backlog. Projects that normally would have taken a year to get permits and approval were taking two and more years.
Hoping to avoid a repeat of that, last month Duran helped put together a presentation that city unions and their business and union allies took to the mayor and all four city commissioners.
The pitch is for $10.4 million in one-time money— enough to avert 25 to 30 layoffs and keep BDS in a state of readiness for when construction demand resumes.
Portland Mayor Ted Wheeler, responding to an overall revenue downturn, has asked all bureaus to draft budgets based on a 5% across-the-board cut.
But the ad hoc coalition of BDS supporters, at least 15 organizations in all, is asking members of City Council to consider BDS a priority now in order to speed the eventual recovery later.
“Portland cannot afford to get in the way of our own recovery,” wrote eight prominent business groups in a Jan. 8 letter to City Council, “especially when it comes to the housing market, where we’re starting from behind.”
“Significant BDS layoffs threaten to touch off a downward spiral, reducing service levels and increasing permitting timelines, both of which create uncertainty that can hamper recovery in the housing and office development and construction industries,” the groups said.
BDS staff and supporters point to one other reason City Council should give the bureau special consideration: BDS’ budget has been unfairly hobbled by a city policy known as “rent equalization.”
BDS operates mainly out of a building at 1900 SW 4th Ave. that was purchased with a bond that the bureau paid off with its permit revenue. When the bond was retired in 2019, some at BDS might have expected not to have to pay rent beyond maintenance expense, except for some overflow office space leased for $32 and $35 per square foot per year. Instead, BDS’ rent increased by $3.2 million a year. That’s because the city’s central administration, trying to pay down the expense of remodeling the Portland Building, is charging all bureaus equal rent based on the square footage they use, regardless of whether the city owns or rents the building. That rent is set at $44.28 per square foot per year, far above what’s typical for Class A office space downtown, and it totals $5.1 million a year for BDS.
Looked at that way, BDS backers are asking the city to give the agency the equivalent of two years of rent relief in order to avoid a repeat of the slow recovery of construction after the last recession.
Portland City Council will begin discussing bureau budget requests in March. Mayor Wheeler will release his proposed budget April 29, and City Council is expected to adopt a final budget by mid-June.