November 2nd, 2010 | by BETH SLOVIC News | Posted In: CLEAN UP, City Hall

City Hall: Bureaucrats Urge Caution Over Randy Leonard's Computer Plan

City Hall
The final item on tomorrow's City Council agenda likely will produce the most contentious debate among commissioners.

That item concerns the Bureau of Development Services' recent request for money to implement a new computerized permit-tracking system. BDS, which Commissioner Randy Leonard oversees, issues building permits. Amid the recession, revenue has fallen precipitously, prompting massive layoffs at the bureau last year.

The agreement City Council will consider on Wednesday—an emergency ordinance that takes effect immediately, if approved—asks commissioners to consider a new financing plan for the updated computer system. BDS has proposed a five-year line of credit in the amount of $4.4 million. And BDS says it expects to be able to start repaying the money in fiscal year 2014.

But City of Portland Treasurer Eric Johansen, in an Oct. 20 memo to BDS, said city officials should proceed cautiously because the repayment plan is premised on the idea Portland's construction industry is nearing a recovery.

"The financing structure proposed by OMF Debt Management is intended to address the Bureau's lack of near-term cash flow while providing flexibility to begin repaying the obligation when Bureau revenues are projected to recover," Johansen writes. "While we believe this is the right financing structure for the project, we express no opinion as to whether the project should proceed at a time when the presumed economic recovery is not yet evident. The Bureau's ability to repay the obligation in a timely manner remains fully dependent upon a rebound in the economy that allows the Bureau's revenue projections to be realized. As such, the Bureau and Council should be aware that the funding of the project at this time involves risk that, in the absence of a moderate to strong economic recovery, will impose potentially significant financial burdens on the Bureau and may ultimately force the General Fund to assume responsibility for the debt."

A representative from Leonard's office, Sara Petrocine, says a committee of economists and budget officials studied BDS's financial outlook, weighed worst-case scenarios and determined the five-year line-of-credit is sufficiently cautious. Also, if the city were to implement the new computer system, it would generate savings through efficiencies beginning in 2015, according to BDS.
 
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