The city of Portland’s permitting bureau told seven of its 429 employees this week that they will be laid off, and warned that more layoffs would likely occur as the bureau, which is almost entirely funded by permit revenue, sees a steady drop in the number of permits requested by developers.
The Bureau of Development Services processes construction permits for new and existing buildings across the city. Ninety-eight percent of the bureau’s budget, says spokesman Ken Ray, comes from fees the city charges developers for permits. But those revenues have decreased substantially in recent months, Ray says, likely due in large part to higher interest rates on construction loans. That means the bureau has been burning through its $37 million reserve fund for the past three months at a rate three times faster than it did the year before; the bureau has had to tap $3 million each month from its reserve for the past three months to pay its 429 employees.
Ray says more layoffs will likely occur before the end of the year. Earlier this month, the director of the bureau, Rebecca Esau, put a freeze on all hiring.
In an email to bureau employees Thursday, Esau wrote that local economists had warned her in recent meetings that the outlook for permit revenue was not good.
“Every economist we met with told us essentially the same thing: we do not expect building activity to pick up in Portland for at least a year, and perhaps longer, due to high interest rates that affect investment in development projects,” Esau wrote. “We must take measures now to reduce our costs and the monthly draw on the reserves, and unfortunately, those measures must include reducing our workforce.”
Employees who were told they’d be laid off this week include those working in inspections, technology, finance and permit processing.
“Additional staff reductions will be needed in the near future,” Esau wrote. “I will be as forthcoming as I can be about future decisions relating to staffing levels.”
Esau, who retires in December, added at the end of the email: “I am very sorry.”