Finance director previews capital improvement plan changes, equity metrics and bond options

Brendan O'Connell, the city's finance director, told the Portland Finance Committee on Feb. 13 that the capital improvement plan is a five‑year rolling document that "assesses the capital needs in our jurisdiction against our overall goals and objectives" and that the city manager's recommended CIP will be presented to the committee on Feb. 27.

The presentation outlined why the CIP matters: it lists projects budgeted for the current fiscal year, identifies funding sources, and provides a 2–5 year plan of proposed spending. O'Connell said the process is required by the city charter and noted the CIP is not legally binding beyond the current fiscal year, so projects in outer years can be amended as priorities or funding change.

O'Connell described process changes introduced this cycle after Portland participated in an equity and bond markets cohort. The changes include adding a capital projects advisory committee, integrating equity and sustainability review at multiple steps, and standardizing project submissions with seven new fields: legal compliance and risk to health/safety/environment; asset condition and level of service; equitable community investment; sustainability and climate action; local funding optimization; project readiness; and department priority. Project submissions also record the project location so staff can flag projects located in qualified census tracts.

The CIP presentation included several fiscal-context figures used by staff to size the plan. O'Connell said departments typically submit between $50 million and $100 million in current‑year requests to city and school CIP lists while new bond authorizations have historically been limited to about $10 million to $20 million per year. He said enterprise funds (the jetport, sewer and stormwater) have historically requested $20 million to $70 million annually while receiving under $10 million on average.

O'Connell also summarized the city's capital asset inventory and recent debt activity. As of the most recent inventory update, he said Portland has "82 buildings containing 2,500,000 square feet of occupied space," more than 1,000 acres of parks, roughly 6,300,000 square feet of sidewalks, about 43,200,000 square feet of roads, 2,000,000 linear feet of underground pipe and about 683 vehicles. He told the committee outstanding debt was about $370 million as of June 30, 2024, plus roughly $86 million of jetport revenue bonds. O'Connell said principal payments and retirement of pension obligation bonds are freeing up debt service capacity in the operating budget for the first time in decades.

On sizing new bonds, O'Connell explained staff typically target an amount of new debt service that will not increase the property tax levy year to year. He showed an example where a $1.5 million reduction in debt service capacity would support roughly $16.7 million of new bonds (assuming 20‑year amortization) without increasing the mill rate. He also noted that issuing an additional $1 million of bonds would add about $90,000 in annual debt service and that each $151,000 of expense would move the mill rate by one penny in his example. He cautioned, however, that capacity to complete projects depends not only on finances but also on staff availability, contractor capacity and other constraints.

Financing options O'Connell reviewed included new municipal borrowing, use of surplus fund balance for one‑time capital, operating budget appropriations for smaller capital items, competitive federal and state grants, private donations and trusts (for example, funds being raised for Kiwanis Pool and donations for Peaks Island Library), tax increment financing (TIF) proceeds, impact fees (which have collected over $5 million since 2018), and public‑private partnerships. He said a post‑process evaluation of this year's CIP is planned for April–June.

The committee did not take formal action on the CIP at the meeting; O'Connell and staff said the full city manager's recommended CIP would be brought to the Finance Committee on Feb. 27 and that an additional March meeting may be scheduled to keep review on track.

Next steps: the finance director will present the city manager's recommended CIP to the Finance Committee on Feb. 27; the committee will consider whether an extra March meeting is needed before council consideration.