*Authorize one-time reductions of past-due balances to coincide with revisions to the sewer-only special tax assessment process

The City of Portland ordains: Section 1. The Council finds: The Bureau of Environmental Services provides sanitary sewer/stormwater management services to over 6,000 properties that do not receive water service directly from the City. These sewer-only customers are not subject to water shutoff to remedy non-payment of services. In 2004, the Bureau recognized the need to address growing delinquencies from owner-occupied, sewer-only properties. These properties had collectively accumulated $1.88 million in unpaid fees for service over the course of many years. State law and sewer bond covenants require the City to collect payment for services provided. To collect unpaid sewer user fees from sewer-only property owners, the Bureau established a process to transfer unpaid balances to Multnomah County for collection as part of a property owner’s tax bill. This special tax assessment process has continued on an annual basis since 2004, with a brief moratorium between 2020 and 2022. The Bureau discovered that the number of tenant-occupied, sewer-only properties with unpaid sewer user fees was steadily increasing in 2018. In 2019, the Bureau initiated a robust financial assistance outreach campaign directed at tenants. This campaign initially resulted in a reduction in the number of delinquent tenants and in a significant increase in financial assistance enrollment. However, the effectiveness of outreach efforts plateaued and, as of December 2022, tenant-occupied, sewer-only properties hold over $2.1 million in past-due balances. Over $1.65 million of these past-due balances are past due by more than one year. In 2022, the Bureau refined the special tax assessment process to address the growing amount of past-due balances held by tenant-occupied, sewer-only properties. The refined process will be implemented at the start of the 2023 calendar year. It will automate notification to property owners and tenants of delinquencies, financial assistance eligibility, and payment arrangement options. In June of each year, the Bureau will assess property owners for unresolved tenant delinquencies to collect fees for services provided to benefitting properties. The Bureau has not given sewer-only rental property owners notice of tenant delinquencies in the past. Some rental property owners may be unaware of their tenants’ past-due balances and thus have not had the opportunity to resolve those balances early enough. Past-due balances subject to assessment range from $265 to $80,200. There are 272 tenant-occupied properties currently subject to a special tax assessment. Most tenant-occupied properties facing assessment are residential single-family homes. As of December 1, 2022, 259 of the properties are single-family-occupied, four are 2-unit dwellings, and nine are commercial. These numbers are subject to change by June 1, 2023, when special tax assessments are processed. Over 47% of the tenant-occupied properties subject to assessment are delinquent by more than $5,000; 28% are delinquent by more than $10,000. The Bureau recognizes these balances may result in significant direct financial impacts to property owners and significant indirect financial impacts to tenants. Although amortizing past-due balances over many years may lessen the immediate impact of these balances, payment arrangements alone will not result in affordable monthly payments on these balances. The Bureau recognizes that, for the proper conduct of business, partial reductions to balances that have accrued over a significant amount of time are warranted. Since a lack of notice to property owners contributed to the increase in their tenants’ past-due balances, waivers will be weighted to apply a greater reduction to accounts that have accrued balances over a longer period of time. Waivers will be calculated as a percentage of each tenant’s past-due balance relative to years aged. The Bureau recognizes that reductions to significant past-due balances, based on payment plan duration, can be effective at encouraging timely repayment. Therefore, any additional reductions will be allocated towards incentives for tenants with larger balances to repay their past-due balance at an accelerated schedule. The Bureau does not currently have authority to provide adjustments of more than $500. The total of one-time waivers will not exceed $1 million. It is expected the rate payers receiving the waivers will be required to satisfy an agreed-upon portion of the outstanding balance. The expense associated with the foregone revenues resulting from the waivers will be made available by BES in the fiscal year the agreed-upon remedy is satisfied. It is expected this effort will take place over the next 10 years. NOW, THEREFORE, the Council directs: The Bureau of Environmental Services is authorized to administer one-time waivers for delinquent sewer-only tenant accounts to encourage timely payment for sewer and stormwater services and to mitigate the financial impact on owners whose properties are subject to special tax assessment for sewer and stormwater charges. The Bureau of Environmental Services is authorized to establish longer, more flexible payment arrangements to apply one-time waivers of up to a total of $1 million dollars from the existing cumulative $2.1 million of past-due amounts currently subject to special tax assessments. Should the waiver offered in particular cases as authorized herein prove insufficient, the Bureau of Environmental Services, subject to the approval of the Commissioner-in-Charge, may further reduce past-due balances attached to sewer-only tenant accounts in the interest of fairness and compassion. The authority granted by this ordinance is distinct from the $500 bill-adjustment authority granted by City Code section 17.36.090 A. Section 2. The Council declares that an emergency exists because of the necessity to provide waivers, implement outreach, and work with both tenants and property owners prior to the FY 22-23 special tax assessment process; therefore, this ordinance shall be in full force and effect from and after its passage by the Council.