Establish a charge to fund City payment of the Flood Safety Benefit Fee to the Urban Flood Safety and Water Quality District

The City of Portland ordains. Section 1. The Council finds: The Oregon Legislature created the Urban Flood Safety and Water Quality District (UFSWQD) in 2019 through Senate Bill 431, now codified in Oregon Revised Statutes (ORS) Chapter 550, to manage the levees, dikes, and other infrastructure that protect Portland and the surrounding communities from Columbia River flooding. In 2024, the Legislature, through Senate Bill 1517, gave the UFSWQD the authority to impose fees on local governments “to compensate the district for the overall fixed costs of operating the district and operating and maintaining district works that are not compensated for by the annual charge . . .” Beginning in Fiscal Year (FY) 2024-25 and annually thereafter, the UFSWQD assesses an annual flood safety benefit (FSB) fee to the City. In 2023, a workgroup consisting of multiple City bureaus and stakeholders examined multiple potential funding options. In response to a budget note in the FY 2024-25 Adopted Budget, the Chief Financial Officer recommended that the FSB fee initially be paid from the General Fund because of the broad benefit afforded by the UFSWQD’s infrastructure management. That recommendation also suggested that alternative funding options continue to be explored. In FY 2024-25, the City paid the FSB fee from its General Fund and it will do the same for FY 2025-26, during which the fee is estimated to total approximately $5.3 million. The FY 2025-26 Adopted Budget included a budget note identifying “an expectation that a fee will be incorporated into the City utility bill in an amount sufficient to cover the FSB fee on an ongoing basis beginning in FY 2026-27" and directing the Chief Financial Officer to convene a workgroup to “identify a recommended customer allocation methodology and implementation plan for consideration by the Finance Committee and/or City Council no later than October 15, 2025, in advance of FY 2026-27 budget development.” The workgroup convened by the Chief Financial Officer at Council direction assessed multiple potential cost allocation methodologies and collection strategies and recommended that, beginning with FY 2026-27, the City’s payment of the fee should be reimbursed to the City through a new charge on the unified water/sewer bill, thus utilizing an existing billing system. The fee should not, however, be considered or used as a utility fee. The workgroup further recommended that, upon collection of the fee, funds be deposited into the General Fund. NOW, THEREFORE, the Council directs: The UFSWQD reimbursement fee is created and will be assessed by the Portland Water Bureau on the water, sewer, and stormwater bill according to the methodology described in Exhibit A.