Approve Plan of Action as required by the Oregon Secretary of State to finding by outside auditors of material weaknesses in the FY 2024-25 Annual Comprehensive Financial Report

WHEREAS, Baker Tilly has been contracted by the City and has audited the City's and its component unit, Prosper Portland's, financial records for FY 2024-25; and WHEREAS, the audit found a material weakness in the Portland Parks and Recreation's construction in progress; and WHEREAS, the audit found a material weakness in the City Fleet's construction in progress; and WHEREAS, the audit found a material weakness in the Bureau of Transportation's construction in progress; and WHEREAS, the audit found a material weakness from Prosper Portland's Pollution Remediation Liability estimate calculation; and WHEREAS, Baker Tilly's audit findings determined that Portland Parks and Recreation failed to close $159 million of completed capital projects and transfer those projects to fixed assets for multiple years, and the correcting transaction also required Portland Parks & Recreation expensing $6.7 million of missed depreciation expense; and WHEREAS, Baker Tilley's audit findings determined the City Fleet failed to close $30 million of completed capital projects and transfer those projects to fixed assets for multiple years, and the correcting transaction also required City Fleet expensing $232,807 of missed depreciation expense; and WHEREAS, Baker Tilly's audit findings determined the Bureau of Transportation failed to close $14 million of completed capital projects and transfer those projects to fixed assets from FY 2024-25; and WHEREAS, Baker Tilly's audit findings determined that Prosper Portland failed to record a liability of $32.4 million for pollution remediation costs and the correcting transaction required Prosper Portland expensing $32.4 million of missed pollution remediation costs; and WHEREAS, all findings are reflected in the Report of Independent Auditors that accompanies the City's FY 2024-25 Annual Comprehensive Financial Report; and WHEREAS, when material weaknesses are reported by the auditor, the Oregon Secretary of State requires filing a corrective Plan of Action; and WHEREAS, the Board of Commissioners of Prosper Portland has accepted and adopted the Plan of Action on December 17, 2025, for the Pollution Remediation Liability material weakness finding related to Prosper Portland; and WHEREAS, the Plan of Action must be approved by the governing body and filed with the Oregon Secretary of State within 30 days of filing the Annual Comprehensive Financial Report; and WHEREAS, the Oregon Secretary of State has granted the City a filing extension to January 31, 2026. NOW, THEREFORE, BE IT RESOLVED, the Portland City Council directs the City's Plan of Action in Exhibit A and Prosper Portland's Plan of Action in Exhibit B are adopted by Council; and BE IT FURTHER RESOLVED that this resolution takes effect immediately upon its passage by the Portland City Council; and BE IT FURTHER RESOLVED that the Portland City Council directs copies of both Plan of Actions be filed with the Secretary of State (ORS 297.466(2)) within 30 days of filing the FY 2024-25 Annual Comprehensive Financial Report, subject to the current extension granted by the Oregon Secretary of State.