PORTLAND, Ore. — Portland officials will decide next week whether to take out a $100 million credit line to fill funding gaps amid the coronavirus outbreak.
The city would borrow the money from banks and use the funds as a short-term “last resort,” Mayor Ted Wheeler said during Wednesday’s City Council meeting.
“While I don’t anticipate needing it, I want this council to have all of the tools at its disposal to ensure that we have the financial resources we need during this crisis,” he said.
City officials said at the beginning of April the coronavirus outbreak to the city could exceed $100 million in lost revenue from sources such as business license fees and hotel taxes.
But the line of credit won’t be used to replace any revenue the city is losing related to any COVID-19 impacts, Matt Gierach, Portland debt manager, said. Instead it could be used in anticipation of receiving federal dollars or as a temporary funding source to prevent city service disruptions, he said.
Taking out the line of credit wouldn’t require any additional taxes but would require using future funds to repay any principal the city draws as well as the interest on it, city officials said. The line of credit would last two years, though it could be extended.
It could also cost the city an estimated $250,000 to $500,000 a year just to obtain the line of credit if officials don’t draw from it.
Gierach said city officials want to obtain the line of credit now because banks may not have the same capacity to lend later.
Gierach said the city would have to identify how to pay the money back before spending any of the funds. He said the decision whether to use any of the money would be made by him, Chief Financial Officer Michelle Kirby and City Budget Director Jessica Kinard.
For example, Gierach said, Portland could use a portion of the credit funds to provide emergency money quickly if there are delays in getting federal relief dollars.
Authorities said the line of credit would be separate from an estimated $100 million the city expects to receive in federal coronavirus disaster relief aid.
Commissioner Jo Ann Hardesty said Wednesday she felt uneasy that the city council wouldn’t be approving use of any of the funds from the line of credit and that the decisions would be made outside of the public eye.
“I’m concerned that the right hand won’t know what the left hand is doing,” she said.
Gierach said that level of approval wasn’t included because it would allow emergency funds to be issued more quickly. Kirby said the money would only be used to support programs or expenses that already have been approved by the council and that members would be given a heads up when they tap into the money.
Hardesty said she was still concerned by the lack of city council oversight.
The council is scheduled to vote on the proposal next Wednesday.
-- Everton Bailey Jr.
This article was originally published by The Oregonian/Oregonlive, one of more than a dozen news organizations throughout the state sharing their coverage of the novel coronavirus outbreak to help inform Oregonians about this evolving health issue.