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More layoffs are to come at the Portland Bureau of Development Services (BDS) as construction activity dips in the city.

In a staff meeting via Zoom on Wednesday, with more than 200 employees in attendance, BDS Director Rebecca Esau, who is retiring in December, announced that the bureau needs to cut 56 additional positions 鈥� about 15 percent of its workforce. Last week, BDS notified nine new employees (within their first nine months of employment) that they would be let go; Nov. 15 is their last day. And late last month, seven employees鈥� contracts were terminated. So, in total, the actions affect 72 workers.

The layoffs will impact managers and nonmanagers, unionized workers and unrepresented workers, according to BDS spokesman Ken Ray.
Ninety-eight percent of the bureau鈥檚 revenue is dependent on fees collected from permits, land use review and related development services. BDS has witnessed a notable decrease in the number of high-value permit requests typically submitted for developments. Recently, BDS has been depleting its $37 million reserve fund at a much faster rate 鈥� $3 million each of the past three months 鈥� to sustain its workforce, Ray said. The cuts are necessary, he added, to reduce the withdrawals to $1.5 million per month, because a downturn in construction activity lasting at least 18 months is anticipated.

The bureau earns between approximately $134 and $918 for commercial building permits that are $100,000 and less; anything above that threshold incurs $4.54 more per additional thousand dollars. For example, Saltwood North, a six-story, 177-unit apartment building that opened in 2022 in Portland鈥檚 Slabtown neighborhood, was valued at approximately $40 million by BDS; its development team paid around $3.2 million in permitting fees, not including 20 deferred submittals and six revisions that each incurred processing fees.

Meanwhile, the 35-story Block 216 tower in downtown Portland was valued at $273.75 million; its development team paid approximately $5.053 million in permitting fees, not including 88 deferred submittals and 21 revisions.

While the total number of commercial and residential building permits processed in 2023 is expected to surpass last year鈥檚 number, the quantity of large-scale, high-value, high-revenue permits for BDS has dropped. Since May, there have been only four commercial permits issued for projects with eight-figure values, with the highest being $25.8 million. Most of the commercial permits issued in the past six months have been $6 million or less, according to BDS permit reports.

Based on conversations with economists and market observations, Ray said, the downturn in construction activity is primarily due to high interest rates affecting investments in developments, reductions of commercial real estate values, a decline in the city鈥檚 population, and general negative perceptions of Portland that are impacting development and investment.

鈥淏DS revenues are directly tied to the health of the construction industry,鈥� Ray said.

Market conditions have led several developments in Portland to be put on hold or canceled, some even with building permits under review. However, BDS does not receive revenue from those permits until they are issued. Currently, approximately 104 commercial new construction permits are sitting in the permit database, approved to issue, waiting for the owner to pay the permitting fees.

As of now, the bureau does not anticipate any further layoffs in this fiscal year. Employees to be laid off will be notified after Thanksgiving, and the final date of employment for each employee will vary depending on seniority and labor contract agreements.