In a split 3-2 vote, Portland’s City Council decided Wednesday to stop all new investment of city cash in corporate debt.
The vote followed hours of testimony from from members of the public who said they did not want their tax dollars supporting corporations. They urged the council to bar investments in companies like Nestle, Wells Fargo and Caterpillar.
Commissioners Dan Saltzman, Chloe Eudaly and Nick Fish voted in support of the move to divest entirely from corporate debt.
They rejected a different ordinance, backed by Mayor Ted Wheeler and the city treasurer, which would have relied on the analysis of a New York based ratings firm to identify companies for the city to invest in that have comparatively better environmental and social track records.
City investments total more than $1.7 billion. About a third of that is currently invested in corporate securities — essentially corporate debt that gets repaid with interest, as distinct from a stock, which is a holding a share or an ownership stake in a company.
The city's move to divest from corporate debt means shifting more of the city’s money into other types of investments, like U.S. Treasury bonds and U.S. agency debt. That could reduce revenue for services citywide by $3-5 million dollars each year ongoing, according to city Treasurer Jennifer Cooperman.
Wheeler said the city can’t afford to lose those dollars and voted against the amendment, introduced by Commissioner Dan Saltzman, to divest from corporate debt outright.
Wheeler noted the money the city will lose could pay for 285 new units of housing, 850 wheelchair accessible curb ramps or more than 667 new beds for the homeless.
"When I was elected, what people told me they wanted to do was address affordability, address the homeless crisis, improve the policing structure, and fill the dang potholes," he said. “For me, I can’t overlook that.”
Wheeler also acknowledged that as a former state treasurer, he's on the record as a skeptic of divestment as a strategy for changing corporate practices, calling it a "passive" approach.
Wheeler said he is more interested in using the city's purchasing power to push for corporate change.
"It’s not divestment that changes a company’s behavior. It’s the bottom line. Are we still buying the product?" he said.
Commissioner Amanda Fritz also voted against the divestment proposal, citing budget concerns.
"I'm very worried about losing the $3-5 million," she said. "That will mean more cuts in places that will hurt."
The city is required by state law to review its investment strategy on a yearly basis.
The City Council had previously developed a volunteer board to flag individual companies that conflicted with the city's environmental priorities and ethics for a "Do Not Buy" list.
But last year, the council failed to reach a consensus on which of the committee's recommendations to adopt, leading Wheeler to propose a new approach.
That's where the counter proposal to hire an analytics firm came in Wednesday.
Cooperman said socially responsible investors had recommended New York financial analysis firm MSCI to her, and said that the firm's take "closely aligned' with the council's environmental and social priorities.
But members of the public universally panned the proposal to use the MSCI ratings. Of the 40 or so people who testified, none said they supported it.
They noted the company considers its analysis proprietary information. As a result, the public could not review how MSCI decides to rank companies, and would only learn which companies the city was investing in after it purchases the securities.
After listening to the public testimony, Saltzman pushed for a vote to ban investment in corporate securities outright.
The commissioner, who is usually among the quieter on the council, spoke at length.
"I think it’s the wiser course to get out of the business all together, because I don’t really want to have to do this once or twice a year, and have the same discussion over 21 companies," he said.
Saltzman noted that since the election of President Donald Trump, the daily grind of running the city has at times taken a back seat to weighing in on national politics.
“When you start adding up all the things we’re going to be taking stands on that some would argue are tangential to fixing potholes, then it becomes a real opportunity cost,” he said.
Casting his vote, Fish agreed that trying to identify ethical corporations was too fraught and time consuming.
"I want to get out of the business of picking and choosing," said Fish.
Eudaly noted that her office had been inundated with calls from members of the public asking for the city to pull its money from specific companies.
"I can't dismiss the symbolism and meaning of Portland taking a stand on these issues," she said.