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TVWD, Tualatin 'close' to resolution with Portland Water Bureau

Amendments could resolve mediation that started in 2013 over contract details

Two years of mediation between the Portland Water Bureau and two of its wholesale customers in Washington County may be coming to a close.

Mark Knudson, chief executive officer of the Tualatin Valley Water District, and Jerry Postema, public works director for the city of Tualatin, said they have been in talks with their Portland counterparts on a proposal that could end the legal dispute over the water purchasing contract each of their organizations has with Portland.

“We have what we believe is a good proposal, and we're hoping to get it resolved as soon as possible,” said Postema.

“We've been talking now for 2 1/2 years, which is a little scary, and we are getting very close,” Knudson said. “I think we're still waiting for final comments back from Portland, but we will see what they have to say.”

Knudson briefed the water district's board members Tuesday on the details of the proposed compromise.

“Just in the last couple weeks, we have reached a point where we have what I would describe as a tentative agreement,” said Knudson.

Portland entered mediation with both the Tualatin Valley Water District and the city of Tualatin in 2013 after both customers objected to the Portland Water Bureau saying it would change how it calculated certain summer water purchases.

A Portland Water Bureau spokeswoman, Jaymee Cuti, said the three parties in mediation “believe they are making progress toward resolution,” although she did not provide details.

Both Knudson and Postema hesitated when asked if the agreement under discussion would increase their customers' water rates.

“It should not result in increased rates beyond what will occur otherwise,” Knudson said finally.

At Tuesday's work session, Knudson downplayed the financial impact of the draft agreement, suggesting it may actually end up saving the Tualatin Valley Water District as much as $92,000 per year — although he noted that is a small fraction of its $7 million water bill to Portland.

“This is not a particularly big issue in terms of dollars and cents,” Knudson said. “It is a very big issue in terms of adhering to the terms of the contract.”

The purchasing contracts are set to automatically renew in 2016 for five years. After that, the parties will be able to modify the contract or withdraw from it if they desire, according to Postema.

However, Portland or one of its customer could provide notice to prevent the contract from renewing, Postema said.

The city of Tigard purchases its water from Portland, but it has notified the Portland Water Bureau that it will not be renewing the contract. Starting next summer, Tigard will switch to water from the Clackamas River, which it will buy from neighboring Lake Oswego, according to Jennifer Joe, a Tigard city official.

Postema said Tualatin has some options if its water purchasing contract with Portland is not renewed next year, although he declined to go into detail. He said Tualatin officials have talked to other municipalities, including Tigard and the Tualatin Valley Water District about possible alternative water sources.

But Knudson said he is hopeful that the legal dispute with Portland, in which the Tualatin Valley Water District and Tualatin have been working together, will be resolved soon.

“My goal is (to have it resolved) within the next month or two, but that said, it's a complex issue,” said Knudson. “It's reviewed and approved by a lot of people, and if they're not happy, it could take longer than that.”

The Tualatin Valley Water District and Tualatin will have to approve amendments with Portland separately, according to Knudson. The Portland City Council will also have to approve the amendments.

There is what Knudson called a “reopener provision” in the proposed amendments, which states that they will be in force for at least three years, but a party can call for negotiations if it feels the changes are not working out after two years; in that case, the amendment will be voided if an impasse is reached after at least a year of negotiations. The intent of that provision is to prevent the Portland Water Bureau and its customers from heading right back to the dispute resolution process if there is another disagreement, Knudson told his board.