Featured Stories

Independent board seen as solution to utility rate issues

Skeptics worry city could still spend funds on pet projects
by: CHRISTOPHER ONSTOTT Portland's historic Benson Bubblers is one of many projects that critics say shouldn't be funded from residents' water and sewer bills.

Mayor Sam Adams and city commissioners have come up with lots of creative ideas lately for spending money collected via sewer and water bills — from college scholarships to a new Portland Rose Festival headquarters. In response, many outraged Portlanders say it’s time to remove the City Council from setting sewer and water rates, to stop them from spending ratepayers’ money on unrelated pet projects. But how to do that? Five ideas are circulating, each with pitfalls. Here’s a primer to sort out the options: • Establish an independent utility commission, a volunteer panel that would recommend sewer and water rates to the City Council. • Enact a similar proposal, only with more teeth, requiring a city charter change. • Establish a “peoples utility district” that oversees city water services, controlled by its own elected board. • Set up a quasi-legal system to set water and sewer rates, somewhat akin to the Oregon Public Utility Commission’s system for setting private utility rates. • Sue the city, as done via the lawsuit filed last week by disgruntled water and sewer customers. The array of proposed solutions could make consensus elusive, resulting in no action. But so far, the charter amendment idea seems to have the most horsepower, in part because the city charter review commission has the power to send issues directly to Portland voters. City Commissioner Dan Saltzman got the ball rolling in July, proposing an independent utility commission to help set water and sewer rates and budgets. But Saltzman backed off when a citizens commission charged with recommending city charter reforms decided to pursue the idea. Saltzman realizes an independent utility commission created by the City Council wouldn’t be very independent — a three-person council majority could simply vote to override its rulings. A city charter amendment, Saltzman says, would give the panel more power by requiring a unanimous vote of the City Council to override it. If at least 15 members of the 20-person charter commission agree on a reform proposal, that goes directly to voters, bypassing the City Council. “I believe this is one of the two or three that will come out of that group,” Saltzman says. An independent utility commission empowered by the city charter will help “take the politics out of rate setting,” says Justin Delaney, a vice president at The Standard insurance company, who sits on the charter commission. He views it as a “good government” reform that would eliminate the “political machinations that occur at council where they fund other projects.” The City Council uses the volunteer Portland Utility Review Board for some decisions, but that group provides only “input” to the council, Delaney says. An independent utility commission, under the charter commission’s draft proposal, would adopt the city’s sewer and water rates and agency budgets. The City Council would have to vote unanimously to override the commission. “This would be very different from input for the council to consider,” Delaney says. There is a good chance the commission will put the idea on the ballot, perhaps next May or November. However, turnover on the charter commission makes it tough to predict what kind of support the charter amendment may have, Delaney says. Some remain skeptical Members of the Portland Utility Review Board are skeptical about the independent utility commission idea, though they favor the charter amendment route instead of Saltzman’s approach. The overall idea is good, says review board Chairwoman Janis Adler, but “I haven’t seen the model that satisfies me yet.” There’s some fear a new independent utility commission will be just another “layer of bureaucracy” that slows approval of the budget process, Adler says. And she maintains the Portland Utility Review Board has been effective during her tenure, with its advice heeded by the City Council. Fellow utility review board member John Gibbon agrees the current system has worked reasonably well. Money from sewer and water customers could be “spent better,” Gibbon says, but the vast majority of the sewer and water bureau budgets are for fixed services, so people expecting to see much rate relief from any of the proposed reforms are in for a disappointment. “I don’t think there’s been any stealing from the ratepayers going on now,” Gibbon says. His big fear is that a new independent utility commission could set a higher water rate for West Hills residents, because it’s more costly to pipe water uphill. Other water authorities around the country do that, Gibbon says, and an independent board might view that as the fairest system for other ratepayers. Gordon Feighner, another member of the utility review board, says the City Council has disregarded the board’s input. “They do whatever they want, without regard to what we say,” Feighner says. The charter commission proposal would be an improvement because it would have more teeth, he says. If an independent utility commission gets to set sewer and water rates and the City Council can only vote up or down on the proposals, the commission “would be more or less in the drivers’ seat in the process,” Feighner says. However, he doubts the commission members can do such a challenging job as volunteers. Radical changes Feighner works for the Citizens Utility Board, which advocates for Oregon residents in utility rate proceedings before the Public Utility Commission. He prefers moving to a similar system for sewer and water rates. But others say a Public Utility Commission-style system requires most parties to hire lawyers, and relies on lengthy hearings and long processes that take several months to complete. That wouldn’t fit the city’s need to do annual budgets. The charter review commission reviewed the idea and concluded it wouldn’t be a good fit, Delaney says. He calls the proposal a “nuclear option,” because it would require the dismantling of the city’s sewer and water utility structure. Kent Craford, director of the Portland Water Users Coalition, is a key player behind a recent lawsuit against the city’s use of water and sewer rates. Craford argues that if a judge finds that the City Council violated the city charter by spending sewer and water ratepayers’ money for unrelated services, that could prevent future city commissioners from doing the same . However, Craford and other longtime City Hall watchers say there will always be temptations for councilors to cut deals with their peers to get pet projects and priorities funded, and money collected from water and sewer ratepayers could remain vulnerable to such trades. “It becomes a convenient slush fund for the things they can’t fund out of the general fund,” Craford says. Craford’s business coalition paid for a poll in March by Riley Research Associates, which found 57 percent of those asked said they would support establishing an independent public utility district to run the Portland Water Bureau. “I think that would make a lot of sense,” Craford says. Elected district directors would campaign for their posts based on utility management issues, he says. Though it would require voter approval, Craford doesn’t see any well-funded groups that might oppose it. “Who’s going to campaign against it?” But Gibbon, an attorney, fears that handing over the water system to a public utility district could endanger the city’s water rights to the Bull Run Reservoir, Portland’s source of drinking water. Because the city holds those rights, a new utility district might not be able to claim them, setting up a long legal battle that could hurt ratepayers.