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'A forensic-style audit' of LOT financing suggested

The Lake Oswego-Tigard Water Partnership (also referred to as LOT) has resulted in astronomical water bills to Lake Oswego water ratepayers. Summer and fall bimonthly bills are in the $450-$600 range, some as high as $800-$900. High water prices are driven by revenue requirements to cover future debt obligations forced by the partnership’s enormous project cost increases.

LOT was initially sold as a way for LO to address a purported “serious water shortage.” Information to the public used data from a couple of peak (higher) usage days in the summer as representative of year-round (annual) water consumption levels in order to justify the deal with Tigard.

Our water system capacity is 16 million gallons per day. In 2006 only six days had usage around 13 mgd. In 2008, only four days were over by that amount. In 2011 a few peak use days were in the 12 mgd range. Also, we have millions of gallons of stored reservoir water.

LO’s annual average water use is between 4-5 mgd — only 25-30 percent of our capacity (16 mgd). Also, beyond that, consumption has been further reduced through aggressive conservation. Lake Oswegans are now conserving water by a whopping 36-37 percent. A project consultant’s report, called the Carollo Report, estimated conservation would be 5 percent within the next 10 years.

We did not have an annual water shortage prior to LOT and certainly do not now have an annual water shortage in Lake Oswego.

Initially in 2006-07 and early 2008, Lake Oswegans were told that we would save $20 million going with Tigard to make system repairs and upgrades: $54 million versus $78 million — which was the amount for Lake Oswego to go it alone. The referenced Carollo Report said Lake Oswego could make certain upgrades with a $5 million investment.

Under the partnership, however, Lake Oswego’s share is now in the $120 million to $140 million range for a total project cost of more than $250 million. Lake Oswego’s cost is approaching three times more than the original $54 million cost with Tigard.

In a Dec. 2, 2009, Oregonian article: “Cost for the Lake Oswego-Tigard water plan hits $200 million,” the reporter states that the city of Lake Oswego “has yet to prominently use the updated (2008) project cost.” The reporter further writes: “Officials in both cities say the smaller number price tag, used last year as the public debated the project, was based on an outdated 2006 figure from an earlier study.”

But, the 2006 figure is the figure that was used to convince the residents and ratepayers of Lake Oswego that we could save $20 million by going with Tigard and why we entered into the deal with them.

Because we are consuming less, there is less water revenue to pay for bond debt, line of credit loans, etc. Additionally, the LOT/Carollo Report assumed a 1.5 percent annual population growth rate for Lake Oswego. But, the Lake Oswego population annual growth rate over the last decade has been less than one half of 1 percent.

Translation: less demand, fewer customers, lower revenues but higher debt and future higher water rates.

In conclusion, a forensic-style audit by an independent expert is desperately needed with results publicly vetted and options considered before future requests for continued LOT financing is decided by the city council.

John Surrett, Lake Oswego, is a former candidate for mayor of Lake Oswego.

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