Lake Oswego council wrestles with costs to local ratepayers

by: VERN UYETAKE - Lake Oswego City Councilor Jeff Gudman, left, and Mayor Kent Studebaker listen Tuesday to a presentation by Tiffany Couch, an accountant and auditor who reviewed Lake Oswego's water rates and projects.Tigard and Lake Oswego plunged ahead Tuesday night with the biggest public works project in the city’s history, after Lake Oswego approved work that will allow construction to start this year on the cities’ new water system.

During its regular meeting, the Lake Oswego City Council approved a series of projects, giving the final go-ahead for work to begin, but not without some reservations.

“I come here tonight with some unpleasant news, at least for Lake Oswego ratepayers,” Lake Oswego Mayor Kent Studebaker said during the meeting, noting the council is “bound legally with decisions made prior to our term of office.

“West Linn took advantage of our predicament and has added $5.2 million to our cost. ... We can either accept their conditions or we can reject them and effectively breach our contract with Tigard.”

West Linn’s recent approval of the water treatment plant expansion was conditional; requiring a $5 million payment to the city, as well as funding for a new West Linn pump station, water lines and a neighborhood community center.

However, Studebaker said, delaying the projects would waste dollars already spent and risk losing millions more,

The council approved more than $13 million in water partnership contracts.

The Lake Oswego-Tigard Water Partnership plans to double the amount of water Lake Oswego draws from the Clackamas River, replace an existing river intake facility in Gladstone, replace its treatment plant in West Linn, build a new reservoir in Lake Oswego and expand a Tigard pump station, in addition to installing bigger water pipes. The goal is to have the new system online and serving Tigard and Lake Oswego by July 2016.

The estimated $250 million in projects is being funded through higher water rates in both cities.

Could water rates be getting higher?

New scrutiny of some of the project’s numbers and ideas arose, Tuesday, after a group of Lake Oswego citizens hired an accountant and forensic auditor to review project data and information about water rates.

After the meeting, auditor Tiffany Couch said that regardless of justifications from project team members, the city’s rates and rate projections “are in serious question and will likely need to be higher” to compensate for lower-than-expected revenues in the city’s water fund and higher overall project costs. She said she wasn’t sure how much higher rates might need to be.

Lake Oswego Finance Director Ursula Euler, who received Couch’s report at the start of the council meeting, said she hadn’t reviewed it.

That’s not the end to the project’s troubles.

West Linn residents unhappy with the plant expansion were in the process of filing an appeal of the water treatment plant expansion this week, and the partnership is currently defending Lake Oswego’s ability to tap all of its water rights on the Clackamas River in order to serve Tigard.

Lake Oswego Councilor Mike Kehoe said Tuesday he wants to work on revising the city’s agreement with Tigard, reallocating costs to reduce the burden on Lake Oswego’s water users.

“I believe we’re elected to challenge assumptions and to challenge research and facts,” Kehoe said. “Why not wait until this is decided?”

Tigard Mayor John Cook said the Tigard City Council has not voted on a proposal to take on 4 million to 5.5 million more of the expanded, 38 million-gallon-a-day water treatment capacity, but has discussed the idea.

“The consensus was we would probably be able to do it,” Cook said. “I didn’t see any problem.”

Gudman proposed drafting a request for proposals from firms that might offer ongoing performance review services in addition to those already in place. Both councils would have to approve it before anyone could be hired. Lake Oswego councilors supported the idea.

Jim Bolland, co-chairman of the Lake Oswego Neighborhood Action Coalition said he felt council members had missed the point.

“What they neglected to discuss is that the rates are going to be significantly higher than what they’ve told us,” he said. “The impact on the ratepayers is the rates are going to be higher than expected.”

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