LO rate hikes could be smaller than planned

Tigard will buy a larger share of water and shoulder more of the costs as Lake Oswego upgrades and expands its infrastructure to serve both cities — a change that will potentially halve projected water rate hikes for Lake Oswego residents.

The Lake Oswego City Council on Tuesday unanimously approved a plan to give Tigard an additional 4 million gallons per day under the Lake Oswego-Tigard Water Partnership, an effort that began in 2008 to develop a joint drinking water system.

Lake Oswego City Manager Scott Lazenby said the agreement represents one way smaller cities like Lake Oswego can efficiently provide services through economies of scale that sometimes elude larger cities.

“We very strategically partner with other cities,” Lazenby said. “The net result is a tremendous savings to the citizens, the ratepayers of Lake Oswego, through negotiation of capacity in our water system while still preserving sufficient capacity for our future needs. This is the kind of intergovernmental cooperation that’s a win-win for both parties, but it really does benefit our citizens.”

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 water treatment plant in West Linn, build a new water reservoir in Lake Oswego and expand a Tigard pump station, in addition to installing bigger water pipes. Work is already underway on some of the projects. The goal is to have the new system online and serving Tigard in 2016.

Officials have said the partnership with Tigard will benefit Lake Oswego because the city would have to expand and upgrade its system anyway and can now share those costs. However, bigger utility bills sparked controversy among citizens.

The estimated $250 million in work is being funded through higher water rates in both cities, which began negotiating in June to reallocate costs in hopes of reducing the burden on Lake Oswego.

After seeing rates climb over the past few years, Lake Oswego residents were set for another double-digit water rate hike in 2014. However, with Tigard now committed to buying a larger share of the new water system’s capacity, Lake Oswego’s rate hikes should be less substantial.

Instead of considering a projected 12.5 percent increase in January, the Lake Oswego City Council might look at a hike as low as 6 percent, Assistant City Manager David Donaldson said following the council vote Tuesday.

Tigard, meanwhile, will see larger increases than previously expected, although it remains unclear how much larger.

Tigard’s rates were already expected to rise 14 percent starting Jan. 1. That planned increase would follow higher rates imposed over the past few years. Today, Tigard residents pay about $36 each month for water. In comparison, a typical Lake Oswego customer pays about $48 monthly for water.

Under the updated agreement, Donaldson said, Lake Oswego will keep 20 million gallons per day, enough to meet its projected supply needs. Including the additional 4 million gallons, Tigard will receive 18 million gallons per day.

Tigard will pay about $20.7 million for that additional water, as well as another $1.3 million to increase its buy-in payment for Lake Oswego’s existing system.

Even so, officials see the deal as a good one for Tigard residents.

While Tigard is paying the lion’s share for expanding Lake Oswego’s drinking water infrastructure, it will now own a portion of the system, giving Tigard direct access to water for the first time in its history.

Today, Tigard buys water wholesale from the city of Portland. Officials said buying the additional capacity in Lake Oswego is still cheaper than alternative options.

“We are getting this additional (capacity) at almost half of what the normal cost would be to go out and build the system on our own,” Tigard Interim Assistant Public Works Director John Goodrich said.

Despite getting more water from Lake Oswego, Tigard will need to look elsewhere to meets its needs in the coming decades. Goodrich said that the additional capacity will give Tigard adequate water out to the year 2040.

Tigard Mayor John L. Cook said that buys the city “a few years before we have to do anything.”

Cook also said purchasing a larger portion of the partnership today will save the city money in the future.

“The purchase price now compared to buying it five to 10 years later is huge,” he said. “I think it’s a good deal for our kids and grandkids. It puts us a lot further down the road before anybody will have to look at that again.”

The updated agreement also allows either party to sell its allocated water on “a surplus basis” to other entities.

The Lake Oswego City Council unanimously endorsed the new plan with no discussion.

After the 7-0 vote, Mayor Kent Studebaker offered the only council comment to city staff members: “Job well done.”

— Pamplin Media Group Reporter Geoff Pursinger contributed to this story.

Kara Hansen can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. and 503-636-1281, ext. 107. Follow her on Twitter, @LOreporter.

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