(Oregon Public Broadcasting) — The city of Portland's high-profile loos-- seven stainless-steel public restrooms that were a pet project of former Commissioner Randy Leonard -- finally had their moment in court on Wednesday.

The loos are one small part of a lawsuit filled against the city in 2011 that alleges Portland spent more than $100 million collected from ratepayers on projects only tangentially related to public waterworks and sewers.

The litigation followed an audit that found the Bureau of Environmental Services and the Water Bureau had spent some money on non-utility related projects.

Attorneys representing the plaintiffs and the city agreed to limit their oral arguments in court Wednesday to four projects that will serve as test cases. These issues will help clarify how Multnomah County Circuit Court Judge Stephen Bushong will apply the law to the rest of the sprawling lawsuit.

The test cases involve $6 million from a stormwater fund that the city used to help purchase the Riverview Natural Area, $618,000 from the water fund for maintenance and marketing of the Portland loos, $3.9 million given to TriMet to relocate pipes during a transit mall construction project, and about $1 million spent on a public campaign financing program that ended in 2010.

Deputy City Attorney Terence Thatcher argued that the law gives City Council broad discretion over the use of ratepayer funds, and that all the projects in question met a standard of being loosely related to water or sewer services.

"We believe the city charter grants the council the discretion to define what the water system is," he said.

Thatcher characterized the largest expenditure in question — $6 million that went toward the $11.25 million purchase of land for the Riverside Natural Area — as an investment in green infrastructure that prevented the city from having to build new pipes.

"If you say the City Council can't do that, you're essentially saying to the City Council, it can't run its sewer system for environmental protection," he said.

Judge Bushong questioned that argument. "Looking at the materials related to that purchase, it seems pretty obvious the primary purpose was a park," he said.

The plaintiffs in the case include former City Commissioner Lloyd Anderson, and Paige Crawford, the sister of prominent water lobbyist Kent Crawford, a chief backer of a measure on the May 20 ballot that would transfer power from city water and sewer bureaus to an independent board. The plaintiffs have asked for a court-appointed auditor. They're also seeking an order requiring that the City reimburse the water and sewer funds for any improper expenditures.

Attorney John DiLorenzo represented the plaintiffs, and argued that Portland had a legal obligation to spend Water Bureau and Bureau of Environmental Services money only on projects narrowly related to their mission.

"There is no way that any reasonable person could view the land as a main, as an extension, a pipe, a duct, a lateral, a branch, a manhole, a lamp hole, a catch basin, a pumping station, a ditch, a canal, an aqueduct, a gate or any type of apparatus or device," he said. "It isn't."

Judge Bushong pressed both attorneys to explain the court's role in the case, questioning his authority over the City Council's spending decisions.

"Isn't the appropriate check on that the political process? You can vote them out of office," he said.

In a statement sent Tuesday, Portland Mayor Charlie Hales, who has acknowledged problems with the way the City Council spent ratepayer money in the past, attacked the lawsuit.

"The anti-environment funders behind this suit are also behind a ballot measure to create a new layer of government to run the environmental services and water utilities," Hales said. "If the facts aren't with you, and the law isn't with you, unlimited corporate money is a wonderful thing. It can be used to attack Portland's environmental investments again and again and again. If you don't like green programs, these are the best attacks money can buy."

DiLorenzo, the plaintiffs' attorney, disagreed, and said the suit reflected broad concern across Portland about rising rates and lack of accountability.

"Its a rare instance when most people in town know all about your lawsuit, and I think it has stimulated marvelous civic discourse and that is a good thing," DiLorenzo said.

The city says it expects Judge Bashon to issue a decision later in February or in March.
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