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DRAFT CITY CLUB REPORT RECOMMENDS CHANGES TO PORTLAND WATER, SEWER BUREAUS TO IMPROVE OVERSIGHT AND BUILD RATEPAYER CONFIDENCE

Report recommends ‘no’ vote on proposed ballot measure, proposes alternate structure

March 6, 2014 (Portland, OR) — The City Club of Portland today released a draft research report that recommends a new governance structure to improve oversight of the City’s water and sewer bureaus, while recommending a “no” vote on a proposed ballot measure to create a separate Portland Public Water District.
“While changes are needed in oversight and management of these bureaus, this ballot measure is not the solution,” the committee states in its report. “More modest steps can improve the process of setting (bureau) budgets and rates and enhance the effectiveness and efficiencies of the bureaus.”
The committee recommends creating a semi-autonomous Portland Water and Sewer Authority that would remain part of City government, but would provide independent management and oversight of the Portland Water Bureau and the Bureau of Environmental Services, which manages the city’s sewer and wastewater services. A single commissioner selected by the Mayor would appoint members of the Authority, who should have experience in utility finance, engineering and fields relevant to utility management.
The Authority would propose budgets to City Council and set utility rates. While City Council would continue to set policy for the utilities and approve their overall budgets, it would not engage in any administrative functions related to the utilities. The Authority would appoint an administrator for each utility who would oversee and manage the bureaus.
The goal of establishing the Authority is to “promote independent, accountable, sustainable and effective management and oversight,” the report states. “The Authority will better insulate the utilities from political and special interest pressure and help ensure accountability for long-term planning and efficient management.”
City’s management of water and sewer functions gets mixed review
The report notes that the City’s water and sewer bureaus are doing several things right in midst of challenges. While public outcry over multiple rate increases helped fuel proposal of the citizen-led ballot measure, the City Club committee found other West Coast cities are facing similar rate shock. The city bureaus are taking expensive but necessary steps to meet environmental regulations and replace aging infrastructure, and their work in asset management is highly regarded in the industry.
Still, the research committee found several problems with the current structure, and concluded: “ratepayers are rightly concerned about how their utility dollars are being spent.”  Public services as essential as sewer and water require more focused, dedicated and experienced oversight, the report concludes.
The committee also studied the use of ratepayer funds for projects such as the Water House and the Rose Festival Headquarters, and concluded such use of ratepayer dollars is “unacceptable.” “The City’s budget-setting process bears much of the blame for the diversion of funds. Often, short-term political expedience substitutes for long-term planning, and the temptation to tap ratepayer dollars for projects unrelated to utility services can be too much to resist.”
Reasons to vote no
In recommending a “no” vote on the May 20 ballot to create a new government entity, the committee found the ballot measure is poorly structured, likely to face legal challenges, and unlikely to save money. “Your committee sees nothing in the measure that will guarantee (lower rates.)  Rates will continue to be subject to upward pressure, regardless of the utilities’ governance.”
The draft research report and recommendations, titled “Rising Rates and Customer Concerns: Assessing Governance of Portland’s Water and Sewer Utilities,” http://pdxcityclub.org/2014/Report/Portland-Water-Sewer-Rates will become the official position of the City Club of Portland if a majority of its members vote to approve it by March 19. The committee interviewed 31 witnesses, including supporters and critics of the City’s water and sewer bureaus. The committee also studied the governance, of water, sewer and wastewater utilities in other municipalities.  Christopher Liddle, Manager, Regulatory Affairs for Portland General Electric, chaired the study committee. Lori Irish Bauman, attorney with Ater Wynne LLP, wrote the report. Brodi Ayers, Leonard Bergstein, David Cook, Michael Dougherty, Pete Farrelly, Don Francis, Michael Greenfield, Catherine Howells, Jim Jackson, Charlie Makinney, Peg Malloy, Chris Stadler, Ted Wall and Larry Wolf were also committee members. Elizabeth Friedenwald, Mark Knudsen, Pat McCormick, Patty Farrell and Greg Wallinger advised the committee.
There are two opportunities to learn more about this report:
City Club will host an informational town hall about the report’s findings, conclusions and recommendations, Wednesday, March 12, from 5:30 to 7 p.m. at the Green Dragon, 928 SE 9th Ave., Portland. The event is free and open to anyone, but space is limited. Click here https://app.arts-people.com/index.php?theatre=ccp to reserve your space
City Club members will vote on the report and its recommendations prior to the Friday Forum on March 14 at The Governor Hotel, starting at 11:30 a.m.; doors will open at 11 a.m. Voting will occur at that meeting and online. The outcome of the vote will be published on the City Club of Portland’s website and reported in the City Club Bulletin, released March 20.
City Club of Portland brings together civic-minded people to make Portland and Oregon better places to live, work and play for everyone. For more information about City Club of Portland, visit www.pdxcityclub.org or call 503.228.7231. Follow us on twitter @pdxcityclub and on facebook.