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Tuesday, February 11, 2014

PBA: Water District Proposal Has Big Problems, But So Does Status Quo

Posted by Dirk VanderHart on Tue, Feb 11, 2014 at 4:14 PM

Breaking its silence on a debate that's festered for months, the Portland Business Alliance today is releasing a critique of a proposed new board that would take control of the city's water and sewer utilities.

The "Portland Public Water District," the business lobby says, could imperil the city's interest rates for borrowed cash, and could lead to problems with Portland's wholesale water customers, who help foot the bill for maintenance.

But the PBA's no fan of the status quo the water campaign is challenging, either.

"I think the big takeaway is neither the initiative nor the existing management structure work very well," says Bernie Bottomly, the group's vice president for government affairs and economic development

For that reason, the business alliance's large board of directors has decided not to take an official position—or offer up valuable campaign cash—for or against the water district as a May 20 vote on the matter approaches. The group is, however, planning to release detailed findings after studying the matter for roughly two months (a power outage at the PBA, apparently, has prevented a copy from landing in my inbox).

"They didn't want to flat out oppose the initiative because they want to send a very clear message change is necessary," Bottomly tells the Mercury. Among those changes, the PBA says the entire city council—not just one commissioner—should run the Portland Water Bureau and Bureau of Environmental Services. And the group thinks a supermajority vote of four commissioners should be required for city council to go against the rate recommendations of a citizen oversight committee.

This is wonky stuff, but important in light of the upcoming vote. After the jump, some of the PBA's key findings, as laid out by Bottomly:

•The PBA says the district could negatively affect the city's interest rates when issuing bonds, a possibility the Mercury explored back in October. The city's utilities—particularly the Water Bureau—have high credit ratings that can save millions when it comes time to borrow for big infrastructure projects. The PBA says an arrangement where a new board might be able to force the city to issue bonds could hurt jeopardize that. "One of the strong suits of the existing utilities is that they have low bond ratings," Bottomly says.

•The PBA agrees with others that problematic language in the measure will produce confusion if the initiative passes. In particular, the measure dictates board members will be elected from seven geographic districts "coextensive" with Portland Public Schools. But PPS doesn't cover the entire city. Supporters of the district have said the terminology is just a loose guideline, and that a more formal arrangement can be hammered out if it passes, but it's not clear that's the case.

The business alliance also thinks having members selected to represent different parts of the city could lead to squabbling and NIMBYism when it comes to decisions about improvements or changes to the systems.

•And the nearby systems that purchase water from the City of Portland may pull out of those agreements under a new district, according to the PBA. That, in turn, would decrease revenue to maintain the system, and increase rates. "Their relationship with the City of Portland is one that the city council and the mayor manage pretty well," Bottomly says. "Under this new board and elected group, we have no idea how that relationship would work."

•But the current system for managing utilities is flawed, too, Bottomly says. The business alliance found having a single commissioner in charge increases the chances of abuse. "They have the ability to shut down the flow of information and to, frankly, make decisions that it's hard for the rest of council to push back on," Bottomly says. Instead, he says a "municipal corporation" should be created, where all five city council members have equal say.

•The alliance also wants a citizen advisory group—a sort-of amalgamation of the Portland Utility Review Board and the utilities' budget advisory committees— that would have independent staff and more teeth. Under the proposal, it would take four votes—rather than a simple three-vote majority—for the city council to override rate recommendations from that committee.

"At this point we really feel like there needs to be this independent objective view," Bottomly says.

The arrangement the PBA is proposing is similar to one the city just reached with the Citizens' Utility Board of Oregon.

Worth noting: Portland Bottling Company, one of the water district campaign's chief backers, is a PBA member.

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