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Wednesday, February 12, 2014

The City Says it Has "Very Broad" Authority to Spend Utility Funds. A Judge Asks: "Then What's the Limitation?"

Posted by Dirk VanderHart on Wed, Feb 12, 2014 at 10:59 AM

Loo.jpg

The city has "very broad discretion" in how it uses the money you pay in water and sewer rates every three months.

Helping pay for Portland's bygone "voter-owned" elections? Couldn't be more inherent to that money's intended use. Paying for a swath of river-adjacent land that will be used as a nature area? Crucial for natural drainage. Helping pay for Portland Loos? Simply furnishing the people with water.

These, at least. were the arguments of the City Attorney's Office this morning, at a hearing about claims in a years-old lawsuit over ratepayer funds. The plaintiffs—some of the same folks who have gotten a measure to wrest utility control from city hall on the May ballot—have asked that the city be required to pay back money spent on purposes they call unrelated to water and sewer service.

Among those purposes are projects like the now-infamous Portland Water House, the Portland Loos, construction of a new residence on Powell Butte to house a caretaker and purchase of the Rose Festival building.

Today's hearing, slated to continue this afternoon, is smaller in scope. Multnomah County Circuit Judge Stephen Bushong heard arguments on four expenditures, which the city argues should be dismissed from the case. Those are: the use of Portland Water Bureau funds to pay for the Portland Loos, the use of Bureau of Environmental Services (sewer) funds to help purchase the River View Cemetery, the city's $3.9 million payment to move water pipes out of the path of MAX tracks, and the use of utility fees to help publicly fund elections.

At stake, though, is something bigger. Bushong—in deciding both these arguments and the case as the whole—has the power to dictate how city council spends water and sewer funds going forward, an issue that's more prominent than ever in light of the approaching vote.

To hear Deputy City Attorney Terence Thatcher tell it, the city charter allows commissioners to use that money in a panoply of ways. As long as purchases have to do with the water and sewer systems, he said today, council can tap utility money.

"They still have to be furnishing water," Thatcher said. "They still have to be managing sewers. The council has very broad discretion."

John DiLorenzo—representing plaintiffs Lloyd Anderson (a former city commissioner), Paige Craford, Millard Christner and the group Citizens for Water Accountability, Trust and Reform—argued against that reading of the charter. He says the water and sewer money never should have been spent.

The hearing came the same morning backers of the so-called Portland Public Water District campaign accused Mayor Charlie Hales of violating a state law prohibiting use of public resources on campaigns.

That follows a press release yesterday from Hales' spokesman, Dana Haynes, which was mainly a preview of this morning's court hearing. It did include passing reference to the ongoing campaign to put water and sewer services—along with many of the city's environmental protection initiatives—in the hands of a new board.

"The high-powered corporate lobbyist behind this lawsuit also represents the chief petitioners in a corporate-funded ballot measure to strip the City of its Environmental Services and Water bureaus," the release said. It also included quotes from Hales, who called backers of the suit and campaign "anti-environment funders."

“If the facts aren’t with you, and the law isn’t with you, unlimited corporate money is a wonderful thing," Hales said in the release. "If you don’t like green programs, these are the best attacks money can buy."

The water district campaign says, in part: "Using public resources on City time, the Mayor's office blasted the PPWD initiative—an exercise in political campaigning and a clear violation of Oregon's Hatch Act." The law prohibits public employees from campaigning "while on the job or during work hours."

Hales has been working behind the scenes to build a campaign opposing the water district, sources say, convening meetings and vetting potential campaign directors. But the mayor's office says it's not concerned with the new allegation.

"Our attorneys vetted it," Haynes says of the release. "We knew that would be the first salvo back. We have no reaction to it."

Now, back to the four purchases at issue in this morning's hearing:

•Thatcher said the city was perfectly justified in paying $618,000 in water fund money—roughly 40 percent of the total cost—to help pay for two Portland Loos because "we chose to furnish water to the citizens with this device." The city can decide what's "necessary, appropriate and convenient in terms of constructing any facilities," he told Bushong.

DiLorenzo, though, said far too much water money was used on the project. Had water funds gone toward hooking the loos up to the water system, he said, there would be no issue. "Nowhere in any facts or materials (on the project) was supplying water to the public ever mentioned," DiLorenzo said.

He likened the expenditure to using ratepayer money to build a new Portland Building, simply because it was hooked to the city's water system.

•The city says the purchase of the River View Cemetery had two purposes, and so the property was bought, for $11.25 million, from various pots of money. By far the larges pot, though, was the $6 million in sewer funds the city tapped. The city argued—then and today—that was fitting, since the purchase would protect the land from development, eliminating the need to create pipes and other equipment for a drainage system and naturally protecting the Willamette River from pollution.

DiLorenzo says the city effectively used the money to purchase a new park. And he said sewer funds needed to be spent on actual apparatuses to control stormwater and sewage, not on land that will merely naturally drain rainfall.

Even Bushong—who made clear he was only asking questions and not making observations—seemed skeptical. "If that's right," he asked Thatcher, "wouldn't the city have authority to spend sewer money on just any park? It seems pretty obvious the primary purpose was to have a park."

No, Thatcher said, the city made a conscious choice to drain the land naturally, rather than artificially. And he cautioned Bushong: "I would urge you not to be concerned about what the city council might do."

•Thatcher's tack on the use of utilities money—along with cash from a lot of other pots—to help fund Portland's scuttled voter-owned elections was novel. The system furnished city council and city auditor candidates with campaign money once they met certain thresholds. "There is nothing more connected to the operation of the sewer system than who sits on the city council," Thatcher said.

"Then what's the limitation?" Bushong asked.

DiLorenzo said the city's argument could just as easily extend to scholarships to improve future city leaders.

•Finally on $3.9 million Portland spend to move water lines to allow for Max tracks, the city says that was simply straightforward management of the water system. DiLorenzo argued the way that money was spent—simply given to TriMet to do the work, rather than handled by the water bureau—was a bald-faced, unnecessary move to help TriMet secure federal funds for the project.

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