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Board members unanimously vote to spend up to $20,000 for independent examination into what went wrong

Clackamas River Water's Backbone Projects — reservoirs and pipelines being constructed between 2016 and 2023 — already are going over budget by nearly $6 million.

Todd HeidgerkenCRW Board members, concerned about the eight-year project exceeding its budget in the first phase of construction, unanimously voted last month to spend up to $20,000 for an independent examination of what went wrong. Backbone construction originally was supposed to run $40 million, but the first half of the projects, budgeted at about $23.3 million, are running at a projected $29.2 million.

CRW General Manager Todd Heidgerken said a consultant anticipates the examination of the 2016 bond fund to be completed by the end of April. The report being developed is being called an examination rather than a forensic audit because no criminal activity is suspected.

"One of the anticipated outcomes from the report is recommendations for improvements in how we report information to the board on capital projects," Heidgerken said.

Hamlet of Beavercreek Board Chair Tammy Stevens said three hamlet board members attended the recent CRW board meeting to address their concerns about the projects going over budget.

CRW serves a population of about 50,000 directly in the urban unincorporated area around the Clackamas Town Center and south to unincorporated areas around Oregon City. Another 30,000 people receive water through CRW wholesale. Officials say that CRW's neighboring water provider, Sunrise Water Authority (serving the Happy Valley area), should be able to purchase more water after the Backbone projects are completed.

"Some people feel this sort of thing happens, but others are furious," Stevens said. "They said they didn't have the contingency (budget) well enough (bolstered), but I think it's probably more that there were change orders that weren't necessarily necessary, and so there's a difference of opinion."

Heidgerken acknowledged that the changing plans and underestimates both were factors in the projects going over budget. He said some of the final designs of the projects had to be modified to address permitting requirements, update water-system demands or incorporate related work that wasn't included in the original scope. In addition, estimates developed in 2015 were used to determine how much to borrow in 2016 to do the projects.

"The 2015 costs were low, and we didn't update the costs to reflect inflation," Heidgerken said. "We also updated the projects once the designs were finalized."

Local residents and some CRW board members are concerned that the overspending will cause rate increases.

"It's not a good situation," Stevens said. "This impacts a lot of ratepayers from CRW, and they should be made well-aware, and I don't know that CRW's going to do that."

Heidgerken said CRW officials will propose a rate increase as part of an eight-year rate plan adopted in 2014. The base water fee for most residential customers is scheduled to go up in May from $49.76 to $52.62 every two months.

"We don't see the need to deviate from that rate plan," he said.

Heidgerken said it's fortunate that the district is in a good financial position and has sufficient reserve funds to complete the projects on time. He added the district is on track to complete the Phase 1 Backbone Projects by the end of the year or early next year, "which will be an improvement to our system and will greatly enhance provision of fire flows, system pumping efficiencies, and connect the CRW treatment plant and northern distribution system to a portion of our south service area" across the Carver Bridge.

For example, CRW's new 6-million-gallon 152nd Avenue reservoir is being constructed on 2.4 acres west of 152nd Avenue and Louise Lane, just north of Highway 212/224. The reservoir's circular prestressed tank was built in accordance with special engineering standards developed specifically for our earthquake-prone region. In its north service area, CRW expects the reservoir will create redundant storage to be able to inspect, maintain and repair its Mather Reservoir. Heidgerken emphasized that CRW advertised competitive bidding for contractors interested in any of the Backbone construction projects.

"It is important to note that the district is getting value for the work that is being performed," Heidgerken said. "Unfortunately, it costs more to deliver today what was planned than when the estimates were originally developed in 2015."

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