Citizen group plans to fund rate analysis

The Lake Oswego City Council on Friday voted against hiring a forensic auditor to analyze water projects and rates, but it might receive the review anyway at a council meeting on Tuesday.

City Councilor Karen Bowerman said she hoped the council would discuss an independently funded analysis by Tiffany Couch of Vancouver, Wash.-based Acuity Group at an upcoming meeting.

“In an enormous project of this magnitude, it is not unusual at this point in the project to have a check,” Bowerman said. “What the audit does is say where the rate structure goes from here for citizens. It’s not suggesting there is anything incorrect about the percentage or increase. It’s just auditing — what does that mean to our ratepayers in dollars and cents?”

After the Friday meeting, Bowerman said she didn’t have anyone in mind to pay for the study, estimated to cost $4,500 to $5,000 for about 25 hours of work.

“I don’t have the funds,” she said. However, she added: “There are people here that care today. We’ll see.”

The council voted 4-3 against hiring Couch, approached for the job by Bowerman.

Councilors Jeff Gudman, Jon Gustafson, Donna Jordan and Skip O'Neill were against paying for the analysis. Bowerman, Mayor Kent Studebaker and Council President Mike Kehoe were in favor.

About a dozen citizens attended the special meeting, scheduled a day earlier to consider hiring Couch to look at water rates and water project costs.

Earlier in the week, the council voted to delay approving conditions attached to permits and contracts needed to start building Lake Oswego-Tigard Water Partnership projects. At the Feb. 19 meeting, the council also directed city staff to investigate the feasibility of hiring someone to conduct some sort of cost-benefit analysis.

Project costs have ballooned over the past two years.

Residents in Lake Oswego and Tigard have watched their water rates rise as a result, and additional fee increases are anticipated in the future.

The latest figure is about $250 million, a cost shared by the two cities, with Tigard shouldering a slightly bigger burden. The partnership plans to double the amount of water drawn from the Clackamas River, replace an existing river intake facility in Gladstone, replace the water treatment plant in West Linn, build a new water reservoir in Lake Oswego and expand a Tigard pump station, in addition to installing bigger pipes. The goal is to have the new system online by July 2016.

The partnership has spent about $40 million so far, Project Director Joel Komarek said.

On Friday, council members had different ideas about what sort of analysis they want and how they might use it.

Studebaker said he "would like a little information sometime prior" to voting on contracts in the coming weeks.

But O’Neill, participating in the meeting by phone, said he didn’t understand what Bowerman’s proposed analysis would produce.

“What are we going to do with the results she gives us?” he asked. “Is she going to tell us our rates are too high or our rates are too low?”

O’Neill said he didn’t think finding rates were too high or low would affect water partnership projects.

Gustafson said he also wasn’t sure a report generated in a short period of time for a relatively small amount of money would hold much value for a project of such magnitude.

“I don’t think it could provide the type of information that should make the decision for us,” he said.

Gudman said he wanted to look at much more than the water rate structure, and he felt a more comprehensive analysis was necessary but should be subject to approval by both the Lake Oswego and Tigard city councils.

“I have skepticism as to what can be provided for 25 hours of work to review a very detailed, complex project,” Gudman said, noting he also wanted to ensure the council followed public contracting laws. “What we’re doing has value, but we’re doing it a bit on the fly.”

Gudman urged the council to avoid “nibbling around the edges” to determine whether rate projections are accurate based on the latest cost estimates and instead focus on the broader picture.

“The core issue is, is this the right project for our city? Is the partnership the right project for our city?” he said. “I think it’s more important to assure our citizens this is or is not the right project.”

Jordan, also participating by phone, said she supported Gudman’s plan “to scope out what we’re looking for, to make sure we are monitoring this project and we are on target and we are doing what we say we’re doing, which is to deliver an effective, efficient system that is not going to overburden our ratepayers.”

Kehoe wanted more analysis before voting on contracts March 5.

“I realize we get chastised for spending money on consultants. … But it’s a pretty darn small amount of money,” he said. “Without something like this, I’d have a hard time supporting the contracts coming before us in two weeks.”

Couch, the auditor, did not attend the meeting but said by phone afterward that it’s not unusual for private citizens to hire her on their behalf for government-type work. That was the case with reviews she did of the Columbia River Crossing Project and in the city of Rockaway Beach.

According to Acuity Group’s website, Couch has more than 14 years of experience in accounting, has conducted numerous financial investigations and has worked with local, state and federal officials in several embezzlement cases. She’s a nationally recognized speaker about fraud and forensic accounting and was honored in 2007 as one of Clark County, Wash.’s “Accomplished and Under 40” individuals, according to the website.

On Friday, she stressed that she would not have been conducting an “audit,” an accounting term, but rather had planned to conduct a cost-benefit analysis of the city’s water partnership.

That meant she would “look at the water rates everybody has paid to date and understand where the money, where those rate increases, were spent, and then look at future projections for ratepayers and determine whether the rates being discussed would be sufficient to pay for the water services as well as the debt service on the project.”

Couch said she couldn’t comment on whether she had any impression of the water partnership’s spending to date, but noted she appreciated the council voted on whether to hire her. The city manager could have initiated the contract without a council vote.

“I commend them on holding a meeting and having a discussion and keeping it out in the open,” Couch said. “I think that’s a fantastic way to conduct business.”

Meanwhile, city staff members are continuing to explore the possibility of hiring a consultant to conduct a comprehensive cost-benefit analysis of the water projects, and the council will consider related contracts and permits at its meeting next week.

Citizen group plans to fund rate analysis

A group of Lake Oswego residents has rallied together to pay for an analysis of the city’s water rates and planned projects.

Jim Bolland said Monday he wasn’t prepared to share the names of everyone involved in the effort because they came together “on the fly” as the group scrambled to fund the study after the city council declined to commission it.

“We feel it’s important enough to have this kind of review to protect the ratepayers and for the council to do their due dilligence. Nobody has audited the calculations” supporting water rate increases, at least not for a long time, he said. “The council ought to know what they’re proposing to charge will pay for the full cost of the project.”

The council approves utility rates each year. Near the end of 2011 it reviewed funding scenarios and schedules of rate increases, including for 2012, but the council has not yet approved utility rates that will take effect this year.

A press release identified Gerry Good as the citizen group’s leader and said it hired Tiffany Couch to conduct the financial review.

The group plans to present the water rate study to the city council Tuesday evening and has tentatively scheduled a public unveiling of the information immediately before the meeting, which begins at 6:30 p.m. Tuesday at city hall.

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