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City Council approved paying $10 million to end lengthy lawsuit over challenged water and sewer spending.

KOIN 6 NEWS - Commissioner Nick FishCalling it "the last chapter of the water wars," Commissioner Nick Fish praised the $10 million agreement approved by the City Council on Wednesday that settled a long running lawsuit that charged the council had illegally spent over $120 million in water and sewer ratepayer funds.

Although Multnomah County Circuit Court Judge Stephen Bushon had ruled most of the challenged spending, he determined that approximately $17 million had been spent on projects not "reasonably related" to the missions of the Portland Water Bureau and Bureau of Environmental Service — a standard he said the City Charter required early in the legal proceedings.

"By accepting this settlement, we're turning the page and moving forward," said Fish who is charge of both bureaus.

The largest amount ruled unauthorized by Bushong was over $5.5 million attributed to a reservoir project in Powell Butte not related to the reservoir itself. It included over $1.2 million spent on a visitors center. Other notable expenditures included a little more than $2.5 million in pass-through funds for Portland Parks & Recreation, over $2 million spent renovating Dodge Park in Clackamas County, and nearly $1.3 million spent on the public toilets known as Portland Loos.

Under the terms of the settlement, the council to repay the water fund $5.54 million and the sewer fund $1.46 million with general fund dollars by Sept. 30, 2019. The Davis Wright Tremaine law firm, which represented the ratepayer that brought the suit, will be paid $3 million by Dec. 29, 2017.

The city does not admit any wrongdoing in the settlement. Nor is it legally obligated to accept Bushong's "reasonably related" standard. Senior Deputy City Attorney Karen Moynahan told the council the city agrees with that portion of the ruling. However, she said said it disagrees with Bushong's additional determination that questions about what is reasonable should be decided by the courts.

Moynahan also said that if the city appeals the ruling, the Court of Appeals could impose the stricter "primary purpose" sought by the ratepayer lawyers and order the city to pay them and reimburse the bureauseven more.

"We continue to believe that City Council, not a judge, is best suited to make decisions about our utilities," Fish said.

Mayor Ted Wheeler praised Fish for working on the settlement, calling him a "man of integrity" the public can trust.

"When no one is happy with the settlement, I've come to the conclusion it is the lowest risk, lowest cost solution that gets this mess behind us," said Wheeler.

Commissioners Chloe Eudaly and Amanda Fritz agreed, with Eudaly saying, "Of course no one is thrilled with $3 million going to the law firm, but it could have been worse and the other $7 million will be reinvested in the city."

When explaining his vote, Fish told the council that when was assigned the water and environmental services bureaus four-and-a-half years ago, both were facing controversies. They included a a ballot measure created an independent water district, continued challenges to federal regulations that were threatening the city's our historic open reservoirs, and ongoing concerns about the use of ratepayer funds.

Since then, Fish said, significant progress has been made on all front. Among other things, the proposed water district was defeated by 72 percent of the vote, both bureaus have new directors, both the Mt. Tabor and Washington Park reservoirs have been taken off-line, a Portland Utility Board has been created to advise council on utility-related issues, and the council has approved building a filtration plant to remove Cryptosporidium from Bull Run water, as required by the U.S. Environmental Protection Agency.

"Although some may view this settlement as anticlimactic, the lawsuit has had a positive effect in refocusing City leadership on the core mission of the utilities," Fish said.

Most of the spending Bushong ruled was unauthorized took place in the early 2000s before ever council member except Commissioner Dan Saltzman was elected. Saltzman was absent during the hearing and vote.

You can read a previous Portland Tribune story on the issue at portlandtribune.com/pt/9-news/381509-269252-portland-settles-ratepayer-suit-for-10-million.


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