City throws in towel on 'rain tax,' offers rebates to houseboat owners
The city of Portland is abandoning a controversial utility billing method that houseboat owners decried as an effort to "tax the rain" falling on their rooftops and decks.
The Bureau of Environmental Services announced this week that it expects to exempt houseboat moorages from paying higher stormwater fees, and grant rebates for past overpayments. BES's proposal would eliminate $260,000 in annual stormwater fees assessed on floating home complexes, and require rebates of $580,000 for the past three to five years of payments.
As an alternative, BES will conduct a broad review of how it sets utility rates in the next two to three years, said Mike Jordan, agency director.
"We are gratified and we are jubilant that they came to the realization that this was not right, and they are willing to give us our money back," said Ron Schmidt, a Jantzen Beach houseboat owner who led protests against the stormwater billing change. He's president of Waterfront Organizations of Oregon, which represents about 1,000 households living in various houseboat communities.
Formal appeals of the higher fees by 18 houseboat moorages, which were put on hold after the controversy erupted, can proceed, Jordan said — though he hopes those are now moot.
"We hope that our interim and long-term approach to this will get them what they are looking for on appeal," he said.
At issue is how the city charges property owners for the city's network of pumps, pipes and other equipment that handles water draining onto city streets and ultimately into the Willamette and Columbia rivers. Roughly 40 percent of the average BES bill is to manage stormwater; the rest is for sanitary sewers. About a third of the stormwater fee is based on water falling on an individual property and draining into the streets. About two-thirds pays for citywide services.
The city now bases onsite and offsite stormwater fees on the square footage of "impervious surfaces" — rooftops, roads and other hard surfaces that don't absorb rainfall and cause it to flow onto city streets.
In 2015, the Vigor ship repair company and houseboat moorages noticed that BES changed its methodology for measuring those impervious surfaces, by adding docks over the water, decks, moorage walkways and the rooftops of houseboats. Houseboat owners said that was ridiculous because rain water simply falls into the nearby river where they are docked, not entering the city's vast system for handling storm water.
Most houseboat communities are exempted from paying an onsite stormwater fee for that reason, but adding to the square footage of their impervious surfaces caused the offsite portion of their fee to double, triple or quadruple.
Vigor appealed the new billing method to the BES Administrative Review Committee, which ruled in late 2017 that the agency lacked the authority to change the definition of impervious surface administratively, and Vigor won a rebate. Eighteen houseboat moorages then filed their own appeals.
In response, BES submitted its proposed new billing method to the City Council as an ordinance in January. Floating home owners mobilized to protest.
BES and two environmental lobbyists, along with Mayor Ted Wheeler, said houseboat owners were trying to get out of paying their fair share to maintain the citywide storm drainage system.
But after the outcry, Commissioner Nick Fish, who oversees BES, withdrew the ordinance, and the bureau conducted three "listening sessions" with houseboat residents.
A Portland Tribune analysis published Feb. 15 found widespread inequities in residential fees for offsite storm drainage, even though every resident benefits equally from protecting our streets and rivers from flooding.
The rate for single-family homes is ostensibly based on impervious surface at each house, but the city simply assumes every home has the same square footage and charges a uniform $18.60 a month. Schmidt finds it unfair that owners of West Hills mansions wind up paying the same as owners of modest East Portland bungalows.
By doubling, tripling or quadrupling the rates for floating homes, BES wound up charging roughly $16 to $26 a month for each households, in the same range or higher than the regular single-family rate.
But the biggest inequity is when it comes to those living in apartments and condos. A Portland Tribune review of utility bills found tenants in sprawling low-rise apartment complexes are billed at about $2 to $3 a month. Those in highrise apartments in condos pay less, about 61 cents to $1 a month, based on a sample of bills provided under a public records request.
The smaller rates for apartments and condo towers are because they have less space in parking garages, sidewalks and other impervious surfaces per person — though those residents benefit equally from the citywide storm drainage system.
Changes in the works
The controversy "has catalyzed a conversation about the equity of this situation," Jordan said. Changing city development patterns, including the construction of more highrise apartments and condos, has raised questions about whether the city's billing methods are equitable, he says.
Most cities around the country still use the impervious surface method to assess storm drainage fees, said Jonas Biery, BES business services manager.
But that dates back more than 20 years, when the new utility fees were devised by municipalities as a way to collect money for expensive storm drainage systems. If cities had instead charged the same amount per-capita, that could be deemed a tax and not a utility fee. Then it might be subject to Oregon's property tax limitations and more easily understood — and overturned — by voters.
Jordan said he didn't want to presuppose what billing methods the city will use after it hires consultants to help with the rate review, but promised the stormwater fee will be revisited.
Impervious surface area might remain as one of multiple factors, Biery suggested.
Another option is to borrow from what's used to assess transportation-related fees on development — measuring the impact each site has on the road system, since that's where rain water accumulates.
"We might look at trip generation as a possible way to allocate this off-site fee," Jordan said.
City leaders strongly agrees that everyone should pay for the storm drainage system, he said. The question is how to charge for it fairly.
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The Bureau of Environmental Services expects to present its new plan in the form of an ordinance to the City Council in September.
"I'm confident it will pass," said Mike Jordan, bureau director.