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The funds were reimbursed $6.6 million by the end of September to satisfy the terms of the settlement

PMG FILE PHOTO - The Visitors Center at Powell Butte that a judge ruled was inappropriately built with water funds.

The city of Portland has reimbursed its water and sewer funds $6.6 million to settle a long-running lawsuit that alleged the City Council misspent ratepayer funds.

John DiLorenzo, one of the attorneys who represent the ratepayers who brought the lawsuit, said the City Attorney Office had notified him the water fund was reimbursed $5.141 million and the sewer fund was reimbursed just under $1.459 million by the end of September.

The funds were reimbursed with general fund dollars, which is the revenue source the council has the most control over.

The lawsuit argued that the City Charter requires ratepayer funds only to be spent on projects that fulfill the primary missions of the Portland Water Bureau and the Bureau of Environmental Services, which operates the sewer system. The suit originally accused the council of misspending tens of millions of dollars, with the largest amount being more than $50 million in sewer funds spent on the Portland Harbor Superfund cleanup.

In June 2017, Multnomah County Circuit Court Judge Stephen Bushong On June 22 of this year, Bushong ruled that approximately 90 percent of the challenged spending was legal. However, he ordered the council to repay the two bureaus more than $17 million for ratepayer funds spent on several projects in violation of the charter.

The most significant amount was more than $5.5 million spent on a reservoir project on Powell Butte not related to the reservoir itself. It included more than $1.2 million spent on a visitors center.

Bushong also ruled the city must eventually repay the sewer fund for any amounts spent to clean up pollution in the harbor related to other city agencies.

The city could have appealed Bushong's ruling but agreed to settle it in December 2017 for around $10 million. DiLorenzo's firm received $3 million for attorney fees.

After the suit was filed, the council reimbursed the water fund for $1.4 million spent on the Rose Festival Building and $950,000 spent to help purchase Centennial Mills for redevelopment.

"All in all, we are delighted we were able to recover almost $8.5 million directly for the benefit of the water and sewer funds," said DiLorenzo, who also represented an organization called Citizens for Water Accountability, Trust and Reform.

More recently, DiLorenzo and his firm filed a new lawsuit in Multnomah County Circuit Court challenging the legality of the council committing $12 million in sewer funds to a $24 million trust account with the State of Oregon to encourage other polluters in the harbor to develop cleanup plans. The city has moved to dismiss the suit. This case has also been assigned to Bushong.

You can read a previous Portland Tribune story on the first lawsuit here.


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