EPA loans $727M to Portland for water filtration plant
Federal funds will help Portland pay for a new water filtration plant, the U.S. Environmental Protection Agency announced Thursday, March 4.
The $727 million loan — the largest to date granted via the Water Infrastructure Finance and Innovation Act — will flow to the Portland Water Bureau's Bull Run Treatment Program, which will construct a water treatment plant and pipelines in Boring to remove cryptosporidium and other contaminants from the city's public drinking supply, as well as reduce corrosion of pipes and prevent lead poisoning.
Gov. Kate Brown said the 100-year vision for the water plant would "center equity" and address the impacts of climate change. "We must be forward thinking in our investments, knowing that our systems must be ready to withstand more severe weather events in the decades to come," Brown said.
Test drilling began in rural Clackamas County on March 1, though the plant is not expected to cross the finish line until 2027.
"This project and EPA's WIFIA loan illustrate how strategic partnerships can improve public health and help address the impacts of climate change, while creating jobs and saving ratepayers money," said Radhika Fox, the Biden administration's acting assistant administrator for water.
"These projects echo the wisdom of our city's founders who established Bull Run as our water source more than a century ago," said Portland City Commissioner Mingus Mapps, who oversees the water bureau. "We are safeguarding their legacy through long-term investment to protect public health and economic growth for the century ahead."
While Oregon leaders had long resisted creating a cryptosporidium cleansing facility, citing the quality of the area watershed that supplies water to nearly 1 million people, a string of positive test results for crypto prompted regulators to revoke the city's variance, forcing officials to begin planning for the facility in 2017.
Fears of rate increases to pay for the plant prompted the Gresham City Council to vote to turn off the tap and construct their own groundwater system last year, rather than continue using Portland's water system. That said, the massive project is expected to create some 4,700 construction and operator jobs.
U.S. Sen. Jeff Merkley spearheaded the Water Infrastructure Finance and Innovation Act, first proposing the legislation in 2012. It became a pilot program in 2014, and was solidified as a federal infrastructure program two years after that. Merkley continues to fight for funding for the program from his seat on the Senate Appropriations Committee, according to a spokesperson.
"No matter where they live, every Oregonian deserves to have clean water to drink, and a modern, up-to-date system to treat their water," Merkley said.
The city will be on the hook to repay the loan over 30 years, but not until five years after the project is completed, according to a spokeswoman for Water Bureau Director Gabriel Solmer. Officials say the favorable 1.89% interest rate on the loan will save Portland ratepayers some $247.5 million compared to typical market financing.
The city's most recent rate hike increased the monthly price for water by 6.5%.
The feds say their $727 million loan will cover almost half the total cost of the new plant, which has a current approved budget of $820 million in 2019 dollars.
The bureau chose to borrow for "other eligible costs," including a price contingency of under 30% to 50% over, plus bond reserves and financing costs, inflation and capitalized overhead.
"The EPA allows borrows to include all reasonable costs, such as contingency," said bureau spokeswoman Jaymee Cuti.
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