City of Portland Reaches $10 Million Settlement on Long-Running Litigation Over Water Bureau Spending

Lawsuit challenged the use of ratepayer dollars for general city expenditures.

Mount Hood and the Bull Run Watershed (Aaron Mesh)

Today marks the end of Portland's water war.

The city of Portland and John DiLorenzo, a lawyer representing water and sewer ratepayers, today announced the $10 million settlement of a long-running lawsuit against the city.

In 2011, ratepayers, led by the late Lloyd Anderson, a former city commissioner, sued the city, alleging officials had inappropriately used dedicated water and sewer funds for a variety expenditures, including the construction of parks and assistance to the city of New Orleans after Hurricane Katrina, that should have been paid for from the city's general fund.

The underlying issue was the segregation of city funds: water and sewer customers pay directly to the city for services provided by the Water Bureau and Bureau of Environmental Services. Those ratepayer dollars are legally dedicated to the operations of those bureaus. The city's general operations, such as providing police, fire and parks to city residents are paid for by the city's general fund, which comes from property and various business taxes.

The city and ratepayers battled in court between 2012 and 2016 over a long list of expenditures that ratepayers challenged. The peak of that battle came in May 2014, when the ratepayer group put a measure on the ballot that would have created an independent water district, effectively taking that function away from the city. The measure failed by nearly a three-to-one margin.

"I'm pleased that the Court upheld the vast majority of the City's investments – including on the Portland Harbor Superfund site – and that this settlement brings an end to years of expensive litigation," said Nick Fish, the city commissioner who oversees the Water Bureau and BES. "My top priority continues to be providing basic services at a fair price, and investing ratepayer dollars wisely."

DiLorenzo, whose firm will receive $3 million of the $10 million settlement for legal fees, also cheered the resolution of the case.

"This settlement is fair for the ratepayers," DiLorenzo said. "It brings to a conclusion a 6-year effort to protect dedicated ratepayer funds.  I thank Mayor Wheeler and Commissioner Fish for their good faith and take this as a sign that future city councils will be circumspect when they approve expenditures from those dedicated funds."

City Council will formally vote on the settlement on Dec. 20.

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