Majority of Citizens Oppose Proposed 41% Rate Hikes, But Voters Approve Borrowing
PORTLAND, OR (PORTLAND GRANDSTAND) – Oregon City commissioners have given preliminary approval to a plan by city staff to borrow money from the federal government after voters rejected an increase in their base water rates in november.
Voters rejected raising water rates by potentially more than 41% after six years, after the city asked for up to 6% compound annual increases.
A separate measure in the November ballot, allowing the city to borrow up to $38 million to replace pipes and tanks, won 52% approval. Permission from voters to borrow money was necessary to allow the city to apply for low-interest federal and state loans.
Following the election, city officials were informed that their letter of interest for funding the EPA’s Water Infrastructure Funding and Innovation Act, submitted in July 2021, had been accepted and they were invited to apply for the WIFIA loan. This program provides long-term, low-interest loans for eligible water infrastructure projects.
The minimum WIFIA project package size is $20 million, with 49% of the project eligible for a WIFIA loan, with the remaining balance paid as matching funds by Oregon City. Up to 80% of the project may receive federal funding in the form of loans and grants.
Without the federal loan, city officials said Oregon City’s water rights through the South Fork Water Board could be threatened by Clackamas River Water. South Fork and CRW are currently seeking an intergovernmental agreement for interim water supply via a main water meter for the Thimble Creek concept plan until the city completes its water system improvements in the area of Oregon City on the outskirts of the urban growth boundary.
“One of our concerns has always been the protection of our water rights,” said Commissioner Frank O’Donnell.
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In its current biennial budget, Oregon City has allocated $5.6 million in American Rescue Plan Act funds for water system improvement projects, which are expected to be used within the required 51% in the city matching funds for federal loans.
Commissioner Adam Marl, along with other commissioners, said he is concerned the city is being prepared for development, while taking care of rusted and crumbling pipes affecting current residents.
“I never want to sacrifice the well-being of our existing community to provide a high level of service for a new development. I won’t,” O’Donnell said.
Patty Nelson, OC’s senior special projects engineer, said the approach was for “citywide equity” with “projects that best serve the community.” She said much of the funding would go towards undersized pipes in danger of bursting, as well as replacing reservoirs that serve everyone. The transmission pipes running down Molalla Avenue will be another major target of the total estimated $24 million in water system project costs, to allow enough water to reach the top of the hill in OC .
“We know we have issues, especially in the summer, meeting the peak demand in the upper area,” Nelson said. “You’re going to want to size it appropriately for growth.”
Oregon City projects will be required to be completed within the 3% annual rate limit by borrowing money through the WIFIA loan program and using ARPA funds. Oregon City’s Department of Finance completed a preliminary analysis that confirmed the city’s ability to provide matching funds using ARPA dollars, water rates, and system development fees, as well as support future debt payments upon project completion.
November election results showed 69% of voters against Oregon City’s plan to use water rate hikes to speed the replacement of century-old water pipes and the construction of two more reservoirs. Oregon City’s charter allows for 3% annual increases in water rates, but officials have sought voter approval for higher annual increases.
No one filed an argument for either measure in the official voter pamphlet provided to citizens of Oregon City as they considered raising water rates over the next few months. years. Two statements appeared in the voters’ brochure against the water rate measure, from former mayor John Williams and OC Chamber of Commerce CEO Victoria Meinig.
The elected officials of Oregon City reluctantly returned the measure to voters, saying recent ice storms and wildfires have raised alarm bells that residents approve rate increases now or find themselves in far more costly and dangerous situations.