Portland is prepared to pay $10 million to settle a six-year lawsuit alleging city officials spent water customers' money on things that had nothing to do with providing clean water.

A judge ruled in January that the city had indeed broken the rules and spent millions of water and sewer ratepayer funds on parks programs and other non-water-related programs. The judge also ruled that much of the city spending that ratepayers had questioned was legitimate.

Water Bureau Commissioner Nick Fish and opposing attorney John DiLorenzo announced the proposed $10 million settlement Friday morning. The Portland City Council will consider approving the settlement Wednesday.

If the council votes yes, the city will repay the utility bureaus $7 million from its general fund of taxpayer money. It will pay DiLorenzo's law firm $3 million.

"I applaud Commissioner Fish, our city attorneys, and all parties for ending a years-long dispute by arriving at a fair settlement," Mayor Ted Wheeler said in a statement.

In 2011, Portland water and sewer ratepayers represented by DiLorenzo, a frequent city opponent, sued the city in Multnomah County Circuit Court claiming the city had violated its charter by spending ratepayer money on initiatives unrelated to providing water and sewer services.

The city charter says the fees water bureau customers pay are for water-related services.

Brought by Paige Craford, Millard Christner and Lloyd Anderson, the lawsuit made about three dozen allegations of utility misspending.

The court ruled in March 2014 that the city could only spend ratepayer funds on "matters that are reasonably related to the water and sewer services provided by the city."

Judge Stephen Bushong ruled in January that Portland was free to place a surcharge on sewer customers' bills that contributed $50.6 million to help fund a federally managed Superfund project to clean up pollutants in the Willamette River. The city was also OK to spend ratepayer money on nonprofit work to educate the public about stormwater management. But the city should not have used money collected from customers' water and sewer bills to pay for parks programs, he determined.

The court ruled against the city seven times, which meant the city could have paid roughly $13 million in damages.

"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," Fish said. "My top priority continues to be providing basic services at a fair price, and investing ratepayer dollars wisely."

DiLorenzo said in a statement that he thinks the settlement is fair for ratepayers.

"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, and will consider the spirit of Judge Bushong's rulings during the six-year course of this case," DiLorenzo said in a statement.

--Jessica Floum

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