Judge rules City Council misspent $17 million in water and sewer funds

Multnomah County Circuit Court Judge Stephen Bushong rules city must repay water and sewer bureaus for spending not authorized by the City Charter

Multnomah County Circuit Court Judge Stephen Bushong has ordered the City Council to repay Portland's water and sewer bureaus more than $17 million for ratepayer funds spent on projects in violation of the City Charter.

Bushong issued his ruling Thursday, five years after lawyers representing ratepayers filed a lawsuit that charged the council had spent utility money on projects not authorized by the charter. Although Bushong ruled the majority of the challenged spending was justified, the amounts covered in Thursday's ruling are the vast majority of those still in contention at the end of the lengthy suit.

The largest amount was over $5.5 million spend on a reservoir project in Powell Butte not related to the reservoir itself. It included over $1.2 million spent on a visitors center.

Other notable expenditures include a little more than $2.5 million in pass-through funds for Portland Parks & Recreation, over $2 million spent renovating Dodge Park in Clackamas County, and nearly $1.3 million spent on the public toilets known as Portland Loos.

Bushong also awarded bureau overhead charges for the disputed projects and 4 percent interest.

The council will now decide whether to appear the ruling. The City Attorney's Office had argued the council has wide discretion to determine how ratepayer funds are spent. The ratepayer attorneys had said the spending must support the primary purposes of the bureaus. Bushong ruled early in the proceedings the spending must be "reasonably related" to the missions of the bureaus.

Ratepayer attorney John DiLorenzo charactered the ruling as "great news." He said the total would have been even higher if Bushong had adopted his stnadard.

The City Attorneys Office issued a statement that was more restrained:

"The City is extremely appreciative of the efforts of the court over the past five years. The court has given close and careful attention to the issues presented. We are gratified that the judge has upheld almost 90% of the expenditures at issue, including those relating to the Portland Harbor Superfund Site. There are also important questions raised in this case about the authority of the elected City Council to decide how best to operate the City's water and sewer systems. We are reviewing the judge's decision with our clients and will advise Council as to whether there are important legal issues that should be reviewed by the appellate courts."

DiLorenzo said if the city appeals the ruling, he will, too, arguing for the stricter primary purpose standard.

You can read the ruling here.