As Portland’s largest water users bankroll utility district campaign, opponents question who benefits

As Portland’s largest water users bankroll utility district campaign, opponents question who benefits
By Brad Schmidt
The Oregonian

March 28, 2014

The biggest user of water in Portland is also the largest financial backer of a May ballot measure to strip utility rate-setting responsibility from the Portland City Council.

Siltronic Corp., which makes silicon wafers in the shadow of the St. Johns Bridge, spent almost $2 million buying 446 million gallons of city water in the last fiscal year – more than the next four largest corporate users combined.

Siltronic also paid the city’s sixth-highest sewer bill, pushing its combined water and sewer tab to $3.4 million.

More than any other commercial or residential customer, Siltronic stands to benefit the most financially from changes to water rates simply because of the company’s staggering consumption.

Not coincidentally, the company has contributed $55,000 in campaign donations to a ballot measure that would end the City Council’s grasp over utility rates. If approved by voters May 20, the measure would create a Portland Public Water District with an elected, unpaid board of directors responsible for water, sewer and stormwater services.

A top company official said new oversight of the Portland Water Bureau and Bureau of Environmental Services should provide proportionate rate benefits to everyone, not just big users.

“We truly believe that everybody should benefit from this effort,” said Myron Burr, senior manager for environmental health safety at Siltronic.

Opponents counter that the proposal would give rate-setting responsibilities to a board of directors that easily could be swayed by corporate interests.

“It’s going to be far more susceptible to corporate influence,” warned Bob Sallinger, conservation director for the Audubon Society of Portland, which contributed $10,000 to the political campaign opposing the measure.

Big bills

Portland regularly lands in top 10 lists for food, young people and green living. But it also holds a less glamorous distinction: combined water and sewer bills here were seventh highest among big cities nationwide, according to a 2013 report by industry group Black & Veatch.

If the City Council approves requested increases this spring, the average Portland water and sewer customer will pay about $95 a month beginning July 1. That’s an increase of about $37, or 64 percent, from decade ago. City officials point to the Big Pipe, a $1.4 billion effort to limit sewer overflows into the Willamette River, as one driver of rate increases.

Proponents of the ballot measure say voters can’t afford to let the City Council continue making spending decisions.

Charlie Hales built part of his 2012 mayoral campaign around skyrocketing bills, pledging “lower water and sewer rates.” After Hales took office, bureau directors warned of major layoffs without annual hikes. Instead of lowering bills, Hales worked to keep rate increases as small as possible.

Proponents are now campaigning on the same prospect of smaller bills, although nothing in the measure requires the proposed board of directors to lower rates. Fans of the switch figure a new governing board will make better decisions, ending spending on projects that have nothing to do with water and sewer services and bringing a more skeptical eye to the big, expensive projects that drive much of the rate hikes.

“We can finally see some reforms and start to bring rates back down,” Kent Craford, a co-petitioner of the ballot measure, proclaimed in January after submitting paperwork to qualify for the election. Craford is the former lobbyist for large industrial water users and has played a key role in the lawsuit over improper utility spending.

Portlanders for Water Reform, the political committee backing Craford’s measure, has reported cash contributions of almost $175,000 through Thursday.

Three companies have contributed three-quarters of that money: Siltronic, Portland Bottling Company ($50,000) and Joe Weston’s American Property Management ($25,000). Other notable contributions: $10,000 from a company run by Walter Bowen, who develops senior housing; $10,000 from management and real estate ownership group Commerce Properties; and $5,000 from Hilton Worldwide, Inc.

Like Siltronic, many of the big contributors receive big utility bills.

Portland Bottling Company paid nearly $160,000 in the past fiscal year for water, putting it among the top 30 highest water bills and within the top 100 when sewer charges are added.

Tom Keenan, president of Portland Bottling Company, said city officials should prioritize basic pipe replacements and stop raising rates for projects he doesn’t think are needed, such as a $37 million project to replace the Water Bureau’s 85-year-old maintenance building.

“We think the rate increases need to stop,” he said.

American Property Management, with more than 150 commercial and multifamily residential accounts, paid almost $1.5 million in combined water and sewer charges. Weston also owns the warehouse that’s home to Portland Bottling Company.

The City Council has been prone to use ratepayer money as a “slush fund” for inappropriate projects such as the Portland Rose Festival Foundation headquarters, Weston said. The Water Bureau spent about $1.6 million renovating the city-owned building for the Rose Festival, but the City Council later used general fund money to reimburse costs in the face of the lawsuit.

Weston said he supports the May ballot measure because bill increases have been “astronomical.”

“Sure we’ll benefit,” Weston said. “But no more than the little guy that owns the house.”

Money and influence?

Opponents of the water district say its elected board could rewrite water and sewer bills, changing base charges or offering bulk discounts aimed at helping big customers.

“I would assume that they would get policy changed that would benefit them and wouldn’t benefit Portland families,” said Carol Butler, manager of the opposition campaign. Stop the Bull Run Takeover has reported $23,000 in cash contributions through Thursday, including $10,000 from city-employee union AFSCME Local 189.

Sallinger, of the Audubon Society, said voters would be unlikely to pay much attention to low-profile water district races. Campaign contributions of $10,000 to $40,000 could easily sway the outcome of who gets elected to the governing board, he said.

Craford scoffed at the notion that big business would disproportionately benefit from a new elected board, saying opponents are trying to create a bogeyman to distract from the fact that ratepayers have lost trust in the status quo.

Not only that, Craford said, but there would be no political support to benefit big businesses at the expense of residents.

“If money bought influence in Portland, Sho Dozono would be our mayor and Mary Nolan would be the city commissioner and we’d all be drinking water with fluoride in it,” Craford said. Dozono and Nolan ran failed campaigns for mayor and city commissioner despite sizable finances, and voters in 2013 rejected a big-money measure to add fluoride to Portland’s water supply.

Burr, the Siltronic official, said the company simply wants to see a new group of elected officials make water and sewer decisions – not throw money behind candidates who seek election to the board.

“We don’t have a long-term plan that involves financing campaigns,” Burr said.

Since 2007, Siltronic has contributed about $67,000 to political causes aside from the water district, none of that money directly to individual candidates. But about $42,000 of Siltronic’s donations went to a political action committee that frequently backs Republicans running for the Oregon Legislature.

Portland Commissioner Nick Fish said he met with leaders from Siltronic and Portland Bottling Company after Hales assigned him management of the water and sewer bureaus in 2013.

Fish described the Siltronic campus as a “ghost town” after the company downsized from about 1,000 employees to 400 in recent years.

“As we left, our conclusion was, ‘They’re not long for this place,’” Fish said, suggesting the company will eventually close its Portland operation in favor of investments elsewhere, such as Tennessee.

Fish speculates that large water users would like to hold rates down in the short run and help their bottom line. That could be done, he said, by postponing large construction projects, including a $56 million new water pipe beneath the Willamette River.

Fish, who has an inherent interest in maintaining oversight of his beleaguered bureaus, questioned the motivations of the businesses trying to relieve him of those duties.

“I think people should be primarily concerned,” he said, “that there’s only a handful of funders.”

Craford finds that thinking cynical.

“(The measure) benefits everybody,” he said. “It’s amazing that nobody can just do the right thing.”