Salem to sell unused water right for $16.2 million

By Tracy Loew
Salem Statesman Journal

May 24, 2016

The city of Salem has agreed to sell part of its water rights on the Willamette River to the fast-growing city of Hillsboro.

If the deal goes through it will earn Salem $16.2 million, which will be used to improve the city’s water infrastructure.

“We don’t have any immediate need for it. We don’t have any long-term need for it. It’s a great way to turn it into cash,” Salem Public Works Director Peter Fernandez said about the water right. Salem doesn’t get its drinking water from the Willamette, instead pulling water from the North Santiam River.

But one conservation group says the deal is the latest in a series of municipal water grabs that eventually could endanger fish and river health.

“What’s happened is encouraging speculation in water in the Willamette Valley and across the state,” said John DeVoe, executive director of WaterWatch of Oregon. “These entitlements should not be permitted.”

Cities around Oregon are sitting on millions of gallons in old, unused water rights.

The state granted the claims when municipalities submitted plans to build treatment plants and use the water. They included deadlines for that to happen.

The claims aren’t permanent until the water actually is used. But the Oregon Water Resources Department has issued multiple extensions.

“The state is allowing these municipalities to hold onto very large undeveloped quantities of water,” DeVoe said.

Salem, for example, applied for its Willamette River claim in 1976, saying it would complete a pipeline by 1983 and use the whole amount by 1984. Its most recent extension required construction to be completed and the water being used by 1997.

In June 2015, the state approved a new request to extend those deadlines to Oct. 1, 2086.

Salem will retain that extension even if its deal with Hillsboro falls through.

A similar situation already has happened, DeVoe said.

Hillsboro previously had agreed to buy part of a water right owned by Adair Village, north of Corvallis. Because that agreement was in place, the state extended the water right to 2050. Then the deal fell through.

“Adair Village got the extension based on its representation that it would sell much of the water to Hillsboro,” DeVoe said. “Lo and behold, that’s not what ended up happening. Now Adair Village is sitting on a large water right. It’s out marketing the water.”

“There is absolutely no charge for this transfer of a public resource to these cities which then turn around and market the water and profit from it,” DeVoe said.

Salem’s water right is especially valuable because of its age, Hillsboro spokeswoman Tacy Steele said.

Older water rights have looser conditions related to curtailments during low-flow periods, she said. Curtailment provisions are in place to protect fish.

Legislation passed in 2005 aimed to ensure that municipal water right renewals were evaluated on current regulations protecting streams and fish, not those in place when the claim was made.

But cities challenged the law, claiming it applied to water not used by the first extension. That meant they could avoid fish protections by delaying their extension requests until after they had put the water to use.

A 2013 court case clarified that was not the intent of the law, but some cities already had taken advantage of the loophole.

In 2015, the cities backed a bill that would have exempted any water used before Dec. 11, 2013, from a review to protect fish.

The bill, SB 712, died in committee.

Salem currently draws water from the North Santiam River, where it holds rights for a total of 239 cubic feet per second.

Those rights were purchased in the 1930s from the predecessor to Boise Cascade, Fernandez said.

City officials estimate the North Santiam River rights will meet Salem’s water needs for the next 100 years or more.

Salem’s Willamette River right allows it to divert 200 cubic feet per second of surface water.

It has agreed to sell Hillsboro 56 cubic feet per second, and to give the city first right of refusal on an additional 44 cubic feet per second, at a price to be determined.

Hillsboro will pay Salem over five years, plus 2 percent interest on the outstanding balance.

The deal will only go through if the Water Resources Department approves the transfer and a water management and conservation plan, as well as a change in location where the water is taken from the river, from Salem at the Marion Street Bridge to a spot near the Wilsonville railroad bridge.

Hillsboro has partners in a water intake on the Willamette River at Wilsonville. It will need to build a new treatment plant, more than 30 miles of transmission lines, and two reservoirs or storage tanks, Steele said.

Hillsboro has until April 2017 to gain those approvals.

Willamette water rights

Here are the municipalities with surface water rights on the Willamette River (not including tributaries)

City of Lowell
Eugene Water and Electric Board
City of Harrisburg
City of Millersburg
City of Corvallis
City of Adair Village
City of Independence
City of Monmouth
Polk County
City of Salem
City of McMinnville
City of Dundee
Yamhill Regional Water Authority
North Clackamas County Water Commission
Willamette River Water Coalition
City of Wilsonville
Canby Utility Board
City of Beaverton
City of Lake Oswego
City of Portland
Port of Portland