Lawsuit claims city misspent water and sewer fees, demands repayment

PORTLAND, Ore. -- A lawsuit claiming the city of Portland owes customers water bill refunds will take a major step forward in the next two weeks.

The lawsuit was filed by a group of activists, water bureau customers and former city officials. It argues utility fees earmarked under the city charter for water and sewer-related projects were misspent on a list of three dozen specific costs.

The Multnomah County circuit court judge overseeing the case heard arguments Wednesday about four of the specific water bureau expenditures questioned in the complaint. The decision will clarify for both sides how the judge will interpret city law moving forward.

According to court documents, the expenditures in question include the Portland Loo project, costs associated with the construction of the downtown transit mall and public financing of political campaigns.

The attorney representing the plaintiffs said his clients believe the city spending outlined in the lawsuit amounts to using “slush funds to pay for almost anything the city council wanted to pay for.”

The lawsuit demands the city pay back its ratepayers and undergo a review conducted by a court-appointed independent auditor.

“We believe letting the city council make those decisions without any court supervision is like letting the fox guard the hen house,” said John DiLorenzo, the attorney representing the plaintiffs.

City Attorney Tracy Reeve said Wednesday that determining whether water and sewer funds were spent appropriately is up to the city council, not to the courts.

“Our main argument is that the Portland City Charter – which is essentially the constitution for the City of Portland – gives broad discretion to the Portland City Council,” Reeve said.

She said water and sewer systems can be defined narrowly or loosely and that choice is in the hands of Portland city commissioners.

“Elected representatives are the ones tasked with deciding how to operate those systems,” Reeve said. “People’s recourse if they don’t like the way the water and sewer systems are being managed is at the ballot box.”