Could selling the Portland Water House help stabilize rates?

For many people, the dream of inheriting a nice house remains as elusive as that rich relative they wish they had.

By contrast, the house Portland Commissioner Nick Fish inherited from former Commissioner Randy Leonard -- the much-maligned Water House -- has proved more nightmare than dream.

The Northeast Portland demonstration project, completed in 2011 during Leonard’s tenure as the commissioner who oversaw the Portland Water Bureau, was supposed to be a marvel of innovation and money-saving technology. "Water-friendly" features include a rain garden and eco-lawn, and floors made of wood reclaimed from a school gym.

However, the tinge of green most associated with the Water House isn’t the environmental angle, but the money it burned. Originally budgeted at $310,900, the project’s total costs with design, construction management and inspection staff time ballooned to nearly $950,000, according to Fish’s own tally.

In August, two months after Mayor Charlie Hales assigned Fish to oversee the Water Bureau, Fish directed the bureau to sell the house. The $475,000 asking price, Fish said, would at least cover the Water House’s "hard costs" of $456,287. (The asking price has since been reduced to $439,000.)

Then, in an article posted on the bureau’s website, he added this: "We are going to sell this house and use the proceeds to stabilize rates."

PolitiFact Oregon wondered whether that amount could help stabilize water rates that have, for a variety of reasons, climbed steadily in recent years. To find out, we contacted Fish’s office and quickly received an email from the commissioner.

Fish noted that it takes about a $1.3 million reduction in the bureau’s $480 million operating budget to get a 1 percent rate reduction for residential customers. So even if the bureau manages to find a buyer willing to plunk down the asking price, water rates would drop only by about one-third of 1 percent.

Currently, the average single-family residential bill for water service in Portland is $27.61 a month, according to rates contained in the current budget. (Note, residential sewage rates, included in the same bills, are typically more than twice that. Most residents also pay quarterly, though we’re using monthly costs for simplicity.) So the typical family would see a savings of about 9 cents a month from the Water House’s sale.

Further, Fish said, all proceeds from the sale will go into the bureau’s Rate Stabilization Account, a fund started in 2006 to smooth the effect of rate increases.

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Combined water and sewer rates have been driven higher in recent years by big-ticket projects, such as the $1.4 billion Big Pipe to keep sewer overflows from reaching the Willamette River, and work to comply with federal mandates to cover or replace the city’s open drinking-water reservoirs.

PolitiFact Oregon, appreciating that every 9 cents counts, dug a little deeper by calling Cecelia Huynh, the Water Bureau’s finance director. Asked how much the Water House’s sale would help ratepayers, she said, "Every dollar helps, but as far as a percentage, it’s not going to register. It is a one-time source of revenue."

Portland’s water rates, like those in cities across the region, have increased steadily in recent years. Unresolved questions of whether Bull Run water needs to be treated and how much it will cost to replace reservoirs could mean more increases in years to come.

The Water Bureau’s Rate Stabilization Account is intended to smooth out short-term rate spikes. Managers this year used about $5.8 million of the fund’s $20.6 million to stabilize monthly water bills that otherwise would have increased more than the 3.6 percent jump that took effect July 1, Huyhn said.

PolitiFact appreciates Fish’s making the best of the political haunted house he inherited from Leonard, but any effect the sale of the Water House will have on water rates is going to be a tiny drop in a very large bucket. Further, the fact that those proceeds will represent a one-time-only infusion blunts any effect even more. Money from the Water House’s sale will have no ability to stabilize water rates.

We find his statement False.