City utility charges: Separate but unequal

PORTLAND, Ore. (Portland Tribune) -- Portland city officials — faced with criticism they're trying to "tax the rain" falling on houseboat roofs — have withdrawn the controversial ordinance.

But the saga highlighted a dirty little secret about a little-understood component of every Portlander's water and sewer bill: the city's off-site stormwater drainage fee is not equitable or based on services rendered for their properties.

When the ordinance came up for a City Council hearing Jan. 10, houseboat owners were criticized by environmentalists and Mayor Ted Wheeler for not wanting to pay their fair share for off-site storm drainage — the city-wide system for managing rainfall that winds up on city streets and then into our rivers, picking up pollutants along the way. By adding houseboat rooftops to the "impervious surface" used to calculate storm drainage utility fees, the city Bureau of Environmental Services devised a way to bring houseboat bills into rough parity with what single-family homes pay. The bureau operates the city sewer and storm drainage system.

The Portland Tribune is a media partner with KOIN 6 News

Commissioner Nick Fish, who oversees the bureau, said BES merely "aims to develop rates that treat all customers fairly."

Later, the bureau sent the Tribune a requested "correction" to its web story on the Jan. 10 hearing with this language: "The city bases most of its stormwater charges, as do other cities, on the premise that all property owners should pay to address impacts on public spaces, such as preventing street flooding and protecting waterways from pollution."

But a Tribune analysis of off-site storm drainage rates confirms what houseboat owners contended — the rates are unfair, and they were being singled out.

If the city were truly equitable, it would charge all Portland residents equally for city-wide services for which they all derive the same benefits. But that could drive up some peoples' city utility rates — especially those living in apartments and condos — or perhaps cause others' bills to be reduced.

Unequal fees

Portland homeowners are billed $18.60 a month or $55.80 quarterly for off-site storm drainage on their sewer and water bills. The BES says that's based on the square footage of "impervious" surfaces at each house, things such as sidewalks and driveways that collect rain that winds up on city streets. But for efficiency's sake, the city assumes each home has the same impervious surface, resulting in a flat rate per household. 

"A big, wealthy west-side mansion pays the same stormwater fee, even if it's six times, 10 times larger, than the 600-foot, 1920s bungalow on the east side," says Ron Schmidt, a floating-home owner who has led the opposition to what he calls the "rain tax."

Using satellite data, the BES added houseboat roofs to their impervious surface area in 2015, boosting their bills accordingly. For floating home complexes, apartments and condo buildings, the impervious surface area is used to set the storm drainage fee. Thirty-five percent of the fee is supposed to pay for handling on-site storm water drainage, and 65 percent goes to pay for city-wide off-site facilities.

Floating home complexes, like some homeowners who disconnect downspouts and make other home improvements, qualify for a full exemption of the on-site fee, because the rain simply falls from their roofs into the nearby lawns or river. But the higher impervious surface jacked up the 65 percent share of houseboat owners' bills covering off-site storm drainage. That pays for city-wide services that have nothing to do with storm water coming from their properties.

When it appeared last year that the BES move to add houseboat rooftops as impervious surfaces would be overturned by a utility appeals board, the city moved quickly to put its new billing method into an ordinance.

"I think it is a cash grab, for no services," said attorney John DiLorenzo, who won a $10 million settlement from the city in December in a long-running lawsuit charging the sewer and water bureaus were spending ratepayer money for unrelated services.

"What's next?" DiLorenzo said. "Should we be paying BES for the rain that hits the roof of our cars?"


 
Sweet deal for tenants, condo owners

The new methodology boosted monthly bills for floating homes in the Macadam Bay complex in Johns Landing from about $6.50 a month to $17 a month, close to the single-family rate, based on data provided by the moorage treasurer, Sam Galbreath. Other floating home residents told city commissioners their new rates were about $25 a month, more than the single-family rate.

Apartment tenants and condo owners get a much better deal, because their impervious surfaces are shared by more residents.


A review of utility bills provided by a manager of three mid-sized apartment buildings in the Lloyd District, inner Southeast and Southwest Portland showed they pay roughly $2.75 per household each month for off-site storm drainage fees.

A sampling of additional apartment bills, released by the BES under a public records request, showed that high-rise apartments — which have big parking garages — have lower bills than garden-style apartments, with their sprawling parking lots.

Wimbledon Square, a 599-unit garden-style complex near Reed College, pays the equivalent of $2.05 per unit per month for off-site storm drainage.

The Broadway, a 383-unit high-rise near Portland State University, pays the equivalent of 61 cents per month per unit. Single-family households pay 30 times that amount as their share for supporting the same city-wide services.

Those figures didn't surprise Galbreath, the former housing director for the Portland Development Commission.

"The taller and more dense the high-rise, the more inequity their share of these off-site fees are going to be," he said. "If there's nothing we hear over and over again it's that we are a city in search of equity."

City backpedaling

City officials have been rethinking the issue since the stormy Jan. 10 council hearing and resulting media coverage. A second hearing was canceled and the BES is now staging what it calls "listening sessions" with floating home owners.

Commissioner Fish declined an interview request and will provide no public statements on the matter, said Todd Lofgren, his senior policy director and liaison to city utilities.

"We've withdrawn the ordinance altogether so it's not on the council docket at all at this point," Lofgren said.

Fish asked BES director Mike Jordan to take the public lead on this issue, Lofgren said.

BES revisiting rates

Jordan, in an interview, declined to say whether the BES billing for stormwater drainage is equitable or not, but conceded that the city's longstanding policy of basing the fee on impervious surfaces may be outdated, given the increased number of residential high-rises in Portland.

"The city's been trying to figure out over the years how to equitably allocate these costs," Jordan said.

After a lengthy review, the City Council ruled in 2000 that the storm drainage fees could be split, with 35 percent based on on-site impacts of storm water, and 65 percent paying for the off-site, citywide system.

But the BES recently started work on a 10-year strategic plan, and will revisit how it bills for those and other services, he said.

"One of the things we will look at is, is impervious surface still an equitable methodology for assessing these costs."

"There are other ways to calculate that," Jordan added. "They each have pluses and minuses."

Galbreath said he understands cities need to raise revenue for important services. But he suggests a per-capita fee, where every resident pays the same for citywide services, would be fairer.

But that could set off legal alarms, as utility fees are supposed to based on services rendered. If everyone pays the same, that could be ruled a tax, which could be more easily contested.

"The issue here," Jordan said, "is that we need to have a rational basis for charging an individual for the services they get from the city, based on the benefit."

Schmidt also likes the idea of a standard fee for each household, though he's wary of the city using the equity argument merely "to get more money."

The city's billing system for storm water management is broken, Schmidt argues. "I would be a proponent of a rebuild from the ground up."

Unequal utility charge

Here's the monthly fees the city levies on residential properties for off-site storm water management, per dwelling.

Single-family homes

$18.60 a month uniform rate

Houseboats

Under new rates imposed in 2015 and now under appeal, roughly $16 to $26 a month

Apartments, condos

• $7.75 for every 1,000 square feet of impervious surface.

• For medium-sized and garden-style apartments, that equals roughly $2 to $3 a month per unit.

• For highrises, that equals roughly 61 cents to $1 a month.

Sources: Reports by floating home residents and moorage managers; a sampling of apartment utility bills provided by a Portland apartment owner; and utility payments released via a public records request to the Bureau of Environmental Services.

Reach Steve Law at 971-204-7866, stevelaw@portlandtribune.com, or twitter.com/SteveLawTrib


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