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Down the Drain?: Critics say Bend's multimillion dollar water system upgrade is a boondoggle in the making 

Bend's prize winning water may be feeling the heat.

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Bend water is famous.

It has won awards for its clarity and flavor. It makes amazing beer. It tastes great straight from the tap. It's so good we've never had to filter it. And perhaps best of all, it's cheap, flowing from Bridge Creek to Bend on a century-old pipe. But now the Environmental Protection Agency says it is not clean enough.

By October of 2014, if we do not begin filtering the drinking water we get from picturesque Bridge Creek that empties into Tumalo Creek just below the falls, the city must start sending "boil your water" notices and possibly paying costly fines.

Responding to this EPA mandate, and dealing with a few other issues such as leaky old pipes and the potential for a forest fire in the watershed, has been the subject of three years of study for city officials. But the answer they've come up with - a $68.2 million plan to install a new pipe to carry the water to a hydropower plant connected to a high-end membrane filtration facility - is not turning out to be the popular project for which they'd hoped.

Last week, two Oregon conservation groups that oppose the project filed formal objections with a federal agency that regulates permitting of hydropower plants. And they promise more legal challenges are on the way.

The number of Bendites opposing the project is also growing. This group of critics includes Old Mill Developer Bill Smith, attorney and land-use watchdog Paul Dewey, former Deschutes River Conservancy Director Bruce Aylward and Jack Holt, a prominent businessman and former Bend Chamber of Commerce president. It's a startling combination of people who rarely agree.

"This group of people - we don't trade Christmas cards," said Smith. "Just that alone should say the city is making a mess somewhere."

It's a project that, because of the big names and massive price tag, is under the microscope. And whether it's fair or not, the current city council's decisions and leadership on this project is being viewed through the eyes of a skeptical public that's watched the city make big gambles that haven't always paid off.

History aside, opponents say that the project is too big, too expensive, bad for Tumalo Creek and is out of step with a peak water demand rate that has actually fallen an average of 9 percent each year for the last three years.

If the project goes ahead as planned, water rates are set to rise 40 percent in five years. That's on top of average increases of 7.8 percent from the past three years, also due largely to this project.

If the city must pay to defend the project in court, legal fees will be tacked on to ratepayers' bills. And should the project be derailed, as opponents are hoping, the city will have to go back to the drawing board, possibly forfeiting the $15 million or so already spent on study, design and materials for this current plan.

"I think there is a chance that this surface water project could become a big problem," said City Councilor Jim Clinton, who has voted down the project consistently.

City officials argue just the opposite, saying one day this project will provide people on Bend city water with the cheapest rates in the state, that the project is environmentally positive in many ways and water demand will rise again once the economy stabilizes.

"We made the more expensive decision, but we made the right decision," said City Councilor Mark Capell.

"Thirty years from now people are going to be saying, 'Now that was a good deal."

Capell points to the Medford Water Commission, which in 1925 was able to win the approval of the city's 10,000 citizens to sell $975,000 in bonds for the construction of a huge water-piping project. According to the commission's website, the project piped spring water over 75 mountain summits to Medford.

That city, which is similar in population to Bend, now has the second lowest water rates in the state, according to a rate comparison done by the city's finance department. That's going to be Bend, Capell said.


Opponents of the project said they are baffled by the way the city has handled this huge infrastructure project.

The biggest issues for this wide-ranging group of critics are the price tag of the project, the limited public input, and that potential alternatives, which could put more water back into Tumalo Creek, were not fully and accurately vetted.

The backdrop to these concerns is what critics see as a larger issue of the city making big decisions quickly. Taken together, these high-profile cases have cost taxpayers tens of millions of dollars, critics said.

"This is a pattern of the city," said Paul Dewey, executive director of Central Oregon Landwatch, which filed objections to the project with a federal regulatory agency last week. "They make all these rash decisions and then they just hunker down."

Dewey has a history of crossing swords with city brass - and winning, or at least stalemating. His Central Oregon Landwatch challenged another ambitious public works and planning project, the Bend urban growth boundary expansion, forcing the city to rework several aspects of the plan, which his group contended was a blueprint for sprawl.

From the beginning of this surface water project, critics say there have been major questions that the city hasn't answered.

One of the biggest puzzles, to some opponents, is the first study conducted by consultants for the city, which was completed in 2009. This study looked at lots of options the city could pursue in light of the new EPA regulation. That included the current option and two other important ones to opponents: using only groundwater from wells, and changing the point of water diversion from Bridge Creek to Tumalo Creek, 11 miles downstream near the new filtration plant. That different point of diversion option is often referred to as the "short pipe" option and would not include a hydropower plant.

A review of HDR's study shows the consultant relied on a risk-factor analysis to support the current proposal, in part by assuming that the city council would support it over other options such as using wells only and the "short pipe" option. But even with the dice loaded, the groundwater only and the "short pipe" options were less risky both from a financial and engineering perspective, the city's own study shows.

Then in the summer of 2010, the city learned that an estimated $25 million in subsidies and incentives for hydropower were no longer on the table. So, city leaders asked their design company on the current project, HDR, to study whether the plan was still a better option than groundwater from wells only. However, the city did not look again at the "short pipe" option. HDR concluded that over the next 50 years the current project was still the best option over groundwater only - by more than $400 million dollars. For city councilors it was a slamdunk. To critics it was a slap in the face.

"It was ridiculous," said Aylward, of the city hiring its own design firm to confirm that the project they were designing was the best one. "Total conflict of interest. Wouldn't pass any standard."

So, Aylward, whose specialty is economics issues related to water, did his own analysis of groundwater only versus the current project using what he said were more accurate assumptions about the cost of electricity to pump the wells, water demand, the value of leaving water in the creek and cheaper well locations. He concluded that going to all groundwater from wells was around $50 million cheaper than this current project.

He and other opponents said their efforts to engage the city council with his study were rebuffed.

"At this point they can't admit a mistake," Aylward said.

City Councilor Clinton wants to retain both surface water and groundwater, but objects to this current project. He said city leaders got the hydropower project in their heads early and they haven't changed course as new information has come to light.

"They didn't do a real analysis of the alternatives," said Clinton, in large part because of the time crunch to meet the EPA deadline. "As the opponents of the project have ramped up their pressure, the city has gotten a bit defensive. If anything, they also have hardened up their position," Clinton added.

"They need to listen to other minds in the community," said Bill Buchanan, a key leader of the opposition and an attorney who represented Jan Ward, the former owner of Juniper Utility, which was condemned in 2002 by the city over issues of water pressure and poor infrastructure. After a lengthy legal battle, courts ruled that the city of Bend ultimately owed more than $10 million to Ward. Two city councilors said they have a hard time respecting Buchanan's concerns because of his past conflict with the city.

But the opposition is not just Buchanan. And opposition leaders want to make sure the city council gives ratepayers and other stakeholders a chance to fully participate in a debate about whether this is the right project, especially considering this economic climate.

"They just need to stop," said Bill Smith. "Just put this thing on hold."

The opposition has created a petition that asks the city to stop the project right now and learn more about potential issues with the project. Buchanan said more than 500 community members, including three former city councilors, three former mayors and a number of other key players in the city's political and environmental scene, have signed.


Despite the criticism, city officials said they are making a fiscally and environmentally and economically responsible decision.

The project will generate hydropower, which the city will sell to offset its carbon footprint. The project also prevents the city from having to rely solely on wells, which are powered mostly by electricity from fossil fuels. The new pipe will also open and close depending on Bend's actual water demands, versus the old pipes that take water at a constant rate from Bridge Creek - no matter the demand. That means that at many times of the year, this new project will actually allow more water to flow out of Bridge Creek into Tumalo Creek and on to the Middle Deschutes, said Tom Hickmann, city engineer and assistant public works director.

This project is also the least risky way to keep roughly half of Bend's drinking water supply secure, said city officials. Other options involve unknowns like whether the city could get its water rights transferred downstream or into groundwater mitigation credits. That could take years. In fact, it took the city of Bend 16 years to get its last groundwater rights, said Patrick Griffiths, the water resources coordinator for the city of Bend.

Even if the city were to go another route, there's a basic infrastructure issue - at least in the short term. According to city officials, the city cannot reliably produce enough water from wells alone to meet domestic demand, including irrigation, and still be able to provide water to fight fires at homes and businesses around town. And if there is an emergency and the power goes out, the city has the gravity-fed Bridge Creek resource.

"When everything goes south and the power goes out," said Heidi Lansdowne, the city's surface water project manager, "you want to be sitting with a really good water supply."

Griffiths, the water resources coordinator, understands some of the opponents' critiques, but said these are complicated issues. And the problem isn't that the city hasn't studied the things the opponents are frustrated about, said Tom Hickmann, assistant public works director and city engineer.

"People just don't like the outcome of the various studies we've done," he said.

Eric King, Bend's city manager, who has come under some fire for trying to shore up support for the project with breweries and for investigating whether Deschutes River Conservancy employees were using company time to collect opposition signatures, said the city has made every decision on this project in a public forum. There has been no effort to shut out viewpoints. Even now, he wants to engage in a dialogue about the project, but said opponents are taking information out of context, misleading the public, and have resorted to unprofessional personal attacks on individuals in an effort to kill a project they do not fully understand. It's difficult to get to a discussion about realities of the project in light of all that, he said.

Lansdowne, who has been an engineer with the city for 10 years, said it would be a shame if a group of opponents derailed this project after so many consultants and specialists have confirmed it is the best option for the city.

"Every day I go home and I look at myself in the mirror and I know I am doing the right thing," said Lansdowne.


The debate between the city and opponents aside, there are real concerns for ratepayers said Jim Clinton and Bill Smith.

They pointed to a simple economic phenomenon - when prices go up demand goes down. When that happens, the only option is to charge more to keep the revenue flowing.

Clinton referred to this as the "death spiral" scenario in which the city is forced to continue raising rates to offset the decline in use, which in turn encourages people to further curtail consumption.

There are a lot of worst-case, boogeyman scenarios put out by both sides in this debate, but this is one that is measurable and very real. It's a scenario that even the city acknowledges can't be ruled out.

"I'm not going to say the death spiral isn't going to happen to us," said Sonia Andrews, the city's finance director.

However, Andrews pointed out that Bend's water rate per gallon of water is right in the middle of state averages. And she noted that water bills in Bend are far cheaper than other household bills like cellphones and internet.

But if this rate spiral does hit Bend, Smith is worried it will do far more damage to our economy than is currently predicted.

"What they're doing is turning our lawns brown," he said. "And that will mean Bend is a less pleasant place for tourists and for people or businesses to relocate," he said.

Recently Smith asked Andrews to humor him by looking at just a five percent decline in water usage each year for the next few years. Under that model, Andrews said the city will have to increase rates by at least 9 percent each year for the next few years, instead of the expected 7 percent increase.

"My fear is that the city has done the financial modeling wrong and they haven't included the death spiral," Smith said.

If there's room for compromise in all this, it hasn't been identified yet.

"People on both sides of this project have been in the mode of butting heads rather than really listening to each other," said Clinton.

If there is no dialogue now, opponents said there will be no choice but to substitute legal challenges for political opposition. Opponents believe the gamut of approval processes the city must still run to get the green light on the project will provide ample opportunity to legally stall the project, possibly "indefinitely."

"This really is a pivot point," said Dewey "There's a lot at stake."

City staff who have years invested in this current project are hoping the city council will resist the pressure to reconsider.

"The decision may change out of a political process, but the facts will not," said Hickmann.

Groundwater v. Surface Water

After the city learned that the $25 million in hydropower subsidies and incentives were off the table, it asked its design firm, HDR, to look into whether going to all groundwater from wells was a cheaper option.

The study found that, over 50 years, the cost of abandoning surface water and using only groundwater would be roughly $557 million, but the surface water upgrade with hydro would cost only $103 million because of the revenues the city will reap from selling electricity.

Bruce Aylward, an economist and former director of the Deschutes River Conservancy, didn't think that sounded right. So, he drafted a response to the HDR report.

His critique said there were several major flaws in the report. He concluded that when you changed the electricity and water demand assumptions, added in the value of water in the creek, and put wells in less expensive locations groundwater is actually $50 million cheaper than the current project.

Based on his analysis, Aylward and other opponents advocate the following:

Stop using Bridge Creek for drinking water. Work with the Deschutes River Conservancy or the state to transfer the water rights from the creek into groundwater mitigation credits, or temporarily lease those rights to mitigate for other withdrawals.

Let the water that would have flowed from sink taps run into Tumalo Creek and on to the Middle Deschutes, a move that would partially offset summer irrigation withdrawals and help to meet the long-term, regional goal of restoring the upper Deschutes Basin.

City staff and elected officials say that at this stage of the project they are not interested in re-opening the book on groundwater vs. surface water. City engineers and water managers cite several hurdles that they say add up to making the groundwater only alternative a non-starter. Those issues include lack of flexibility with water rights and a prolonged permitting process. Even so, opponents contend that the city has an obligation to do a more detailed analysis of feasibility, given the potential environmental benefits.

A Cheaper Route?

One alternative to rebuilding the existing surface water system or switching over entirely to groundwater is to pull water from farther downstream, closer to the city's planned filtration plant. This option would allow the city to forego the planned $13 million hydropower plant.

Critics say that after the city learned that the primary economic subsidies and incentives were no longer available for the hydro project, it should have taken a serious look at this alternative but didn't. Proponents of the idea say the potential benefits include:

Cost savings on the now 14-mile-long pipe and the hydropower plant.

Increased water flows on Tumalo Creek for fish and recreation.

City engineer Tom Hickmann said this option isn't really viable because the city is on a tight timeline to meet the EPA deadline and moving the point of diversion would require a complex state and federal permitting process that the city can avoid by rebuilding the existing system as proposed. There is also a question of reliability. Finally, there is an issue of feasibility. Moving the point of diversion closer to Bend means more danger of contamination, something the city wants to avoid. Even so, opponents say the city has a responsibility to at least seriously examine the question, before dismissing it - especially with so much money on the line. As the opposition gathers momentum, they're increasingly focusing on this under-explored compromise option.

The Project in a Nutshell

This project is happening because the EPA says the drinking water we get from Bridge Creek could contain cryptosporidium, an outbreak of which killed more than 100 people in Milwaukee in 1993. If we want to keep using that water, like we have since the 1920s, we have to build a filtration plant, which we've never
done before.

In the end, the city council voted to build a high-end system that uses plastic membranes to filter out the cryptosporidium. These membranes will also filter out dirt if we ever have a forest fire that causes major erosion in the watershed, city officials said.

City leaders also decided to replace 1920s and1950s-era pipes that bring the water down from Bridge Creek with one big new pipe that city officials hope to bury under Skyliner's Road when the road is repaved by Deschutes County in the next few years.

The third part of the project is a hydropower plant that would capture the energy the water builds up as it falls 1,000 feet from the creek to the new filtration plant two miles west of town. Total cost of the project: $68 million.


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