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Wednesday, May 26, 2010

Are Portland water, sewer bills now "taxes" subject to Measure 5 limits?

Like many people in Portland, I've been brooding about the City Council's unsettling, recurring raids on our already sky-high water and sewer bills for frills like bicycle lanes, neon rose signs, a new headquarters for the Rose Festival, "voter-owned elections," and bailouts for The Oregonian under the guise of buying a disaster "staging" site. (And there's more where that came from.) People on fixed incomes are going to be chased out of their homes, not by property taxes this time (although those aren't exactly low), but instead by fast-increasing utility bills that are funding all manner of City Hall pet projects.

One thing I've thought is that Oregon is going to need some sort of new ballot measure limiting utility bill increases, like the laws that already exist to prevent sharp jumps in property tax bills -- Measures 5, 47, and 50, which have completely changed the state's property tax landscape since they were passed in 1990, 1996, and 1997, respectively.

But on closer inspection, a new ballot measure may not be necessary after all. By subverting water and sewer revenues for purposes far from the provision of water and sewer service, the City Council may very well have already triggered Measures 5, 47, and 50 by turning part or all of the utility bills into "taxes" subject to those strict limitations.

I'll let you be the judge of the validity of this idea. Here is the definition of a "tax" included in the final version of 5-47-50. It's currently contained in Article XI, section 11b of the state constitution. Note especially the last sentence of this excerpt:

(b) A "tax" is any charge imposed by a governmental unit upon property or upon a property owner as a direct consequence of ownership of that property except incurred charges and assessments for local improvements.

(c) "Incurred charges" include and are specifically limited to those charges by government which can be controlled or avoided by the property owner:

(i) because the charges are based on the quantity of the goods or services used and the owner has direct control over the quantity; or

(ii) because the goods or services are provided only on the specific request of the property owner; or

(iii) because the goods or services are provided by the governmental unit only after the individual property owner has failed to meet routine obligations of ownership and such action is deemed necessary to enforce regulations pertaining to health or safety.

Incurred charges shall not exceed the actual costs of providing the goods or services. [Emphasis added.]

It seems to me that since Portland water and sewer bill revenues are being used for many purposes that cannot reasonably be called "actual costs of providing" water and sewer "services," at least part of Portlanders' water and sewer bills are now "taxes" subject to the property tax limitations of 5-47-50.

It could be quite interesting if one or more of the moneyed folks behind the old ballot measures is still around and willing to bankroll a lawsuit to see if I'm right about that. Perhaps one of our legislators of the Republican persuasion could ask our illustrious state attorney general for an opinion on the point. Or maybe I'm all wet. Our readers are usually pretty good on topics like this. What do you think?

Comments (35)

This is particularly interesting Jack. Very good work.

I own a vacant parcel and am billed minimum storm/water fees. This looks like an additional property tax to me.

You want help from the state attorney general? All Sam has to do is to take the money from the water bureau fees, put it in envelopes and leave it at the receptionist at city hall. Then have his pet projects pick the cash up later.
That's how he got money to his last pet project, Beau Breedlove, and Kroger didn't see anything wrong with that.

The City's charge for water may not be an "incurred charge" because it exceeds the actual cost of providing the service, but it may not be a property tax either, because it's imposed not on the owner, but on whoever orders the water service.

The city's charge for storm sewer service is not an "incurred charge" either, for a different reason: it can't be controlled or avoided by the property owner. (The property owner can in theory choose to do without water, but not storm sewer service.) Because the storm sewer charge is imposed on the owner of property and the owner can't avoid it, the storm sewer charge is a property tax, and is subject to the tax limit measures. The city once had a program of reducing the storm sewer charges on properties that disconnected their downspouts and disposed of their stormwater without using the city system, but repealed it several years ago.
An example of the storm sewer charge as a property tax is someone I know who owns property on the Willamette River. His stormwater drains into the river, not into the city system, yet the city charges him for stormwater service. That's a tax, not an incurred charge.

Might want to google for info on a Michigan "rain tax" case that was decided favorably for the argument you propose.

No question governments are using monopoly utilities as a "back door" way to extract more money out of the taxpayers.

What's even worse are Oregon Electric Co-operatives. Not only are there no limits on what these state sanctioned monopoly power companies can spend ratepayer/owner/stockholder money on the ratepayer "owners" DO NOT even have the right to know where their money is being spent.

Ratepayers/owners/stockholders also DO NOT have the right to fair and impartial board of directors elections.

On top of that these state sanctioned monopoly utilities DO have the right to use ratepayer money to for unlimited political contributions to maintain this extraordinary privilege.
Talk about big-time conflict of interest!

For more information please check out

I like it. How about a 26 USC § 164 deduction for good measure?

Great Jack. I'll support legal action. I'll gladly give the difference from the present to the proposed/adopted sewer rates being proposed.

I hope other citizens of Portland follow suit, because if we started something like this it won't need legal action.

Looks like a case can be made here but I would still like to see a ballot measure adressing fee hikes. Fees across the state have been skyrocketing ever since 5-47-50 were imposed.

Fees should only cover the cost they are associated with and nothing more. Currently they are used as an unregulated revenue stream to cover budget shortfalls and funding for pet projects.

I'm sure the twins will magically discover vast, untapped pure drinking water on that $10M parcel and go about setting up a well any moment...

Here in Milwaukie we're dealing with high sewer and storm water bills also. (I thought I'd escaped when I moved here from Portland. Silly me.) Further complicating is Milwaukie's contract with Clackamas County WES for sewer services. And Milwaukie and Clackamas County WES have argued for the past two years about further rate increases. Thank you Isaac, George and Jack.

Wouldn't Sam and Randy have already run this by City Attorney Linda Meng to make sure it's kosher (in the City's view, anyway)? They know how to work the system to get what they want.

The lawyers in the audience can let us know if there are grounds under 5-47-50 to challenge the use of utility fees for non-utility purposes, but even if they're technically legal, they need to be stopped. I'll gladly sign a petition and make a donation to get a citizen referendum on the ballot curtailing this abuse of ratepayers.

We shouldn't kid ourselves, though, that any remedy is going to drastically lower our water and sewer bills. The systems are a century old and falling part, there are expensive regulatory mandates to comply with, and there are bonds to pay off. And it's not just Portland - Milwaukie and Lake Oswego ratepayers have recently been forced to swallow huge rate increases also (although, of course, on top of base rates that are much lower and more affordable than in Portland).

Taking all of the non-core pork out of the water and sewer bills probably won't make that much of a difference. But on principle, whether technically legal or not, it is unfair to charge ratepayers for things unrelated to the delivery of the core services, and if not stopped now the Council will only be emboldened to do it even more.

How can you people be so cynical?
Randy has already said this about the staging area:
"The west side of Portland deserves the same kind of response to restore water service as does the east side. It's an entirely appropriate expenditure for the Water Bureau to acquire the site."

I would question why KGW has this sentence by David Krough:
"The lot is currently owned by The Oregonian and valued at around $4 million."

Maybe the extra 6 million is to help build a streetcar to Bob Caldwell's house.

The Oak Grove Sewer District is guilty of imposing these charges. How can we get it stopped and how can we get our money back? Do we have to sue?

Any attorneys want a class action suit? I'll sign up! I'll be the main plaintiff too if you need one.

An urgent reason to do this is to stop spending on new construction triggered by unneeded unfunded mandates. New York received a 10-year delay. Not giving Portland a delay would be discriminatory, but our council has to ask if we are to stop the debt-accumulation clock. Then, money and attention could be directed to delayed maintenance. Burying water with radon causes it to dissolve in water (current bureau plans). Cracks in present piping allow it to enter as well (needs attention). It is remarkable how resistant to citizen needs and input the council has been. Does anyone have a connection to Matt Taibbi? A good expose in Rolling Stone might help us out, and it would be more fun and probably faster than a court case. Modest-income ratepayers are paying double-tax-free interest on muni's, with big fees to big banks. This would not play well in Portland, if we had a home-grown Taibbi to expose it. How does the council get away with so much regressive policy in a place that uses the word progressive so much?

Sorry, that is the Oak Lodge Sanitary District.

5. How is my Surface Water Management bill calculated?
Surface Water Management charges are a flat rate of $6 per month for each single family residence within Oak Lodge Sanitary District. Other uses are billed $6 per month for each 2,500 square feet of impervious surface at their site. Typical impervious surfaces are parking lots and other paved areas, and roof area.

6. Who is responsible for the Sanitary Sewer and Surface Water Management charges?
Property owners are responsible for the service charges on property. Oak Lodge Sanitary District service charges are lienable and therefore should be cleared in closing when a property changes hands. Service charges that are not cleared will remain with the property and will be owed by the new property owners. This is the opposite of many utility bills, such as water and power, which are owed by the users, and are not lienable. However, because there is no reasonable way to turn off sanitary sewer service, sewer service providers have no other way to ensure collection. This collection mechanism is part of the Oregon Revised Statutes, and is not unique to Oak Lodge Sanitary District.

In addition, the District certifies delinquent charges to the Clackamas County Property Tax Rolls once a year in June. The owners of those properties that have delinquent charges meeting certain District requirements are notified by letter of the District’s intent to certify the charges each May, and have until June 15 to pay the charges and avoid certification. Certified charges will show up on the next property tax bill for a given property as a special assessment. This is not a tax, but is a method for collecting outstanding service charges against a specific property.

Too brilliant to get buried under an older post:

We can put an end to this water/sewer rate increase madness in a hurry. How? BY ORGANIZING A CITYWIDE BOYCOTT OF TOILET USE. Simply deposit your steaming pile of 'protest' in the nearest bike box. Perfectly appropriate for our Third-World-quality city leadership.

I support legal action, but I don't know if this particular section of law is the way to do it.

Note the use of the word "or" for parts (i),(ii), and (iii). Doesn't that mean that incurred charges have to meet just one of those criteria? Charges for water usage are pretty clearly covered part (i) because the owner can control the amount used.

However, sewer might be different, because it is just a base charge, is it not? There is no measure of household usage of sewer per se. The specific volume to refill the toilet, etc. is included in the charge for volume of water usage.

So arguably, the water and sewer BASE charges should be treated like a tax under (b). But the water rate charge is an incurred charge as defined here.

Still, it seems like you shouldn't be able to use the incurred fee for non-related things. It should apply specifically to the volume of the service the household is using. And therefore it would be the base charge that you would be using for neon roses and emergency sites, which would be a tax subject to the limits of the Measures. (?)

But I'm no lawyer.

Would the threat of legal action be enough to get the Sam-Rand clown car to change direction? If history is any indication, the COP will roll over faster than a cocker spaniel.

Snards, you are right that to qualify as "incurred charges," fees have to meet only one of the three stated criteria. But no matter which of those criteria the fees meet, to qualify, the fees have to be something that the owner can "control or avoid" by one of those three reasons. For example, stormwater service charges based on a property's overall area can't qualify as "incurred charges," because the service is not provided at the specific request of the property owner, the owner doesn't have direct control over the quantity of service, and the service isn't in response to the property owner's failure to take care of the property. That keeps stormwater charges from qualifying as "incurred charges." To be subject to the tax limit, however, the stormwater charge has to be imposed as a direct result of ownership of property. A city might say "We will charge anyone who pays a water bill for storm drainage, on the (odd) theory that anyone who needs our drinking water gets rained on also," which would not be a direct charge on a property owner, but on a water user.

Where would the base charges fall? The increase on those has been pretty steep - and the user has no choice about them - if one has service, one has the base charge. One cannot avoid or controll those charges.

Eric comments: . . But on principle, whether technically legal or not, it is unfair to charge ratepayers for things unrelated to the delivery of the core services, and if not stopped now the Council will only be emboldened to do it even more.

Principle is not in the city council’s arena, arrogance is.

This is not going to end any time soon.
The Portland Water Bureau Proposed Rate Increases:
FY 2011-12: 19%
FY 2012-13: 18.8%
FY 2013-14: 19%
In addition to the above proposed water usage charge, the base charge will also be increased.

What can happen in a community when water bills double and the PWB is already in great debt? (Doesn’t look like city council cares about that debt as they are continuously raiding water for pet projects and are using emergency ordinances to spend for unnecessary projects)

it's imposed not on the owner, but on whoever orders the water service.

If the tenant doesn't pay, isn't the property owner responsible?

The key is the base charge. They charge that on vacant land. If not water is being discharged into the storm sewer then it is a tax, pure and simple.

Jack wrote: "If the tenant doesn't pay, isn't the property owner responsible?"

Actually, this is backwards, in a multiplex it's the landlord paying. If s/he fails to pay the water/sewer bill service is cut-off (was in the news not that long ago), even though renters pay their rents to landlords.

I've owned rental homes where the water/sewer service is set up by the renter. They pay the bill. But several times I've had renters skip town, or said they had paid all the bills for utilities and moved out. The renters were held accountable, but the city couldn't find them.

When the city started Sten's failed computer billing system, for over 9 months my renters never received a bill. They moved out before any bill was ever generated by the City, which took over a year. I got a bill for almost $400 dollars. I refused to pay because when I checked the account when they moved out there was no bill so I had no way to ask the renter to pay the bill or take it out of their security deposit. I tried to locate the renters to no avail. I was hounded by the city and then collection agencies for over two years after. I never paid even after they threatened to cut off service to my own home and my rental with a new renter. The city and collection agency they hired also purposely lowered by credit rating. Nice.

lw, in that example, the city turned the water charge into a tax by looking to you (as the property owner) to pay it simply because you owned the property, because you didn't ask for the water service and you couldn't control the quantity that was used.

Let's hope Don McIntire and his band of rowdy patriots have the time, energy, and money to save all of your collective a**es yet again.

(apologies in advance) Has anybody noticed more "restrooms for customers only" signs going up?

Think about why that is. To save money this month if you can run down to the corner establishment, well, never mind.

Wait until the 19% annual increases go into effect.

Let's see: If I pee out the back porch, hold the duece until I get to work, take the laundry to mom's, and use paper plates and disposable utensils then maybe I can still swing the water bill. When the next increase hits I'll brush my teeth with vodka. Maybe I'll just move to Tigard. Portland sucks.

Also not a lawyer, but I agree with Snards on the interpretation. The fees only need to meet one of the criteria. Plus, unless some spacing was accidentally deleted, the highlighted text only applies to the third sub-paragraph, i.e. goods and services provided by government after the owner has failed to meet "routine obligations of ownership." It doesn't necessarily apply to subparagraphs (i) and (ii).

As to Isaac's point, sewer use is measured. My understanding is that they take a reading for one or two months during the winter, when it's assumed that all water use in the house is going down a drain or a toilet. They use that to calculate your sewer charge for the rest of the year. As for stormwater, I think there's a base charge, but I have a hard time believing that no one has looked at the legal issues of that being considered a tax in the decades it has been in use. Also, I think the stormwater discount is still in effect if you disconnect your downspouts.

Folks may have more luck with the City Charter, where I have heard that it limits water and sewer charges to actually paying for water and sewer services (although I was unable to find anything in a quick search).

I believe the spacing in the excerpt is not as it is in the original, but even if it were, it wouldn't change the fact that the last sentence modifies all three of the small Roman numeral items.

Of course, "or" means "or." That's not the point.

Regardless of whether the service is measured or not, if the charge exceeds the actual cost of providing the service, it's a "tax."

Up until recently, the base charge may have been justifiable by the actual costs of the service, but clearly Portland has gone way beyond that, thanks to Fireman Randy and Mayor Creepy.

No, there's no need to go on a wild goose chase under the city charter. There's a big problem for the city under Measure 5-47-50.

I have changed the spacing on the highlighted sentence to correspond to this source, which is about as official as I can find on the internet.

That spacing does make it clear that it applies to all types of "incurred charges."

I just called to set up service at a new rental. The lady estimated by total bill for 1 person to be $60/mo. That is insanity, and then to hear they are wasting money on parks and all sorts of crap. I mean the water literally falls from the sky. Due to environmentalism and higher water bills, water use is down, and the O quotes:
"But bureau Director David Shaff acknowledges that it's tough for the public to accept that using less water causes the cost to go up." Wow. What a load of crap. This is a terrible regressive tax, how do we stop it? Fund lawyers?

I say sue 'em or get a ballot measure going.


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J.K. Rowling - Harry Potter and the Sorcerer's Stone
David Sedaris - Holidays on Ice
Donald Miller - A Million Miles in a Thousand Years
Mitch Albom - Have a Little Faith
C.S. Lewis - The Magician's Nephew
F. Scott Fitzgerald - The Great Gatsby
William Shakespeare - A Midsummer Night's Dream
Ivan Doig - Bucking the Sun
Penda Diakité - I Lost My Tooth in Africa
Grace Lin - The Year of the Rat
Oscar Hijuelos - Mr. Ives' Christmas
Madeline L'Engle - A Wrinkle in Time
Steven Hart - The Last Three Miles
David Sedaris - Me Talk Pretty One Day
Karen Armstrong - The Spiral Staircase
Charles Larson - The Portland Murders
Adrian Wojnarowski - The Miracle of St. Anthony
William H. Colby - Long Goodbye
Steven D. Stark - Meet the Beatles
Phil Stanford - Portland Confidential
Rick Moody - Garden State
Jonathan Schwartz - All in Good Time
David Sedaris - Dress Your Family in Corduroy and Denim
Anthony Holden - Big Deal
Robert J. Spitzer - The Spirit of Leadership
James McManus - Positively Fifth Street
Jeff Noon - Vurt

Road Work

Miles run year to date: 5
At this date last year: 3
Total run in 2017: 113
In 2016: 155
In 2015: 271
In 2014: 401
In 2013: 257
In 2012: 129
In 2011: 113
In 2010: 125
In 2009: 67
In 2008: 28
In 2007: 113
In 2006: 100
In 2005: 149
In 2004: 204
In 2003: 269

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