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This page contains a single entry from the blog posted on December 12, 2011 12:00 PM. The previous post in this blog was Portland's solar economic future gets dimmer. The next post in this blog is They were part of our religion. Many more can be found on the main index page or by looking through the archives.

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Monday, December 12, 2011

Water, sewer lawsuit hits City Hall where it hurts

The long-awaited lawsuit by angry water and sewer ratepayers against the City of Portland must be driving the spendthrifts of city government bananas. They have now had to amend their sales pitch for new city bonds to acknowledge the lawsuit. About the only thing City Hall does consistently these days is borrow money, and so having to interrupt the steady flow of IOUs to Bank of America and other Wall Street overlords must really stick in the bureaucrats' craw.

One big revelation is that the bureaucrats and politicians estimate the potential damages at $50 million or more -- that's how much water and sewer revenue the city may have spent illegally on unrelated pet projects like "voter-owed elections," the Rose Festival headquarters, and the "green" construction demonstration house.

But even better is this passage in the revised disclosure:

The City will vigorously defend the lawsuit and believes that it is unlikely that the plaintiffs will prevail on the majority of the claims alleged.

Notice: Not all of the claims are meritless -- just "the majority." Meaning, we suppose, that the city's already conceding partial defeat. It's hard to read that sentence any other way.

Comments (21)

Consider:

1) With multiple claims oftentimes a minority of them -- or even just one -- still gets a plaintiff to 100% relief. Could that be the case here?

2) In the end, if the lawsuit is successful in obtaining a final judgment ordering reimbursement, and assuming those former funds have been expended, can the City raise the intra-departmental reimbursement funds by just doing another "successful" bond offering?

sure would like to see their itemized list totaling $50 million.

The notice says "repayments from misspent monies could exceed $50 million based on a list of highlighted projects." That sort of sounds like they think $50 million is a starting point...

So they think the projects listed in the document misspent at least $50 million. Given that there are surely other projects/expenditures that a full audit would turn up it is likely to be much higher than $50 million.

It is about damn time. And if this one is successful I hope they can clone the case and go after other misspending.

The ratepayers will never see the money of course. You can't get blood from a stone. The City creeps spent the money on all their not so little projects. However anything that makes these crooked bureaucrats squirm makes my day!

Sad that you have to sue the city to get them to be fiscally responsible.

Does anybody know how the current crop of mayoral candidates are siding on this lawsuit?

Is Linda Meng retiring so she won't get disbarred once they find out she was giving bad legal advice?

Has anyone figured out if/how a normal citizen can support this legal effort?

I don't care one bit about the legal expense to the city, or the fact that they won't be able to pay any of it back. Elected officials and city staff need to be smacked upside the head. This city has been run like the mafia for as long as I've been here.

I read the complaint and compared the allegations to the applicable provisions of the city charter. It looks to me as if the plaintiffs win.

One side effect of the plaintiffs winning is that the city will not be able to pledge water and sewer revenues to secure bonds unless the city's outside attorneys are willing to give an opinion, backed up by malpractice insurance, that the bond money is going to be spent only on the water and sewer system.

Interesting that the lead plaintiff is a former City Council member:

http://news.opb.org/article/lawsuit-filed-against-city-portland-improper-use-funds/

Lloyd was a good council member...not perfect, no one is, but honest and straight. Reassuring to know he's involved in this case. But my fear is that this being Oregon, something will go sideways. After all Portland's a city where the DA doesn't prosecute cops hardly ever (no matter what) and this is a state where the AG and others blithely allow state bureaucrats to steer 60-thou sub-contracts to the guv's squeee...er uh, I mean the first lady. Then there's the developer crowd that got rid of an Oregon City councilor in a recall who had the audacity to challenge their latest ripoff scam. Okay so maybe ripoff scam is redundant...

Another interesting thing is the diversions were done when one could plausibly maintain that the council should have been aware that a reckoning could have come.

This is mis-serving rate-payers, but after years of testifying, we know how The Water Bureau has traditionally treated even very sophisticated rate-payers, not to mention regular folk.

But isn't this also mis-serving bond-placing agencies, bond salespeople, and bond-holders, since violating the charter had the potential to impair the value of the collateral and the ability to re-pay bond principal?

Am I the only one who might think such a thing?

Rate-payers have years of experience with not being listened to, but what about the banks and all the attendant stakeholders, as we say these days? Don't they have some clout?

Is it possible someone in the bond line might want their principal back enough to close the window on ever more?

Or are individual elders holding the paper, and nobody cares once the debt is passed off?

How would one go about this kind of research?

Just wondering.

Garage -

Meng has no "disbarement " risk. Wrong advice doesn't get you disbarred. It might get you sued for malpractice, but that's all.

City self insures for malpractice by city attorney and staff, with an excess coverage. I think the city's retention is $ 1 million.
Same as the tort claim stuff as in the Chassee family claim.

It all goes round in a circle. Taxpayers would be suing themselves if the city made a claim against Meng's malpractice coverage.

I can't imagine this will go any further than the sexual-misconduct-with-a-minor claim against our mayor.

Like my friend said some 10 years ago when quitting after 5 years working at City Hall, "this place is more crooked than a box of corkscrews".

What do you expect from a city government run by Leftists ?

No Surprise Here

One good aspect of this, as far as I am concerned is that the case is making an official record, bringing forth documentation, etc., therefore, it can become clearer when these officials have not been trustworthy stewards of the finances or of our water system.
This is especially troubling when rate-payer's dollars are used for other projects while the much needed maintenance of our water system has been deferred.

Clarity and the spotlight on their behavior may if we are fortunate deter them from going further on their spending sprees.

We need to add a clawback provision to PERS so that elected officials can be held personally liable for willful violations of the law.

If Randy knew the damages were coming out of his paycheck, he'd have far more respect for O.R.S. and City Ordinances.

As it is, they have demonstrated that "piss on you" is their only pre-litigation response.

ORS (2009) 294.100 Public official expending money in excess of amount or for different purpose than provided by law unlawful; civil liability. (1) It is unlawful for any public official to expend any moneys in excess of the amounts provided by law, or for any other or different purpose than provided by law.
(2) Any public official who expends any public moneys in excess of the amounts or for any other or different purpose than authorized by law shall be civilly liable for the return of the money by suit of the district attorney of the district in which the offense is committed, or at the suit of any taxpayer of such district, if the expenditure constitutes malfeasance in office or willful or wanton neglect of duty.
(3) On the demand in writing of 10 taxpayers of any municipal corporation with a population exceeding 100,000 inhabitants, filed with the tax supervising and conservation commission in the county in which the municipal corporation is situated, which demand sets forth that a public official has unlawfully expended public moneys in excess of the amount or for any other or different purpose than provided by law and that the expenditure constitutes malfeasance in office or willful or wanton neglect of duty, the tax supervising and conservation commission shall make an investigation of the facts as to the expenditure. If the tax supervising and conservation commission finds that public moneys have been unlawfully expended and that the expenditure constitutes malfeasance in office or willful or wanton neglect of duty, the commission shall proceed at law in the courts against the public official who has unlawfully expended the moneys for the return of the moneys unlawfully expended to the treasury of the municipal corporation. A right of action hereby is granted to the tax supervising and conservation commission for the purposes of this section.

"if the expenditure constitutes malfeasance in office or willful or wanton neglect of duty"

That's the key phrase. Given all the complaining that was done in advance of the water and sewer bureaus' mission creep, it might be a valid claim in this case. But maybe not.

All they have to do is argue that all these "creative" projects are somehow related to water. Then all it takes is a judge to agree.

Citizen groups have been pointing out these improprieties for years, only to be ignored. Seems rather willful and wanton to me.

To all the legal minds here: since Sam and Randy are leaving the Council, how does that affect their legal positions if this lawsuit continues beyond their leaving?

If it gets to court after leaving how would their testimony be affected. Would they have to pay for their own legal representation? And per Eastly's quotes, would their legal nightmare expand after leaving office?


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