February 15, 2011 – Bend Bulletin – Bend should slow down on water supply solution

This article was published on: 02/24/11 12:00 AM

Bend should slow down on water supply solution

By Peter Schneider / Bulletin guest columnist
Published: February 15. 2011 4:00AM PST

The controversy concerning the future of Bend’s water supply is critical to everyone in the area. Surprisingly, for something of this significance, very few people are aware of the real issues.

Those city employees and officials who want to spend $58 million on an upgrade of our surface water source cite extensive engineering studies and raise the fear of impending deadlines as justification for the expenditure. Those who oppose this option are asking the council to put the project on hold, commission truly independent third parties to reanalyze the studies, look seriously at less expensive alternatives and include the public in a much more transparent and active role.

The question of strategy versus tactics in the future water supply issue appears to have been ignored. Strategy may be simply defined as deciding which course of action is optimal given current policies and situations. Tactics may be described as choosing the best particular actions to accomplish the strategy. It seems to me the City Council should concern itself with thinking about the strategy of the water supply question, while the city staff and consultants should deal with the tactics. Unfortunately, it appears that all our officials are obsessed with the tactics of the situation and have lost sight of any strategic analysis required.

I think the really central question should be: Can Bend afford to spend $58 million in the next few years, especially when the city is already facing a serious shortfall in its budget and is millions behind in repairing its existing infrastructure? The fact that this expenditure will raise everyone’s water rates substantially and force the city to borrow large amounts of money, thereby lowering its credit rating and incurring huge new interest obligations, should also raise doubts about the wisdom of this decision. The fact that other, cheaper options may accomplish the same thing raises even more questions about this decision.

In essence, I feel the City Council has been supplied with misinformation, or at least a very biased analysis of the facts, by its consultants and/or the city staff.

The consultants used assumptions that are clearly biased against the groundwater option, but don’t seem to be supported by the facts. For example, in assessing the future costs of electricity to run the wells, rather than state them on a present value basis (standard in all future analyses) they presented a number that was simply a cumulative cash flow. Of course, when this figure is run out for 50 years it is huge. (So would city staff salaries be if run out on this basis.) These costs and many others have been grossly overstated, using the assumptions selected by the consultants for the groundwater option. The consultants also presented a biased picture of the costs of the surface water option. Their initial analysis of the great revenue benefits from a hydro facility eventually proved to be incorrect and included several assumptions that did not fit with the current situation. This option has been put on hold. Yet many of the costs and facilities necessary to support the hydro project are still in the plans.

It has been said repeatedly that surface water is gravity-fed and so represents “free” water to the city. It is not — actually it is quite the opposite. Based on conservative estimates, the city would have to borrow $40 million to $50 million to finance the surface water option, with ratepayers having to pay most of the rest. This would require the city to pay approximately an additional $3.5 million annual debt service per year for 20 years. The consultants ignored this and the fact that an all-groundwater option would cost less than $1 million in the early years and not more than $2 million per year in future years ~ and would not require an immediate expenditure of $58 million.

We all know city councilors are overworked, have heavy responsibilities, and serve in this thankless position as a matter of civic duty. It would be unreasonable to expect them to have the time, or the training, to be able to analyze every detail of every study they are presented with. They must rely on the advice of others. The council has done the best it could with the representations and presentations given to it, but that data has come under serious question as more people have had the opportunity to examine it. I ask the City Council to take a step back and take a more strategic look at incurring this huge expenditure in these difficult times. Please consider other alternatives, such as the all-groundwater option, or delaying the project for two to four years, or examining less extravagant solutions.

Peter Schneider lives in Bend.

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