For several decades the City of Bend has used both surface water from Tumalo Creek and ground water (wells) to serve the citizens of Bend. Now the city plan for a $70 million expenditure to maintain the surface water source has become a highly controversial issue.
Bend’s original source of drinking water was the Deschutes River. Then in 1924 the City purchased water rights from Tumalo Creek and in 1926 installed a pipe to deliver the water. Additional water rights were purchased in 1949 and a second pipe installed in 1957. It was determined in 1964 that there was a very high quality and great quantity of ground water available. The first well was constructed in 1972, and many since. All three private water companies serving the Bend vicinity are served exclusively by well water, as are the cities of Redmond, Sisters, Madras and Prineville. Most other cities in Oregon also use well water exclusively.
RECENT OPERATION AND POLICY
The City has done a great deal of well expansion in the past several decades, almost none in surface water, except for some pipe replacement in the 1980s. The City has one large well, plus two acquired from Juniper Utility, that have never been used, because the city doesn’t need the capacity. The city presently meets its winter demand almost exclusively from surface water – an average of 5 million gallons per day (mgd). Peak summer use, of 22 mgd in 2011, is met primarily by using ground water. Surface water and well water each supply approximately two billion gallons annually. If the city could not use its surface water for whatever reason, it could meets its peak demand using only well water, and still have a third of its well capacity unused. It can provide only about one-third of its peak summer demand with surface water. The quality of the water from the two sources is almost identical.
As noted the city has invested primarily in ground water for the last 40 or more years. More recently its documents have confirmed the desirability of groundwater. For example the Bend Water Management and Conservation plan of 2004 stated, “Groundwater is a sound choice for future municipal supplies when considering water quality, water availability, reliability and environmental impacts to the basin. The impacts of groundwater use have the added benefit of being attenuated over time and space due to the large magnitudes of water in the regional aquifer and the high annual recharge rate.”
Bend’s Water System Master Plan Update of 2007 stated, “The City reports the belief that ample quantities of groundwater are indeed broadly available and accessible throughout the City’s urban planning area, as supported by prior studies…. groundwater sources may be developed in certain convenient location, relative to various distribution facilities….may avoid the need to construct high cost transmission piping that might be required with an approach that focuses on more centralized source development …existing and proposed groundwater supply facilities could provide a significant volume of emergency storage to the City…needed additional constructed ‘tank storage’ may be reduced significantly, potentially saving cost for the City in the long-term.”
THE BIG CHANGE
In 2008 the federal Environmental Protection Agency notified the City that if it intended to continue using surface water (e.g. Tumalo Creek) for domestic use, it would need to install a filtering system to treat for “ crypto.” The order does not affect water from wells. The city hired Brown and Caldwell to address the issue. Its October 2009 report recommended what has become known as the Surface Water Improvement Project. They pointed out that the existing pipelines were 50 and 80 years old, 12-14 inches in diameter and 41,000 to 49,000 feet in length. They estimated repair costs at around $10 million. But they recommended replacing them with a 36 inch diameter pipe, so that the water flow could be used to generate electricity. This approach was the “highest risk” rating and was substantially more expensive than alternatives. They recommended it because of the total project cost of approximately $70 million, over $20 million would be funded by tax credits, and other various subsidies for the power generation portion, lowering the actual cost considerably. It also estimated $1.8 million in revenue from power sales.
In May 2010 the city hired HDR consultants to design the first phase of the Surface Water Improvement Project.
By the summer of 2010 it became apparent that the hydro electric subsidies, on which Brown and Caldwell justified their case for the project, were no longer available. In August 2010 the city finance director so advised the City Council. The Council requested a review of the project costs and an analysis of wells as an alternative.
HDR consultants, the designer of the project, was hired to do the review. They created a new model, based on different assumptions than Brown and Caldwell used, and endorsed moving forward with the project, without the $20 million subsidies, in a memo October 27, 2010. If they continued to design the project, which they are, design fees were estimated at $13-$18 million.
Critics charge the City and the consultants with many errors and neglecting many facts. They maintain the conclusions are based on improper assumptions and ignoring important factors. Critics believe the city has adopted a bunker mentality and refused to, or has been unable to, address legitimate concerns. In no particular order, some of their questions and concerns are:
- The original Brown and Caldwell recommendation was justified because the city would receive over $20 million in subsidies for the hydro electric facility. Planning began, but less than a year later it was determined that no such subsidies were available. Critics say, if that’s what made it economical before, how can it still be justified now with the huge subsidies gone?
- The original projection for revenue from the power plant was $1.8 million annually which helped make it feasible. Now the projection is $0.5 annually. Much less income, but still a deal?
- How much of the piping expense is necessitated for the power component. If the power component went away, could savings in piping occur?
- The City says all the piping must be replaced. Isn’t it reasonable that the pipe built in the 1950s should last at least as long as piping built in the 1920s? if so, there should be at least 30 years of life remaining in the ‘50s pipe.
- 5. As noted above, when it was determined that the power facility subsidies were gone, the council asked for a fresh review of the surface water project verses going to wells. In an amazing decision the city hired the consulting firm (HDR) to do that analysis. They were chosen despite the fact that HDR stood to make an additional $15 million if the surface water project was picked. How could anyone expect an objective study?
- Critics charge the basic assumptions used by HDR were in error and that led directly to improper conclusions. Some of those assumptions included using cumulative cash flow rather than net present value; using unrealistically high increases in power prices thus overstating future income; using unrealistic increases in water use making well water costs higher; using minimal maintenance costs for the treatment plant; adding unreasonable costs for piping and reservoir costs in the well model and improper addressing of peaking supply and charges. How can the council accept this study as unbiased?
- Cities under 10,000 do not have to test for crypto because the government believes it is too expensive.
- There are many other contaminates in surface water for which treatment is not now required. It is possible that the EPA could order more expensive treatments in the future, making surface water more uneconomic.
- Addressing the overall project cost the city engineer, at a planning commission meeting, stated that that $68 million is a class 5 estimate. This means it could cost up to as much as 100 percent more.
- 10. An alternative, not thoroughly investigated, involved leaving the water in Tumalo Creek until just uphill from the City’s Outback storage and treatment facility. It would allow more water in the streams and save $30 million in piping. Brown and Caldwell indicated this was less risky both engineering and financially. When the city hired a value engineering firm to find ways to save money, they were expressly told not to consider this.
- 11. Another alternative is to abandon the 1920’s era pipe and continue use of only the 1950’s era pipe. This pipe can carry 6 mgd and provide for the city’s average daily winter use. This would avoid the $30 million in new piping, greatly reduce the cost of the treatment facility, and eliminate the expense of the power plant. The value engineering study was also forbidden from looking at this.
- The city unduly romanticizes the dual source for water. Outside of Portland’s Bull Run water system, very few cities in Oregon use surface water. It is just too prone to pollution and other problems. And in 20 years, 90 percent of Bend’s water will be from wells. $70+ million is a tremendous price for a source of continuously less importance.
- Inadequate attention is paid to the fact that surface water is very undependable in drought years. Should such an investment be made on an undependable source?
- Because of fire risk and other potential problems, the City requires a reserve equal to the entire Tumalo Creek capability. In fact the City wells can meet the peak demand, without Bridge Creek, with 30 percent spare capacity.
- Additional well capacity providing 1 mgd can be provided for less than $1.5 million.
- The city plans to double its withdrawal from Tumalo Creek to provide for the power plant. The detrimental effect of taking more water from Tumalo Creek and the Deschutes River has not been valued.
- If the City pursued # 10 and #11 above, additional water would be returned to Tumalo Creek and the Deschutes. This value of this has not been evaluated.
- The interest on the newly borrowed money will vastly exceed the cost of power to operate all the wells needed to replace Bridge Creek water.
- The financial effect of borrowing for a project of this magnitude has not been addressed. This one project would likely increase the indebtedness of the city by 50 percent, if it comes in within estimates. Sewer bonds of a similar magnitude might also be needed. Combined with the recently passed road measure this means the city indebtedness will likely double in the very near future.
- The city finance director reports that Moody’s financial services indicates that borrowing, just for the water project, could increase the cost of all Bend’s borrowing up to ½ percent, in addition to requiring rate increases to cover the expense. This could mean an additional interest charge up to $250,000 on this project alone, plus increases on every other new bond issued by the city. Moody’s indicated this may be unavoidable because of the significant debt projected and the uncertainty of revenue growth.
- The City makes it sound like this project must proceed in order to protect its surface water rights. But a city can lease its surface water rights and, by state law, they cannot lose their rights.
Many of those opposed to the City’s Surface Water Improvement Project have formed the committee “Stop the Drain.” They believe the city has not addressed these points in an open minded unbiased manner. They believe a project of this magnitude needs a much more thorough investigation and the city should obtain a new analysis of alternatives from an unbiased third party.
Most recently, the City Council sent a letter to the State of Oregon requesting a delayed implementation of the EPA’s new rule to treat surface water for cryptosporidium.
The City has hired a Washington D.C.-based lobbyist, Dan Bates of Thorn Run Parners, to assist the City in putting together its case to the Oregon Health Authority to allow for more time to address the state and federal rules on it surface water project.
Representative Greg Walden has asked the EPA to grant Bend flexibility from arbitrary water treatment deadlines so the city can sequence compliance in a way that avoids burdensome impacts to the community while protecting public health and safety.
Of the estimated $70 million bill for its surface water treatment project—$30 million is specifically tied to compliance with an October 2014 deadline for compliance with the Long Term 2 Surface Water Treatment Rule (LT2).
“If that flexibility is not granted, the city will be forced to decide between missing this arbitrary enforcement deadline or accelerating the project in a manner that would deal a dangerous economic blow to the city through substantial water rate increases to Bend ratepayers,” said Walden.
Bill Buchanan, an attorney and one of the project’s leading opponents, is a member of the broad coalition opposing the Creek Water Project that includes seven former Bend mayors. “The City hasn’t considered cheaper and more reliable alternatives that also happen to be better for the environment,” says Buchanan. “It has ignored the reasoned views of well respected experts in the basin.
“This project has a huge price tag and the benefits are really very small. For instance, Bend’s water project will cost fifteen times as much per gallon of peak day capacity as Portland’s similar project.”
Paul Dewey, executive director of Central Oregon Landwatch, has concerns for how the City’s project will affect Tumalo Creek and the Middle Deschutes, “We oppose this plan because it will harm our streams and natural environment. We need to leave as much water in our streams as we can, rather than draining them.”
Another member of the coalition is Bill Smith of William Smith Properties, Inc. who is concerned by the expected sharp increase in water rates. “I don’t want to see our town needlessly turn brown… at least not any more than it already has. It is a quality of life issue.”
Allan Bruckner is a former mayor of Bend and a member of the Stop the Drain coalition. For more information: www.bendwater.info.