Take Action Now!

It is important that your voice be heard on the LT2 Rule and its unneeded and expensive mandate.  Please take the time to contact your congressional representatives and your City Council.  

Senator Jeff Merkley is especially important to contact because he is open to citizen input and finding a lasting solution. Here is suggested text to include, but feel free to create your own personalized message:

 

Contact Senator Merkley Now!

http://merkley.senate.gov/contact

 Your Honorable Senator Merkley,

The EPA wants the City of Portland to cover our open reservoirs and build unnecessary treatment plants. This will provide no measurable public health benefit, nor will it make our organic drinking water any safer. Covering our reservoirs will cost over a billion dollars. The result would line corporate pockets while degrading our water quality by adding unnecessary chemicals to our Bull Run system, a system that has beautifully served us for over one hundred years. My water bills will double in less than 4 years and it won't stop there. Our pristine Bull Run drinking water needs your help in stopping this mis-guided action by the EPA. As a community effort, please help us obtain a Waiver to the EPA LT2 Regulation, allowing us to keep our water "The Public Treasure" that our visionary forefathers passed on to us and the generations to come. My intent is to keep our water system a public treasure, not a corporate asset.

Sincerely,

Update from Citizens for Portland's Water

Town Hall Meeting with Senator Merkley

Please attend Senator Merkley's Town Hall Meeting on Saturday June 5, at 11:20 at Parkrose High School.  (12003 NE Shaver St. Portland, Oregon 97220)

Map:  Click here

It is important that we continue to let Senator Merkley know that the only lasting solution is to get a federal waiver for Portland. See our article about this: Click here

And if you'd like to join us before the meeting, we will be in the high school parking lot with coffee at around 10:30 AM

 

What's Been Happening?

First, it seems that our campaign to get Senator Merkley's attention may be working. If you signed and sent in a postcard to Merkeley, asking for his help in combating the senseless and extremely expensive compliance with the EPA LT2 rule, you may have received a letter from his office in response.

In that letter Senator Merkley says that he is working with local Portland officials and that he has met with Lisa Jackson (EPA Administrator) to make the case that Portland should not pay to treat the water for a problem that may not exist. Although this sounds like good news, it is actually the same process that has been tried before. Portland requested a variance to the rule and was denied the variance by the EPA. Additionally, even if the variance would be granted, the testing required to get the variance is rigged - so that no detection of a problem would still register as a problem!

Our position is this is politics as usual - pretend you are doing something and then wring your hands and say that you gave it your best shot. We need to show up in sufficient numbers at the town hall meeting to let him know that this issue will not fade away. We need to ask Senator Merkley to support a federal waiver that would exempt Portland from the rule.

We know that even as all of our elected officials say they are fighting this unfunded and unnecessary mandate, Randy Leonard (City Commissioner in charge of the Water Bureau) is busy trying to award contracts to his corporate buddies, Black & Veach, Michael Willis, and CH2MHill. He had an agenda item for the awarding of contracts for the Bull Run Treatment Plan on May 19th's City Commission Meeting Agenda. (Remember, Joe Glicker, who works for CH2MHill was essentially the author of the LT2 Rule.) Write a rule, have the EPA enforce it, and then you get the contract. Politics as usual.

So the game continues, as Randy and the Water Bureau pretend to do one thing, while doing another. We have an opportunity to put pressure on Senator Merkley and let him know that we are well aware of the shenanigans and that we expect his help to step in on a federal level.

Thank you,
Citizens for Portland's Water

 

Other things you can do:

Post our webpage to Facebook:  http://www.citizensforportlandswater.org/

Here is an article about serious concerns upcoming for munincipal bonds from Rick Bookstaber, who is a a Senior Policy Advisor to the Director of the SEC, Mary Schapiro.  He maintains his own private non_SEC affiliated blog.

 

The Municipal Market

Sunday, April 4, 2010

This represents my personal opinion, not the views of the SEC or its staff.

My first blog post was in June, 2007. It was titled “What sorts of crises am I worried about now”. My answer was housing and credit. With the benefit of hindsight, this might be considered a no-brainer, although at the time it was not so clear where things would go.

(continues...)

So, where to look next. To see other potential sources of crisis, let’s first recount the lessons learned from this crisis:

1. Problems occur when things get leveraged and complex (and thus opaque).
2. If the problems occur in a very big market, especially in a very big market like housing that is tied to the credit markets, things can go systemic.
3. The notion that you can diversify by holding a geographically broad-based portfolio, (“there has never been a nation-wide housing recession”), works fine – until it doesn’t.
4. A portfolio that is apparently hedged can blow apart. So we have to look at the gross value of positions, even if they are thought to be hedged.
5. Don’t bet on ratings, because rating agencies are conflicted and might not be all too dependable at their job.
6. Defaults are never easy to manage, but it gets worse when there are a lot of them happening at the same time. It is harder to manage the mess, and there is less of a stigma in defaulting. And it is all the worse when, as is the case in the housing markets, those defaulting are not businessmen. As an added complication, with housing the revenue that we thought was there really wasn’t. Income that was supposed to be there to finance the mortgages – even when that income was fairly stated – became committed to other areas (like second mortgages). .

Well, guess where we have a market that is (1) leveraged and opaque, that is (2) very big and tied to the credit markets; and is (3) viewed by investors as being diversifiable by holding a geographically broad-based portfolio; with (4) huge portfolios where assets and liabilities are apparently matched; and with (5) questionable analysis by rating agencies; and where (6) there are many entities, entities that may not approach default with business-like dispatch, and that have already mortgaged sources of revenue that are thought to support their liabilities?

Answer: The municipal market

.

Read the entire article here:

http://rick.bookstaber.com/2010/04/municipal-market.html

The following article paints a similar tone to events right here in our town.

Looting Main Street

How the nation's biggest banks are ripping off American cities with the same predatory deals that brought down Greece

MATT TAIBBI

Posted Mar 31, 2010 8:15 AM 

If you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.

(continuing....)

The sewer bill, in fact, is what cost Pack and her co-workers their jobs. In 1996, the average monthly sewer bill for a family of four in Birmingham was only $14.71 — but that was before the county decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase. The result was a monstrous pile of borrowed money that the county used to build, in essence, the world's grandest toilet — "the Taj Mahal of sewer-treatment plants"...

Read the complete article here:

http://www.rollingstone.com/politics/story/32906678/looting_main_street/print

^{The Value of Bull Run Water}

During Drinking Water Week, the Water Bureau invited the community to send information for blog posting on the value of water. This blog is from a former citizen member of the Portland Utility Review Board , Scott Fernandez

The human body is made up of 55% to 65% water, with the brain comprised of up to 75% water. It is critical to have clean natural water as a source for our cellular and interstitial fluids. As a biologist / microbiologist, this is why I have been so passionate in my position regarding the water as it originates in the Bull Run. The gift we have in the quality of the Bull Run water is immeasurable, both biochemically and microbiologically.

In 1699 Dr. John Woodward designed an experiment to observe the botanical reaction to water with varying amounts of suspended material. The experiment was the first to demonstrate hydroponics. He used direct rainwater that had no suspended material, conduit water from an unspoiled natural spring /lake area, and polluted river water. The growth of botanical material, in this case spearmint, thrived in the conduit water that was consistent with Bull Run water quality. The other two experimental spearmint groups showed a modest effect.

The Bull Run water contains natural suspended materials from the soil, leaves, and many other sources. Two examples are carotenoids and flavonoids. The suite of health benefits from these substances alone is large. These are naturally occurring anti-oxidants that contribute to fall color.

Discussions about using the Willamette as a drinking water source continue today. Industrial, agricultural, and municipal waste, all contribute chemicals such as mercury, birth control hormones, and petroleum by- products to the river water. The finished drinking water product and chemicals of concern meet EPA measurement standards, so theoretically there should be minimal health risk. However, it is the chemicals below the reported measurable threshold levels that are the true concern. It is these levels that may allow site specific pathology to metabolize.

Given the natural Bull Run water, we do not have to be apprehensive about these man- made and foreign chemical substances with the uncertain health impacts they bring. The deep open water reservoirs' natural cleansing actions contribute to the knowledge that the finest drinking water is available with only a turn of the faucet.

Unfunded mandate draining Peoria County

Enforcing state's erosion control permits becoming more and more costly

By KAREN McDONALD

Posted Mar 21, 2010 @ 10:04 PM

Without relief from the state and federal government, Peoria County could be in arrears hundreds of thousands of dollars each year to enforce required erosion control permits without the funding attached to do so.

County officials are drafting a letter to the Illinois Environmental Protection Agency and state legislators regarding funding concerns and seeking relief.

"The state of Illinois is requiring us to enforce the regulatory scheme they've created. They're collecting all the permit revenue and not sharing it with us," said County Administrator Patrick Urich. "The frustration point is they are making us comply at a time when there are no resources to go along with it. It's the classic unfunded mandate."

 

Read the entire article here:

http://www.pjstar.com/news/x126577993/Unfunded-mandate-draining-Peoria-County

Here is an article that describes the high likelyhood that by taking on more debt, cities are putting themselves at tremendous risk of bankrupcy.

Are Interest Rate Derivatives a Ticking Time Bomb?

by Washington's Blog

Derivatives are the world's largest market, dwarfing the size of the bond market and world's real economy.

The derivatives market is currently at around $600 trillion or so (in gross notional value).

In contrast, the size of the worldwide bond market (total debt outstanding) as of 2009 was an estimated $82.2 trillion.

And the CIA Fact Book puts the world economy at $58.07 trillion in 2009 (at official exchange rates).

Interest rate derivatives, in turn, are by far the most popular type of derivative.

 

(continues...)

 

As interest rates begin to rise worldwide, losses in derivatives may end up bankrupting a wide range of institutions, including municipalities, state governments, major insurance companies, top investment houses, commercial banks and universities.

Defaults now beginning to occur in a number of European cities prefigure what may end up being the largest financial bubble ever to burst – a bubble that today amounts to more than $600 trillion.

See the complete article here:

http://www.globalresearch.ca/index.php?context=va&aid=18800

PORTLAND: WATER AND POLITICS

 

1990'S CHANGES TO U.S. WATER SYSTEMS:

In the 1800's because of a lot of problems, a move had been made away from private ownership of water systems. However, in the 1900's in communities across the U.S. there were systems that had been operated by small local companies for decades without major problems. Then, in the early 1990's, larger companies that had been active in Europe & the 3rd World began to look for new markets to expand into and turned their focus to the U.S. market. Reports were issued such as Restructuring America's Water Industry. The companies began to lobby at the US Conference of Mayors. Associations were created like the NCPPP, National Council for Public-Private Partnerships. At an annual conference they "role played" dealing with an irate public and union members. Privatization usually operates with only 1/2 the number of employees. Primarily small communities began to learn that their water systems had been sold to large, often foreign companies like Vivendi/U.S. Filter which became #1 in the privatization market. Water systems were aging & it frequently seemed like an answer to replacement needs. Wages weren't keeping up with rising house values which often supported general obligations bonds. Water revenue bonds were replacing them & it was easier for private companies to deal with increases in water rates than politicians.

 

THE LURE OF MONEY CREATES A POLITICAL DIVIDE:

Portland citizens and officials had a long history of valuing and protecting the Bull Run watershed that their water supply flowed through. In June 12, 1892 President Harrison signed the legislation that protected it from logging and human encroachment. In 1904, the reserve was amended by Congress at their request to make it a crime to enter unless you were a forest ranger or employed to protect it. Certain parts of the forest service & and Water Bureau starting in 1952 began to see value in the revenue it could generate over the emphasis on protection that had happened up to that point. In 1952 there was an internal report by a U.S. Forest Service District Manager called "A Plan of Approach to Better Management of the Bull Run Watershed" which was only revealed through a freedom of information request in 1987 following a 1973-1976 court case involving logging issues. Joe Glicker was employed by the Water Bureau in various jobs for 14 years ending in 1994 when he went to work for the global water related company, Montgomery Watson Harza. In the 1990's he had become an advocate for increasing logging in Bull Run and wrote a paper, "Convincing The Public That Drinking Water Is Safe". He ended up going head-to-head with a respected expert, Doug Larson. He, along with other like minded people there tried to undermine Doug Larson's point-of-view by defaming him. Larson sued the city over it & won. Logging was stopped but Joe Glicker was later promoted.

 

What's in Our Water?

Here is a link to a report that shows what chemicals have been found in our water supply and how they measure up to safe levels. Note that Arsenic, Radium, and Lead are at levels above what is considered healthy.

http://www.ewg.org/tap-water/whatsinyourwater/OR/Portland-Water-Bureau/4100657/

What Doesn't Get Tested in our Water?

This is an interesting article from the New York Times:  The 35-year-old federal law regulating tap water is so out of date that the water Americans drink can pose what scientists say are serious health risks — and still be legal.

Only 91 contaminants are regulated by the Safe Drinking Water Act, yet more than 60,000 chemicals are used within the United States, according to Environmental Protection Agency estimates.

 

http://www.nytimes.com/2009/12/17/us/17water.html?_r=1

2010 DEBT UPDATE: WATER RATES TO DOUBLE-MORE COMING

 

FEBRUARY 2010 BOND ISSUE:

As of Jan. 26th, $73,440,000 in revenue bonds were offered. The statement contains an update of the debt balance and their plans for the future. The city council statement when they authorized plans for a UV treatment plant mentioned taking a less expensive route and numbers of around $150m came up. The debt balance in this statement and their plans for $507m more debt doesn't seem to jive with those remarks.

 As of the last disclosure 2/15/09, the total debt service, principal and interest, was at $426m. The new principal balance after this issue is at $325,305,000. An estimate of interest based on previous documents would bring the total debt service as of now to around $517m. Their plans to add another $507m in principal alone, adds up to $832m plus an estimated $188m in interest, bringing the grand total of water bureau debt planned in the next 5 years to an estimated $1.2 billion. The interest as a percentage of principal, using the current ones issued over the life of the bonds, ranges from 37% to 46%. For the estimate of the February 2010 bonds and future ones, I used 39%. It's quite likely it could be higher due to economic conditions and the water bureau's lower debt ratings. They have started to borrow the money that has to be put in a debt reserve account because they don't have it available.

 

THE NUMBERS:

Let's see how just this bond issue affects us. After this one, only about 36% of their plan will have been issued. This new bond will increase annual debt service payments 3x and water bills will double by 2015.

Here are their monthly numbers: (from page 61)

                                                                2009                 2015

RESIDENTIAL (6 CCF)                             $22.02               $41.18

MEDIUM COMMERCIAL (200 CCF)          $510.13              $953.45

LARGE COMMERCIAL 20K CCF)         $48,822.00         $91,241.00

LOW INC. RESIDENTIAL (5 CCF)               $9.79                $18.31

 

POSSIBLE OUTCOMES:

The revenue bonds say "City of Portland & Multnomah, Washington & Clackamas counties" but it doesn't mean the "City of Portland" which guarantees certain bonds. It means us and the wholesale buyers in other counties. However, we pay 85% and people buying Bull Run water elsewhere pay 15%. The money is being borrowed for building construction but the revenue from us must pay for operation, repair, and debt service. The water sales revenue is serving as collateral, along with the water system if the debt gets too large. There are clauses in the terms of the bonds that spell out what happens in case of a "default" and "disposition of the water system". The "rate covenant" says it will make sure water rates are high enough to "generate net revenues each fiscal year at least equal to 125% of annual debt service". In fact, making sure the debt is paid and money is deposited in the right amounts at the right times, is more important than how the water system is being operated. By 2015 the debt service plus reserve requirements will have almost surpassed the operating expenses anticipated that year. There is also wider latitude in how the bond money is invested and riskier things like derivatives, are allowed.

 

WHO Thinks This Is UNNECCESARY?

New York City: Unfiltered Working Group +Boston, S.F., Tacoma; Portland wouldn't sign their joint letter;

EPA FACA: Federal Advisory Committee led city-selected reservoir panel;

Mayor Potter's LT2 Committee: Composed of diverse groups;

Oregon State Legislature Clean Water Variance: Urged alternatives;

Infectious Outbreak Officials: Dr. Gary Oxman & Amy Sullivan, PHD & Epidemiologist, Mult. Co.; Their more affordable plan was rejected;

American Water Works Assn: Year long tests=O detected; Concerned with difficulty of getting credit for watershed protection;

Assn. of Metro. Water Agencies: Said rule moved from watershed protection;

PSU/Portland Water Bur. Led CAPSTONE Class: Concluded no health benefit;

 

WHAT'S BEING DONE?

NEW YORK

New York's legal team advised Portland that the EPA interpretation is wrong and the rule clearly authorizes a variance. Their DEQ compiled 161 pages of date to support it.

PORTLAND

Wrote one letter late in the process; started working on process; started working on plans and issuing debt; Developed plans and issuing debt; Developed a plan for a variance which has a longtime consultant in charge of water sampling who has Powell Butte contract;

 

WHO BENEFITS?

BANKS/FINANCIAL INTERESTS

BOND ATTORNEYS/UNDERWRITERS

INSURANCE/RESERVE CREDIT CO

BOND INVESTORS

WHOLESALE AGENCIES

CONSULTANTS/LG.WATER COMPANIES

 

Revenue from debt (See lawsuit)

Cost to issue '08 bond: $207,487

Pdx.bonds: MBIA/NATIONAL & AGM Municipal: Tax free income Low cost contracts; Didn't want to buy share of "Bull Run"; Default could create Regional Agency with up to $1.4 Billion at stake, are they the best ones to decide if Portland should get a variance?

The GFOA is an association of financial officers which holds conferences. The city's Debt Manager is often a presenter, A recent one defined "Debt Derivatives": "Hybrid financial instruments whose value is derived from or based upon the value of another underlying security: Caps, Floors & Collars, Inverse Floaters, Forward Purchase Contracts, Interest Rate Swaps & Bond Banks". It is hard for the average person to understand these things but the anti-trust lawsuit in Los Angeles is a place to start and these things all played a part in State & Local Governments losing millions.

Go To: www.bondbuyer.com/pdfs/LosAngelesFirstAmendedComplaint.pdf

 

REFERENCES:

1) www.citizensforportlandswater.org/ See: Issues/Timeline

2) POS=Preliminary Official Statement: www.portlandonline.com/omf/index.cfm?c=52005&a=284015

3) Disclosure: www.portlandonline.com/omf/index.cfm?a=12891&c=28112

4) Audit: www.portlandonline.com/omf/index.cfm?c=49561&a=228968

5) Sampling Plan: www.portlandonline.com/water/index.cfm?c=50082&a=240049

6) Past Bonds: www.portlandonline.com/omf/index.CFM?c=28116

7) "Bonds Legal? "Law Prof. Blog: www.bojack.org Comments 2-8-10

8) Quotes of Dr. Oxman: www.oregonlive.com/search/oregonian/ 3/4/05: "hard to make the case we'd see any reduction in infectious disease"

9) Home pg:Jan. 27, 2010 Letter: www.friendsofreservoirs.org

 

 

Corporate interests are eyeing our water. From wastewater to drinking water, big business is looking to cash in on public water systems and they've got a new tactic: They're using desperate economic times to convince city officials that they should place a corporation between families and their ability to eat, drink, and clean.

 

http://www.alternet.org/water/145480/water_heist%3A_corporations_are_targeting_cash-strapped_cities_for_control_of_their_public_water

Seattle's Covered Reservoirs Need $$$ Expensive Repairs

Here is an interesting story about covering up the reservoirs in Seattle and finding out they are leaking and need major repairs:

"As Carlos Balansay stood inside the cavernous new underground reservoir that would soon hold 50 million gallons of drinking water, the last thing the construction manager expected to see was water, dripping from a roof that was supposed to be watertight.

The drops, first detected last August, have triggered a massive do-over project involving the removal of waterproof coating applied to Beacon Hill's new covered reservoir. A second new reservoir, in West Seattle, had the same orange coating applied to its concrete cover, and it, too, is being blasted off with pressure washers."

http://seattletimes.nwsource.com/html/localnews/2009485902_reservoir17m.html