Measure 26-156 and Portland’s Credit Rating
Posted on May 9, 2014 by Janice Thompson
Tags, Consumers and Utility Customers, Legislative & Political, Portland Water, Sewer and Wastewater
If you’re registered to vote in Oregon, by now you’ve probably received your voter pamphlet for the May 20th election. If you live in Portland, you might have heard or read about Measure 26-156 that will be on the May 20 ballot. CUB’s board elected to take a neutral stance on this matter, so CUB is here to help shed light on this topic! We’ll be releasing a series of informative blogs before May 20th to help prepare voters just like you to make an educated decision on Measure 26-156. You can follow these updates by visiting our Portland Water, Sewer and Wastewater news feed. We’ll also be announcing new posts on our Facebook and Twitter feeds, so follow us on those channels to keep up with our new water and wastewater series!
Utility rates are greatly affected by how good a deal a utility gets when selling bonds to raise money for major construction projects. A city’s bond rating works much like your personal credit rating. When the city’s credit rating is good, it’s easier to sell bonds and pay them off at a low interest rate.
For example, the Bureau of Environmental Services sold bonds to raise the dollars needed for the Big Pipe project dealing with sewage overflows into the Willamette River. The bonds for the Big Pipe project are still being paid off, but at a low rate due to the City of Portland’s good credit rating. This actually makes replacing aging infrastructure and other construction projects cheaper for ratepayers.
Measure 26-156 proposes to create a separate elected board to manage water and wastewater services; that board would be able to require the City of Portland to issue bonds without giving the City the ability to consider how that new bond affects the overall debt load, or take steps to adjust the bond sale to improve repayment rates. This could hurt the City’s bond or credit rating, resulting in higher interest rates to pay off construction bonds. If those interest rates increase, so can utility rates.
Supporters of Measure 26-156 cite the Eugene Water and Electric Board (EWEB) as a model for the proposed new board. For example, EWEB can issue bonds for its capital improvement construction projects. A major difference from Measure 26-156, however, is that EWEB must consult with the Eugene City Council before issuing bonds. The Eugene City Council can also stop an EWEB bond sale if they believe it would adversely affect the City of Eugene’s credit rating. Measure 26-156 doesn’t afford this option for balancing the credit rating needs of the city and an independent utility district, and consequently is a potential danger for Portland ratepayers.
In our next pre-election blog post on Monday May 12th, we’ll sort out other similarities and differences between EWEB and what is proposed in Measure 26-156. Let us know what questions you have about Measure 26-156, or water and wastewater services in general, by contacting Janice Thompson at .(JavaScript must be enabled to view this email address).
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04/07/17 | 0 Comments | Measure 26-156 and Portland’s Credit Rating