Amend Intergovernmental Agreement with the City of Lake Oswego to purchase property for replacement or expansion of the Tryon Creek Wastewater Treatment Plant

The cities of Lake Oswego and Portland have maintained a decades-long relationship regarding a sewage treatment plant (the Tryon Creek Wastewater Treatment Plant, or “TCWTP”) located within the City of Lake Oswego, and built, maintained, owned and operated by the City of Portland via the Bureau of Environmental Services (“BES”). TCWTP provides wastewater treatment services to approximately 20,000 City of Portland residents, and roughly 40,000 residents of the City of Lake Oswego. Service and cost-sharing responsibilities are defined in an existing intergovernmental agreement established in 1984 (the “1984 Agreement”). The TCWTP is currently in need of major, significant maintenance and upgrades. Staff from the cities of Lake Oswego and the City of Portland have been in discussion for multiple years regarding potential upgrades to or replacement of the TCWTP to ensure adequate and efficient service to both cities over the long-term, and to continue to meet environmental regulatory requirements. Ordinance 190127 authorized Portland to collaborate with Lake Oswego to proceed with the procurement process for a public-private partnership to design, build, finance, operate and maintain (“DBFOM”) a replacement sewer treatment plant within the City of Lake Oswego. The procurement process is being led and managed by the City of Lake Oswego as they will become the long-term owner of the new treatment plant and will have the direct contractual relationship with the DBFOM provider. Portland will pay for Lake Oswego for wastewater collection and treatment services rendered under the new DBFOM arrangement. (This is the reverse of the current arrangement, where Portland owns/operates and Lake Oswego pays for services.) If the City of Lake Oswego procurement is successful and DBFOM of a new Lake Oswego-owned treatment plant proceeds, future City Council action will be required to approve a new intergovernmental agreement to specifically address costs and responsibilities under that new arrangement. If a DBFOM agreement is not successful, the City of Portland will continue to own and operate TCWTP.

The legislation provides Portland the opportunity to acquire 50% equity interest in land to be used for building a new, Lake Oswego-owned treatment facility or capital reinvestment at TCWTP that will utilize the acquired land. The long-term financial impacts to Portland are not to exceed $11M dollars, comprised of $5,923,000 of cash and up to $5,077,000 of forgiven depreciation and assets in-progress expense owed to Portland from Lake Oswego for the use of TCWTP. Portland will have no operations or maintenance expenses with regard to the acquired land. Passing of the legislation will allow Portland to remit $5,923,000 of cash from the Sewer System Operating Fund to Lake Oswego for Portland's 50% equity interest in the land. This $5,923,000 represents an additional, one-time expense in fiscal year 2022-23 with budget authority to be established in the upcoming Spring BMP. Forgiving up to $5,077,000 of depreciation and assets in-progress will reduce current and future revenues for the wholesale agreement with Lake Oswego. However, given the alternative of paying up to $11M in cash for the land, it creates substantial cash savings for Portland. Additionally, the $11M of total land acquisition cost is a high estimate, and Portland anticipates the total cost being under $11M dollars. Portland will not incur additional staffing expenses in purchasing the land. Staff time to model the fiscal impacts to Portland has been achieved within existing staff levels. This legislation provides an amendment to the Interim IGA between Lake Oswego and Portland, representing the expansion of financial terms stipulated in the 2020 agreement.

The project to replace TCWTP is led by Lake Oswego staff, with the new plant being located in Lake Oswego. Community outreach and community involvement has been stewarded by Lake Oswego through various council meetings and virtual open houses. The following URLs provide access to different sources of information. The following URL provides access to project website: http://www.lakeoswegowastewater… The following URL provides access to video recordings of Lake Oswego City Council meetings, where the proposed project is discussed on numerous occasions: https://www.ci.oswego.or.us/boc…