Photo by Katie Summer

IN A SMALL COURTROOM high in the Multnomah County Courthouse, Judge Stephen Bushong recently listened as the City of Portland argued it can use water and sewer revenues in almost any way it deems appropriate.

Building public toilets with ratepayer money was merely another way to get people water, Deputy City Attorney Terence Thatcher said. And sewer funds spent on city council campaigns were an investment in the future leadership of the sewer system.

"The council has very broad discretion," Thatcher concluded.

But Bushong, who has reined in the city's missteps perhaps more than any other current county judge, had a question that cut to the heart of what will be Portland's next big debate: "Then what's the limitation?"

A year ago, the city was bitterly divided over a single chemical additive to the water supply. This time around, there are larger issues on the table: Who should manage the city's water and sewer systems, and how much leeway should they have in doing so?

Three months before a vote on the matter, the battle's finally become real—charged with some of the stinging rhetoric and accusations of chicanery that marked the fluoride fight.

Complicating all that, Bushong might decide in the coming weeks whether the city illegally spent ratepayer money on past projects like the Portland Loo and the now-defunct "voter-owned elections." Given the judge's apparent skepticism at the February 12 hearing, that ruling could amount to fresh ammo for activists who say it's time to strip city council of its utilities.

On Friday, February 14, Mayor Charlie Hales revealed to the Mercury he'll lead a campaign to keep that from happening.

Hales and his supporters are calling their effort "Stop the Bull Run Takeover," a name designed to elicit visions of shady industrialists scheming to snatch control of Portland's much-loved water source.

And that's precisely what the mayor says is happening.

"If voters know who's behind this measure and what they stand to gain, they will run away," says Hales. "If this measure passes, the ownership of the Portland water system gets transferred to a government that a few people might be able to control."

Formally, the measure would create the "Portland Public Water District," a seven-member elected board that would control the Portland Water Bureau and Bureau of Environmental Services.

Supporters say the new board would remove city hall cronyism from sewer and water rates, and hint that more-prudent decisions (like not using water money to buy public toilets) will lead to rate relief.

But Hales and others paint the effort as a shameless takeover bid. The bulk of support for the new water district consists of sizeable checks from Portland Bottling Company and microchip-component manufacturer Siltronic, along with a handful of local property management groups.

Hales says he sprung into action on February 6, the day city elections staff certified the measure for the May 20 ballot.

"We had some prospects and ideas, and, as soon as the signatures got validated, we got serious," he says.

The mayor wasted no time hiring Carol Butler, a longtime Democratic strategist who's managed successful campaigns for US Senator Ron Wyden and US Representative Suzanne Bonamici, among others. Hales also tapped Jay Clark—who had a hand in his mayoral bid—as fundraising manager.

The campaign already has financial support lined up. Groups like the Audubon Society of Portland and Friends of Trees fear the new board would be used to erode environmental protections. And several of the city's labor unions say the proposal would cost some members their jobs.

Joe Baessler, political director for the American Federation of State, County, and Municipal Employees (AFSCME) Council 75, recently told the Mercury he was just waiting to find out where to send a check.

The campaigners behind the water district, meanwhile, have wasted no time accusing Hales of lawlessness. On February 12, the group filed a complaint with Oregon Secretary of State Kate Brown's office, saying Hales illegally used public resources on a partisan campaign.

That followed a press release from Hales' spokesman, Dana Haynes, that quoted the mayor calling the proposal "anti-environment" and a "corporate-funded ballot measure to strip the city of its environmental services and water bureaus."

Kent Craford and Floy Jones, chief petitioners behind the water district measure, said Haynes' involvement in the press release amounted to "an exercise in political campaigning and a clear violation" of state law that prohibits public employees from such campaigning during work hours.

"We have no reaction to it," Haynes said of the accusation. "Our attorneys vetted it."

But the city faces more-significant questions of lawlessness.

In 2011, Craford and others filed a lawsuit saying the city council flouted its charter by using ratepayer money on a host of projects tangentially related to sewer and water service.

Bushong, presiding over the case, hasn't heard arguments on all of those. But at the February 12 hearing, he listened as the city explained why it was justified in using sewer and water money to help pay for four projects: two Portland Loos, the city's scuttled voter-owned elections, a swath of river-adjacent land that's going to become a park, and the relocation of water lines to make way for the MAX.

Thatcher, the city attorney arguing the case, had a lot of very specific arguments at hand, but his general contention was this: If the city council decided the projects were a prudent use of ratepayer money, a judge doesn't have the authority to second guess it.

Only things like significant fraud or abuse would be subject to judicial intervention, Thatcher explained. In the meantime, voters are free to vote politicians out of office if they don't like their decisions.

"I would urge you not to be concerned about what the city might do," with its authorities, Thatcher told the judge.

A ruling on whether the four projects passed muster is anticipated in the next several weeks, and the city has at least one reason to be worried: It's Bushong who annihilated the city's controversial "sit-lie" law in 2009, ruling it violated the state's constitution.