Investing in our water future: Bull Run Filtration project costs and funding

We are building a new filtration facility to treat water from the Bull Run Watershed, Portland's primary drinking water source. We're also building new pipes to connect the facility to our water system. Federal drinking water regulations require us to treat our water for Cryptosporidium. We are building filtration to comply with these regulations. Filtration will also provide health benefits and make our water system more resilient.

As of February 2026, the cost estimate for the new filtration facility and pipelines is $2.56 billion. That includes all project costs from planning through construction. The estimate also includes cost increases caused by the land use permitting process.

Customers pay for the project when they pay the water portions of their bills. To pay for the upfront costs, we are also using:

• Low-interest federal loans
• Proceeds from selling bonds, a common method we use to help pay the upfront costs of large projects

We'll use money from water rates and other fees to pay back the money borrowed through the federal loans and bonds.

Filtration is a long-term investment in our community. The high upfront costs are worth it to secure our region's water future. Filtration will help us deliver safe, reliable drinking water for generations to come.

Our investment in filtration also supports our regional economy. The project is creating jobs and supporting local businesses. When complete, filtration will supply consistent, high-quality water to businesses and families.

We're working to minimize the financial impact of this project on our customers. We will continue to support customers through our financial assistance programs.

How filtration will impact your bill

As a public utility, customer payments fund most of our work. This includes infrastructure projects like filtration. We're using federal loans and bonds to pay for most of the upfront costs of filtration. Borrowing allows us to spread the costs of projects over longer periods. That helps us avoid large spikes in customer rates.

The bonds and loans will be repaid with money from water rates. Because we are borrowing money now, we can increase water rates more slowly over a longer period. Water rate increases are necessary to support this generational investment.

We will need to request adjustments to water and sewer rates for the upcoming 2026–27 fiscal year. The budget submission includes options to fund the filtration facility and pipeline projects. Learn more about our long-term financial planning work.

If you are struggling to pay your bill, we can help. We offer financial assistance and other programs to help you lower your bill. Learn more about our financial assistance programs.

Project costs

As of February 2026, the estimated total cost for the filtration facility and pipelines is $2.56 billion. That includes money we have already spent and estimates for completing the rest of the work.

The estimate includes:

• The money spent on planning and designing the filtration facility and pipelines.
• Project support and administration costs, including permitting, insurance, legal fees, and oversight.
• The costs of constructing the facility and pipelines, including materials, equipment, and labor. These costs make up most of the total project costs and are largely fixed by outside factors.
• Costs associated with the land use process, including added costs from permit conditions of approval. It also includes cost increases caused by extraordinary delays in the land use permitting process, lengthy appeals, and a remand that delayed construction by seven months.
• About $100 million in contingency funds to help address known and unknown risks.

Why filtration project cost estimates have increased

The filtration project cost estimate has increased since our first estimate in 2017. Some of the cost increases were due to solidifying project details over time. Other causes include inflation, land use conditions of approval, and delays caused by the land use permitting process.

For large infrastructure projects like filtration, cost estimates often change as work progresses. In the City, we rate the "confidence level" of project cost estimates to show how likely they are to change. At the start of a large project, confidence levels are usually low because much is still unknown. Over time, as we make more decisions and work begins, estimates often grow.

We first estimated filtration costs in 2017, when Portland City Council was deciding how to treat our water for Cryptosporidium. The City had not yet decided on the facility's location, size, and filtration technology, so our initial estimate was very low confidence.

We refined the cost estimate in 2019 after making those key planning decisions. More detailed information led to a higher estimate, but the increase was expected. We still rated the 2019 estimate as low confidence because we had not yet completed the designs.

Since our 2019 estimate, we have adjusted our cost estimate upward. More complete information was a factor, but the main causes of cost increases since 2019 are:

• Significant inflation and supply chain issues started by the COVID-19 pandemic. The costs of construction materials and equipment have risen dramatically since 2019. These increases are much greater than the rates of regular consumer inflation. Federal Reserve data shows the costs of industrial building construction rose 44 percent from 2020 to 2025. These costs continue to rise much faster than the standard cost of living.
• Regional market capacity, competition, and limited supply of skilled workers. In 2022 and again in 2023, we requested bids for construction contracts. We competed with other large infrastructure projects for the same contractors and workers. Demand for their work was high while supply was low, which drove up contract costs.
• An extended and complex land use permitting process. The land use permitting process delayed the initial start of construction. Our permits also include many conditions of approval, which added costs. Some of the conditions require extra work. Others limit how and when we can work, such as restrictions on vehicle traffic and work hours. These limits mean the project takes longer to finish. That increases expenses for labor, equipment rentals, and site management.
• A four-and-a-half-month pause in construction work due to the land use remand process. In January 2025, the Oregon Land Use Board of Appeals sent one item from the land use permit back to Multnomah County. We had to pause construction until the County reapproved our permit in June 2025. Because it took time to bring workers and equipment back to the site, the remand delayed the construction schedule by about seven months. This added significant new costs to the project.
• A disrupted and extended schedule for completing work. Our initial agreement with the Oregon Health Authority (OHA) requires us to finish by September 2027. The City is working with OHA on extending the project's compliance deadline. While necessary, extending the construction schedule would add some costs. These include ongoing site maintenance, extended equipment rentals, and annual inflation.

Our current cost estimate of $2.56 billion reflects all these influences. The contingency funds included in the estimate will help us address other potential risks. These risks include:

• The ongoing land use permit appeals process. On February 11, 2026, the Land Use Board of Appeals affirmed the County's reapproval of our land use permits. Opponents may appeal this decision to the Oregon Court of Appeals. We are reviewing the decision and preparing for any challenges opponents may file.
• Possible economic challenges such as tariffs increasing the costs of construction materials.
• Weather or unexpected site conditions that could further delay construction schedules.

We are monitoring and managing these risks to reduce impacts on costs as much as possible.

Managing project costs and their effects on customers

We prioritized cost management throughout the planning and design of the project. We estimated how choices would affect the costs of building and operating filtration. Then we weighed those costs against the benefits and community needs. This ensured we designed a facility that will deliver the most value to ratepayers.

Planning and design decisions we made to manage costs included:

• Reducing the size of the filtration facility. In 2018, we planned for a facility that could treat 160 million gallons of water per day (mgd). We based the size on predicted water demand at that time. In 2021, we reduced the size to 135 mgd to better match updated projections.
• Selecting a location that will continue to use gravity flow to deliver water to Portland. This will avoid adding significant new pumping costs to the facility operation.
• Working with a third-party firm to find and make cost-saving changes during design. Changes included raising the facility elevation (which lowered excavation costs) and reducing the number and length of pipes. We also decided to delay construction of a segment of pipeline and ozone treatment. These changes saved at least $200 million in construction costs.

Our cost-management efforts will continue throughout the construction phase. Other cost-management strategies include:

• Strong financial management during construction. Construction contracts include many controls and processes to manage costs. Strategies include limiting scope changes and managing the schedule. Experienced staff are enforcing all contract requirements.
• Forming a Project Delivery Advisory Team to provide construction management and financial oversight . We formed a group of infrastructure construction experts and Portland Utility Board members. They will help guide cost management strategies through the critical construction phase.

Many of the causes of increased project costs are outside our direct control. We're doing everything we can to keep costs down for customers despite rising project costs:

• Applying for and securing a WIFIA loan in 2021 to help pay for the project. WIFIA loans are flexible and have low interest rates. We applied for the loan to help keep short- and long-term costs down.
• Applying for and securing our second WIFIA loan in 2024. The second loan helps address cost increases after we secured the first loan in 2021.
• Continuing to evaluate financing options, including low-interest funds and long-term bonds.
• Finding ways to reduce our spending in other areas to offset project cost increases. We are updating our 10-year Capital Improvement Plan to focus on our most critical needs first. (Learn more about our approach to cost management.)
• Pursuing energy efficiency-related grants from the Energy Trust of Oregon.
• Continuing to invest in financial assistance programs to mitigate effects on customers.

Other project funding sources: Federal WIFIA loans

In 2021 and 2024, we secured two Water Infrastructure Finance and Innovation Act (WIFIA) loans. WIFIA loans are low-cost, flexible loans with favorable terms for Portland ratepayers.

We applied for our first WIFIA loan to help keep short- and long-term costs down. When cost estimates rose, we applied for and received a second loan to help mitigate the impact.

Our two WIFIA loans are for the Bull Run Treatment Projects. The Bull Run Treatment Projects include filtration and the $20.4 million Improved Corrosion Control Treatment (ICCT) project. Completed in 2022, ICCT has significantly reduced lead levels at customers' taps.

Our first WIFIA loan is for $726.6 million and has a 1.89 percent interest rate. The second loan is for $319 million and has a 4.49 percent interest rate. Combined, the two loans provide over one billion dollars toward the project costs.

The WIFIA loans provide many benefits to Portlanders.

• The low interest rates will save customers at least $387million compared to borrowing money from other sources.
• We have up to 35 years after completing the filtration project to repay the loans. Spreading out the costs of the filtration project over time reduces the impact on our customers.
• Because repayment starts after the project is complete, the customers benefiting from the project will share in the costs. This eases the burden on current ratepayers.

How project spending supports our economy

As a public utility, how we spend and invest our money matters. Our investments in projects like filtration generate enormous economic value for the Portland area.

• The filtration project supports thousands of jobs and businesses in our community.
• Many of the project contracts directly support local businesses and workers.
• Those workers and businesses can then invest back into their workforces, families, and communities. The dollars we spend multiply as they spread throughout the region's economy.
• A 2021 ECONorthwest study showed the Bull Run Treatment Projects will provide $1.59 billion (in 2020 dollars) in economic output for the tri-county area. Adjusted for inflation, that's just shy of $2 billion over the 10 years of planning and construction.
• A 2025 study found that every $1 invested in water infrastructure in Oregon supports $1.99 in economic output.
• Apprentices are performing at least 20 percent of construction trade work on the filtration project, creating career paths for the next generation of trade workers.

Filtration provides economic benefits to businesses and residents too:

• Filtration will lower the risks of a long-term disruption to water service. Some emergency events could prevent us from delivering safe water, and customers would need to boil water before using it. Filtration will let us safely serve water in some situations when we would otherwise issue a boil water notice.
  • Businesses that rely on drinking water, like restaurants and hotels, suffer from extremely limited or paused services during boil water notices. Filtration will decrease the chances of long-term boil water notices and keep water quality high.
  • During a boil water notice, consumers would either boil all their drinking water or purchase bottled water. This would burden low-income community members the most. Preventing water service disruptions means relieving the burden on low-income Portlanders.
  • A 2017 ECONorthwest study estimated a boil water notice for two days would cost over $13 million. At two weeks, that price tag goes up to $91 million. In today's dollars, the costs would be even higher.
• Some businesses, like hospitals, brewers, and technology manufacturers, are sensitive to changes in water quality or chemistry. Filtration will result in more consistent water quality by removing dirt and organic material (bits of plants) from our water.
  • Some businesses that relied on their own water purification systems will no longer need to do so, saving them thousands of dollars in maintenance and materials costs.
  • Healthcare providers and schools will be able to safely serve water to our most vulnerable populations.

Clean drinking water is the foundation of the economy and our lives. Filtration is an investment in consistent water quality in the face of potential disruptions. That means safe, reliable drinking water now, and for generations to come.