Problems in the bureau's billing system since early 2000 have cost the city $17 million to $19 million in extra expenses and lost collections. In addition, in the past five years, the bureau effectively shifted nearly 12 percent of its work force from maintenance and operations into customer service and billing.

City Auditor Gary Blackmer said the growing maintenance backlog concerns him most. If water mains, valves and meters are not repaired and replaced more frequently, the fixes could ultimately be much more costly, even catastrophic, he said.

"This is a trend that will have long-term consequences," Blackmer said. "We still have pure water delivered reliably to every home. But if we don't turn around the trend, that won't be the case."

The Water Bureau has an annual budget of $104 million and supplies 35 billion gallons of water annually to nearly 800,000 people in the metropolitan area.

Among findings of the 51-page audit: Significant staff resources in the 545-employee bureau have been diverted to customer service since 1999, in large part to address billing problems. Since then, the number of employees dedicated to maintenance, construction and operations has been reduced by 63 positions. The number of positions in the customer service group increased by 75 during the same period. In the past five years, the feet of water mains replaced has decreased from 46,500 to 9,800 feet, a 79 percent drop. If main replacement continues at that rate, it will take 400 years to replace all the city's 2,000 miles of water mains. National guidelines recommend that mains be replaced every 50 to 100 years. The bureau's backlog of repair work orders has "grown significantly over the last four years" and could be more than 26,000 hours.

Mort Anoushiravani, Water Bureau administrator, said he welcomed the audit's findings and recommendations.

"These are not new issues to us," he said. "We are already on our way to dealing with some of these issues, and we have been raising many of them (with the City Council).

"The audit is a validation of the additional resources that are required to maintain the water system."

Anoushiravani said the billing problems and a competitive environment for rate dollars -- the $1.4 billion Big Pipe project to reduce sewage and storm-water overflows is raising sewer rates, making it more difficult to increase water rates -- have stretched bureau resources thin.

That said, Anoushiravani said he and bureau officials would work to create savings by reducing inefficiencies highlighted in the audit.

104 retirements in five years

The $745,000 computer system to replace the one that caused the billing problems should be online in the fall, he said. That should allow staffing and money to be redirected toward maintenance.

The audit also delivered a sober critique of the bureau's "unstable organizational structure," though it acknowledged an extremely high number of retirements -- 104 in the past five years -- contributed to that problem.

Those problems will be addressed by technological upgrades already under way, Anoushiravani said. The bureau is installing a maintenance management software system to prioritize and track repairs, which will be linked to a computerized citywide mapping system -- the latter itself the subject of an audit released Thursday revealing cost overruns and other problems.

Water Bureau officials said it's too soon to tell whether resolving issues raised by the audit will lead to higher water rates.

City Commissioner Dan Saltzman who oversees the Water Bureau said other upcoming changes in federal regulations on filtering and reservoir security are more likely to affect rates than the need for increased maintenance.

"It was a good audit. We're dealing with the aging infrastructure in our current budget," Saltzman said. "We will manage to do these without significant impact to our ratepayers."

The Oregonian

-- Anonymous, August 27, 2004