City finance officials are raising serious questions about plans to sell the Bull Run water supply system to a consortium of regional water agencies.

A draft analysis prepared by the Office of Management and Finance says basic questions about the value of the system, the financing of the sale and the future management structure have yet to be resolved.

The draft suggests that the sale might not be in the best interest of Portland residents who have paid for the system over the years.

City Commissioner Dan Saltzman is now in charge of the Portland Water Bureau. He has not yet seen the document but is expected to review it over the holidays, according to aide Eddie Campbell.

Noting that the sale price has yet to be set, the report says, 'The city has an obligation to the water bureau and ratepayers to sell assets that we have invested, developed, owned, and operated for 100 years at the highest possible value.'

'The finance office is finally doing what should have been done months ago, asking what's in the best interest of the city,' says John Wish, a member of the Portland Utilities Review Board who repeatedly has questioned the wisdom of the sale.

The City Council directed the finance office to analyze the potential sale on Nov. 5. The office studied the most recent report on the concept, called the Implementation Plan for the Formation of a Proposed Bull Run Regional Drinking Water Agency Phase II. It was prepared by consultants working for the 13 potential members of the consortium, including the cities of Portland, Beaverton, Gresham and Tigard.

The draft analysis is dated Dec. 10. It runs seven pages and includes dozens of questions about the sale, including:

• Whether the sale is legal and, if so, whether it must be approved by government agencies such as the U.S. Forest Service, which owns the Bull Run Watershed

• Exactly what parts of the existing system would be sold to the new consortium, and for what price

• Whether the city of Portland can legally help the other partners finance the sale, as suggested in the consultant's report

The sheer number of serious questions is surprising, given that the council first authorized pursuit of the regionalization idea in March 2001. Although the report says the sale should be completed by July 2004, the analysis says major issues should be resolved before any deadline is set.

According to Campbell, some of the questions might be answered in other documents prepared by the bureau and consultants.

In addition, the analysis says the potential sale should be examined by the city attorney's office and outside bond counsel. The water bureau currently is financing more than $100 million in outstanding bonds with city water rate payments.

'Do bond covenants allow transferring assets? What are the restrictions?' the analysis asks.

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