April 18, 2012

Shipyard sewer fee probe finds errors, no misconduct

Poor record-keeping hampers an investigation into the Portland brewery's unpaid sewer fees.

By Tom Bell tbell@pressherald.com
Staff Writer

PORTLAND — Hampered by poor record-keeping, an outside investigation of why Maine's largest brewer wasn't billed for much of its sewer usage for 16 years came up with no definitive answer, according to a report released Friday. But despite the lack of city or Portland Water District records of the Shipyard Brewing Co. account, an attorney hired to conduct the inquiry concludes that the mistake was likely the result of human error and poor communication -- not misconduct.

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Attorney Bryan Dench will present the findings of his investigation at a special City Council meeting Monday. The council will also go into executive session to discuss whether it should seek back payments from Shipyard.

Still, the report concluded, while there is no evidence the brewery misled the city and water district, some city or water district employees should have known that it was not paying sewer fees on the primary water line serving the plant.

The investigation found there is no written record of communication between the city of Portland and Shipyard Brewing Co. regarding the water line prior to 1998; no one can find copies of an application for a submeter on the new water line, which was installed in 1996; and there are no copies of the permit or inspection records for the water line, said Bryan Dench, an attorney hired by City Manager Mark Rees more than a month ago to find out what went wrong.

"One of course recognizes that the events these records might illuminate occurred some 16 years ago, but it still seems reasonable to expect that the records would exist elsewhere," Dench writes.

In addition to the incomplete or missing records, he says, two key players are deceased: David Peterson, a senior sewer technician at the city, and his supervisor, whom Dench did not name.

The error cost the city as much as $1.5 million in lost revenue from 1996 to 2011, according to an analysis by the Portland Press Herald. Dench did not calculate the lost revenues. Nor did he say whether the city should ask the brewer to pay the fees it should have been billed for.

As part of Dench's review, the water district provided the city with a list of 108 current water accounts that were not being billed for sewer at the time of the investigation.

The majority proved to be properties with septic systems, but 12 accounts were found that should have been charged for sewer. These accounts either represent conversions from septic to sewer hookup or new construction. The monthly sewer charges for the accounts range from $24 to $162, resulting in an annual loss of $14,598 and a total cumulative loss of revenue of $46,672.50. There are about 18,000 accounts in Portland that generate sewer revenues. The sewer department has an annual budget of $21 million.

All accounts have been notified and are now being correctly billed for sewer, according to a statement from the city Friday.

In a 40-page report, Dench writes that he found no evidence that Shipyard deliberately misled anyone about the use of water from the six-inch line installed in 1996. Nor did he find evidence of corruption by city or water district employees.

The city's investigation into the matter is complete. Dench will present the findings at a special City Council meeting Monday.

The council will also go into executive session to discuss whether it should seek back payments from Shipyard. City attorney Gary Wood will present the council with the legal and policy options, said Mayor Michael Brennan.

Brennan declined to say what he believes the city should do.

"We need to reserve judgement until we have the advice of our counsel," he said.

Fred Forsley, co-owner of Shipyard, said the report vindicates the company because it shows the brewery did not mislead the city about the water line. Forsley has said Shipyard officials had believed all along that they were paying the correct sewer fees.

(Continued on page 2)

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