Portland City Hall will keep control of its Bull Run water supply, after voters tonight rejected a new government to oversee the city's water and sewer utilities.

Measure 26-156, which creates a seven-member elected board called a public water district, is failing with 28 percent of the vote.

The decision means City Hall and its allies have averted one of the most significant changes ever made to Portland government—removing City Council's control of the Bull Run Watershed after 101 years.

It also closes the book—at least for now—on a bitter rebellion to wrest control of the bureaus Water and Environmental Services from City Hall and put them under the control of an independently elected board. 

The attempted coup has been staged by activists who object to construction of underground reservoirs, and funded by corporations that pay the city's biggest water and sewer bills.

They argued that out-of-control spending at the bureaus demanded structural reform. Allies of the campaign sued the city for $127 million in utility ratepayer dollars. A judge has so far found only a fraction of that was illegal.

Revelations by KOIN-TV and WW about an Environmental Services office building for sewer workers that tripled in cost to $12. 6 million provided more ammunition. Robo-calls paid for by the "yes" campaign last weekend began with a flushing toilet and a voice saying, "Hear that? It's the sound of another $12 million down the drain."

Portland's elected officials have rallied to defend the city's management from what they described as a "hostile takeover" by corporations hoping to avoid paying their fair share of environmental clean-up costs.

City Commissioner Nick Fish (also on the ballot tonight) and Mayor Charlie Hales led that defense. Earlier this month, both officials poured money from their own campaign war chests to fight the measure.

Construction contractors, labor unions and environmental groups also rallied to fight the measure. Since the measure made the ballot, opponents have raised nearly $300,000.

Supporters raised about $100,000—mostly from two big backers, soda packer Portland Bottling Co. and German semiconductor manufacturer Siltronic.

The election-night party in support of Ballot Measure 26-156 met its Waterloo early.

The measure's supporters gathered at Northeast Sandy Boulevard bar Club 21 saw voters crush their plan to move Portland's water and sewer utilities to a new government. 

"Evil wins," muttered one supporter as she watched a television news feed show election results, then a report on Mayor Charlie Hales' proposed street fee.

Co-petitioner Kent Craford was more diplomatic. 

"The voters have given Mayor Hales a second chance," Craford said. "He's not going to get a third. We go back to working cooperatively with City Hall—if we can. It's up to them." 

Craford's co-petitioner, water activist Floy Jones, said the campaign had vindicated her efforts to expose waste in the city's utilities. But she seemed at a loss, and near tears. 

"It's just hard to believe that money ends up buying elections every single time," she said. "The moneygrubbers win." 

On the lawn in front of the bar, Craford shook hands with lawyer John DiLorenzo, who's representing water ratepayers in a $127 million lawsuit against the city. 

"Your prediction is a little off, John," Craford said, referring to the margin of the election. 

DiLorenzo smiled. "We're gonna get 'em in the lawsuit."

At the On Deck Sports Bar in the Pearl District, opponents of the measure engaged in a low-key celebration while gesturing toward reform of spending. 

"We always need to be working to improve things," said Bob Sallinger, conservation director for the Audubon Society of Portland. "We also needed to see the damage this would do." 

In recent months, he became the loudest voice fighting the measure—both in media appearances and in smaller forums, where he persuaded environmental activists to stay away from the measure. 

"To me, Sallinger added, "what this says is the voters took a hard look and realized it was moving us backwards." 

As City Commissioner Steve Novick departed the bar—the same location where opponents of fluoride rejoiced last May—he said City Hall would continue reforms pledged this spring by his colleague, Nick Fish. 

"We'll do everything we can," Novick said, "to make sure we earned the faith the voters put in us tonight."