A new report on the city of Portland's efforts to improve opportunities for minority-owned, women-owned and disadvantaged businesses shows that more than 80 percent of funds earmarked for this purpose on two large Portland Water Bureau projects went to groups who had individuals representing them on the committee guiding the work.

The report—an evaluation of the Community Benefits Agreement program Portland launched in 2012 under former Mayor Sam Adams—criticized lax procedures for the problem. Specifically, the report looked at two CBAs that were in place when the Water Bureau recently built the $75 million Kelly Butte Reservoir and a $50 million maintenance facility.

Under the CBAs, 1.5 percent of the total cost of each project went to efforts designed to help disadvantaged businesses—technical assistance programs, training, recruitment and compliance monitoring. In the end, the two projects spent just under $800,000 on the community benefits.

But the CBAs, which established a Labor Management Community Oversight Committee, provided inadequate oversight of that money, the report says.

"CBA programs and strategies were designed, executed and managed by a relatively small number of individuals from organizations signatory to the CBA or specifically identified in the CBA," according to the report. "Some organizations represented on the LMCOC were also awarded contracts by the LMCOC. This created the appearance of conflict of interest."

The report adds: "We could not confirm or find signed conflict of interest statements."

Fred Miller, the city's chief administrative officer who oversees the bureau that published the report, says it raises questions about how the city should implement CBAs in the future. Minutes from committee meetings show members abstained from voting on grants going to their own groups.

Still, Miller says he has concerns.

"If the committee gives 80 percent of the funds they allocate to themselves, that's bothersome," he says.

The Portland City Council unanimously approved the creation of the Community Benefits Agreement in 2012, but asked for an analysis of its effects after the city finished building the two Water Bureau projects.

The agreement grew out of work by former City Commissioner Jim Francesconi, who pressed the City Council as a labor lobbyist to adopt the model.

Commissioner Nick Fish, who oversees the Water Bureau, says his agency will use a different program on its upcoming Washington Park Reservoir project to improve opportunities for disadvantaged businesses.

Clarification: The headline was amended to add the word appearance.