A new city audit says the proposed $62-million Oregon Sustainability Center, which may never get built, is already costing the city a lot of money.

City Auditor LaVonne Griffin-Valade this morning released her agency's review of how efficiently the City of Portland spends money on downtown office space for 2,200 city workers. 

The audit found the city is generally doing a good job of using city-owned space rather than renting from others—with a couple of significant exceptions, both of which relate to the Oregon Sustainability Center.

Uncertainty about whether the building will become reality, the audit found, has led to violations of the city policy that calls for prioritizing the use city-owned space over privately-owned space.

In short, city bureaus haven't sought cheaper places for their offices—while lots of vacant city space remains empty—because of this uncertainty about the proposed center.

"If bureaus have outside leases

when there is space in City-owned buildings, then the City is paying

twice: once for the external lease and once for the maintenance fund

covering the vacant space in the City-owned building," the audit explains.

That Sustainability Center—which would be joint venture of the City and the Oregon University System—is in limbo because legislators, who control the University System's borrowing authority, are skeptical of the project's benefits.

Meanwhile, auditors found that uncertainty over the project has led two bureaus—Revenue and Fire and Police Disability and Retirement—to enter into relatively expensive leases in privately owned buildings, even though the city has 26,000 square feet of empty space in the 1900 Building, at 1900 SW 4th Ave. (That empty space costs the City $800,000 annually).

Those bureaus decided to stay put rather than occupying the city-owned space because of the possibility that the city would sell the 1900 Building to help finance its share of the Sustainability Center.

"The Bureau of Fire and Police Disability and Retirement (FPDR) has

been housed in the Harrison Square Building since 1995, when they

moved from The Portland Building. By 2010, on average, they were

paying more per square foot than any other City bureau at almost

$31. Their most recent lease was set to expire in July 2012," the audit states. "FPDR

wanted to extend their lease and contacted Facilities for assistance.

Facilities, with the help of a contracted broker, renegotiated the lease

and secured a better rate for FPDR.

At the time, there was adequate space for the bureau in the City-owned 1900 Building. According to Facilities management, however,

the FPDR Board Chair decided not to locate in City-owned space.

Management also told us there was continued uncertainty surrounding the future ownership of the 1900 Building. Again, as with the

Revenue Bureau lease extension, this contradicted the existing binding City policies on office space use."