PORTLAND, Ore. -- A City of Portland audit released Wednesday showed Water Bureau customer payments have been used for more than water and sewer services.

The city auditor's office said their investigation was to find out if money was being used for non-utility purposes and if the decisions to use that money were done in accordance with city code.

Auditor LaVonne Griffin-Valade's division found that in at least two cases -- money not requested or approved by the city council was spent on projects unrelated to customers' water or sewer services.

Read:The audit

The Yeon Building in Waterfront Park, which was remodeled and leased to the Rose Festival foundation for $1 a month, cost more than $1.5 million. The Rose Festival is paying off remodeling costs, but ratepayer money will continue to be spent on maintenance, the report showed.

State law mandates sewer rates only be collected to pay for activities or projects related to the City sewer system.

The auditors office said the city attorney interprets that to mean customers are to only pay for something they get in return.

The report also showed that Water Bureau funding cannot be transferred to the City s General Fund or to special funds that are not related to the water system and related bond debt service.

In the past five years, the audit showed funds for parks and planning programs not directly linked to utility services jumped from $200, to more than $2.5 million.

Water Bureau Commissioner Randy Leonard said he generally concurred with the audit's results, but defended the non-utility work. He added that no new hires were used to renovate the Yeon Building, and were therefore opportunity costs, since the employees performed maintenance on all bureau facilities and therefore would have been paid regardless.

Customers of all utility services within the City of Portland pay a utility license fee which helps fund general City services including but not limited to, fire fighting, parks and police. Thus fee is factored into each of the following charges, Leonard stated.

Another project, the Water House, in Northeast Portland, was found to have been neither requested in budget nor approved in council.

City council in 2009 voted to allow donations of services and products to build an energy efficient home.

Water Bureau officials planned to develop, then sell the home and recover the value of the costs and land. Staff estimated the building cost $200,000, and the land value at $150,000, with a goal to sell the house for $400,000.

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So far, the bureau has spent more than $700,000 of ratepayer funds on the project.

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