OIG Publishes Audit of City Water Service Inventory and Revenue

The City of Chicago Office of Inspector General (OIG) has completed an audit of the City’s water service account inventory and revenue, managed primarily by the Department of Water Management (DWM) and the Department of Finance (DOF). OIG found that DWM maintained a complete inventory of water accounts and uploaded all meter read data to its billing system in a timely manner.

However, the audit also concluded that DWM lost an estimated $3.9 million in revenue from June 2008 through December 2014 because the City failed to charge for water used during new construction of privately-owned buildings. In response DWM states that it is changing its process to require meter installation at the time the City’s water main is tapped.

OIG further found that,

  • DWM provides non-metered water service to non-residential buildings and residential buildings with three or more units in violation of Municipal Code of Chicago (MCC) § 11-12-210;
  • DOF failed to bill and/or collect $330,981 from 26 accounts incorrectly coded as inactive or permanently removed;
  • DWM charges a fee for hydrant permits that is approximately one-third the rate prescribed in the MCC and issues fee waivers that are not expressly authorized by the MCC.

In response to the audit findings, DWM states that it no longer issues fee waivers for temporary water use and commits to improving its overall fee structure for hydrant use in coordination with City Council. In addition, DOF took immediate actions in response to OIG’s audit including back billing appropriate accounts.

“With a large and complex operation such as the provision of water service by a major municipality, the question is less whether there are opportunities for improvement, but how leadership responds when and where opportunities are identified,” said Inspector General Joe Ferguson. “We are therefore especially pleased to report that both DWM and DOF have been quick to analyze their practices and respond to OIG’s recommendations from this audit. I encourage DWM to continue its work to bring non-metered water service accounts up to date with modern urban infrastructure and technology.”

The full report, and City’s response to the findings, can be found online at the OIG website: bit.ly/WTRAUD.

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