For sale: Newly built ranch home with high-end upgrades in "emerging" outer NE neighborhood, near golf, close to Randy Leonard's heart, despised by utility customers. Asking $475,000/OBO.

That's right: Portland's infamous "WaterHouse" is hitting the market, and ratepayers who footed the bill are about to get hosed.

Portland Commissioner Nick Fish on Monday said the city Water Bureau will sell its controversial demonstration house for a massive loss, ridding itself of a "mistake" built 21/2 years ago under rosy financial projections and insufficient political oversight.

"We will lose a minimum of a half-million dollars on this transaction," Fish said, "unless we get a bidding war between Paul Allen and Merritt Paulson."

The Water House is the latest pet project promoted by Leonard, the former city commissioner in charge of water operations, being denounced by city leaders who want to distance themselves from problems they helped create.

Under Leonard's leadership, the Water Bureau constructed public restrooms and upgraded a park in Clackamas County. It renovated office space for the Portland Rose Festival Foundation and built the high-end Water House in outer Northeast Portland.

But since a lawsuit challenged those projects and others, city leaders are backtracking on previous decisions and laying blame squarely on Leonard, even though they sometimes voted in support.

"This house is a symbol of a former commissioner in charge who lost touch with ratepayers," said Fish, who now oversees the Water and Environmental Services bureaus.

Leonard, the one-time fire union boss who defiantly defended his efforts before retiring in 2012, is singing a different tune now, too.

"I didn't believe that I did" lose touch, Leonard said Monday. "But maybe he's right. Maybe I did."

In 2009, Leonard sold the City Council on a plan to build a single-family home that would demonstrate energy efficiency and water conservation. The Water Bureau planned to build the house on land it owned but didn't need.

The Water House would be open to the public for a year to encourage smart construction and would feature solar reflective roofing, special driveway pavement to reduce runoff, energy-efficient appliances, water-efficient fixtures and a stylistic ranch design to fit in with the neighborhood.

The best part: Local businesses would chip in an estimated $180,000 in products and services. The Water Bureau would pay $200,000 to build it, officials said at the time, and sell the property for $400,000.

But costs released Monday by Fish outlined a far more expensive project: $456,000 for construction-related costs, including $125,000 to decommission two groundwater wells on the property; $217,000 for staff time; and $267,000 for overhead --all told, about $940,000.

"If in 2009, Commissioner Leonard came to council and said, 'I want to spend $1 million of ratepayer money to build a demonstration house,' I believe the council's reaction would have been somewhere between, 'No' and 'Hell, no,' " Fish said.

"It was presented, however, as an opportunity with a big upside and no cost," Fish added. "The lesson for me, and I'm not singling Randy out exclusively, the lesson for me and I guess for all my colleagues is to be more skeptical the next time someone presents a deal that looks too good to be true."

Leonard on Monday continued to say "the costs have been misrepresented" and reiterated that he thinks the "idea was good."

But he said he wouldn't do it again. "If I could have fast-forwarded and seen how it would have been represented, I would not have brought it to council for consideration," he said. "So in that sense, it was a mistake."

Kent Craford, who is

, gave the city credit Monday for trying to recoup money, even if its 30 cents on the dollar.

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But he said the city needs more reform -- he's pushing a ballot initiative to create new utility oversight -- and blamed Fish, Leonard and the rest of the City Council for problems.

"Nick Fish is attempting to fashion himself as the new sheriff in town, ready to get tough on reforming this broken utility," he said. "The reality is ... he's enabled the very waste he's attempting to fix."

Fish now plans to list the Water House for $475,000, a price determined by Valerie Hunter, owner of H&H Preferred Real Estate. Hunter told the city that the 2,038-square-foot house and a 600-square-foot granny flat could be worth about $400,000, plus $75,000 for all the upgrades.

Another real estate broker who tried to represent Portland recommended listing the property for $425,000.

Either way, that's steep for blue-collar east Portland, where fewer than two dozen homes are now listed for sale above $400,000. Most homes on tree-lined Northeast 140th, a short walk from

, are valued about $200,000.

Fish acknowledged that the city is being aggressive, if not optimistic, in its pricing. "I want to get back as much money to ratepayers as possible," he said.

But it appears ratepayers won't be bailed out by Allen, the billionaire owner of the Trail Blazers basketball team, or

.

"I'd lose any bidding war I ever got into with Paul Allen," Paulson quipped Monday when told of Fish's proposition. "You can confirm I have no interest."

-- Brad Schmidt