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Only the tip of the iceberg has surfaced in efforts to meet an Erie County Water Authority financial crisis, leaders of the suburban and rural water agency told county legislators Tuesday.

Responding to an Erie County Legislature call for a report on operations of the authority, commissioners reviewed current problems and investigations and predicted more troubled waters for the future.

"You should know from the outset that it is our belief that we are managing a fiscal crisis which has yet to fully manifest itself," Executive Director Robert A. Mendez told legislators.

His report noted that investigations so far "raise more questions than they answer" and include "highly questionable and poorly structured" bond issues and refinancings.

"What is clearly evident is a disturbing pattern of financial mismanagement starting in 1990 and extending through the first several months of 1996," he reported.

Previous water agency officials, replaced in a series of leadership moves starting in May, consistently have denied any improprieties and have defended their management.

After a 3 percent rate reduction approved late last year contributed to a budget crisis this year, though, new leaders began cutting costs and personnel and approved an 8.3 percent rate increase to close the budget gap.

County Comptroller Nancy A. Naples also began an audit of financial dealings by the authority.

The Water Authority report outlined several problem areas revealed last week in a series of Buffalo News articles, including the bond reissues, water rates, land dealings, and travel and credit card expenses.

"It appears that top administrators attended industry conferences in order to gain credentials qualifying them as private consultants," Mendez reported to the legislators.

The executive director noted that the new administration has been in place only four months.

"This, in addition to the fact that numerous files containing official authority documentation have been deleted or are missing, has made it very difficult to fully reconstruct the Water Authority's business activities over the past several years," Mendez said.

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