Council Increases Budget for Civic Center Audit

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The Newport Beach Civic Center — Photo by Christopher Trela ©
The Newport Beach Civic Center
— Photo by Christopher Trela ©

In order to examine the process and determine lessons learned from the $140 million civic center and park project, Newport Beach City Council decided last week to increase the budget to audit it.

Council members voted 4-3 on Nov. 24 to authorize a $300,000 contract with R.W. Block Consulting, Inc., for a one-phase plan with periodic reporting to the city council. The vote also included $52,920 for the independent manager’s agreement.

The total budget of $352,920 for the audit is triple the amount that was originally approved by the council earlier this year.

Mayor Ed Selich, and councilmen Tony Petros and Keith Curry dissented.

In June, the council voted to bring in an outside firm to analyze the process of how the Newport Beach Civic Center price tag ended up at just over $140 million.

At that time, council unanimously approved the plan to conduct the close-out audit/post-implementation review analysis with a budget of $100,000.

Last week, city staff requested the budget be increased to $612,920.

According to the report, staff asked for the bigger figure because the original budget “may not be a feasible” amount to get the job done.

Staff expects the first phase of the audit to include a general overview of the project, which is estimated to cost $100,000. The second phase, if needed, would provide a detailed review of certain project aspects, this portion of the plan is estimated to cost $560,000. The report also included hiring the services of an independent outside manager to oversee the audit (as the council directed staff to do in June), which is not to exceed $52,920.

Councilman Kevin Muldoon suggested the adjusted $300,000 amount without the two-phase plan and asked staff to regularly report progress. If there is something that comes up that needs further review or additional funds, “we can cross that bridge when we get there,” Muldoon said.

Allyson Gipson of Harris & Associates, Inc., who was hired as the independent manager of the audit, explained the process of the audit and broke down the costs.

In her research, she found that the anticipated cost of similar large projects the industry standard is typically about one percent of the total program cost.

So they expected the cost to be approximately $1.35 million, at the high end, but after some review they found the actual estimated cost to be well below that initial number, at just over $600,000, she said.

It’s a very complex project, Gipson said. It’s not just the size, but also the nature of the site, challenging construction and design elements, some sophisticated features, and more. So there are a lot of lessons to be learned from this project, she said.

“The goals of the audit are to identify areas that were done correctly, areas that could use improvement, and if applicable, areas where results fell short of expectations,” the staff report explains.

It’s a very detailed process and “there are a lot of moving parts,” in a project like the civic center, she noted.

It would be easier to not do anything and just move past it, Muldoon said. But the hard, responsible thing to do is to carefully review it.

Council members have a fiduciary responsibility to be accountable to the taxpayers, agreed Mayor Pro Tem Diane Dixon. She hopes the audit comes out with a “clean bill of health” and they can move on, she said.

“I would very much like to not be sitting here today,” Dixon said. “I wish that the prior council who commissioned this project would have dealt with this and answered all of these questions and we could have moved on with life.”

The $140 million civic center project was sizeable and complex, she continued, and this audit should provide a “roadmap” for future projects.

Canal Street resident Arym Diamond agreed. It’s an important issue that will affect many projects in the future, he said.

“The city has been poisoned from this project,” he said.

He criticized the rabbits, the luxurious city building and the overrun budget.

But not all council members were on board.

This proposal has a “checkered history,” said Councilman Keith Curry. It is a “political witch hunt” and a waste of funds, he added.

In January, the city manager provided “two feet” of documentation on the project. Nobody on the council read it and nobody had questions after it was presented, Curry said. But some council members later pushed the idea for political reasons, he argued.

“It was done in a way to drive the political decision to do this politically manipulative audit that serves no purpose. We’re asking consultants to tell us who won World War II,” Curry said. “It’s simply wrong and it’s a complete waste of money.”

The funds would be “infinitely better spent” elsewhere, like the library, he noted.

Without saying much, Mayor Ed Selich agreed.

“It’s a huge waste of money,” Selich said. “It’s putting money down a rabbit hole.”

Other council members expressed concern for the projected cost, if it is politically motivated, and whether or not it’s actually needed.

George Leslie, another Canal Street resident, was also skeptical of the $600,000 price tag and whether or not it’s justified.

“The civic center project was extremely unique (and) very complex,” he said, but it should have been better managed from the get go, rather than reviewing everything after the project is completed, he noted.

City watchdog Jim Mosher agreed that it’s too much cost, too late. He emphasized that the original budget for the audit was $100,000 in June and now, only a few months later, just paying for the manager of the project already eats up more than half of the funds that was allotted for the entire project. It seems like the same mistake all over again.

“I don’t think we’ve learned very much,” Mosher said.

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