NEWPORT BEACH – Two years after the city’s Civic Center opened, some residents in Newport Beach still wonder how the decade-long project jumped in price from about $49 million to more than $140 million.
Most know some of the basics:
Neighbors fought for an expensive relocation. Parameters on the project repeatedly changed, always getting more complicated. Politics eventually swamped many public officials.
“It grew in size and scope for sure. We looked at what the needs were, and things were tacked on,” said Steve Rosansky, a former City Council member and part of the team that helped shape the Civic Center project.
Now, the project is under a magnifying glass.
In June, City Council members, most of whom campaigned against the spending on the Civic Center, voted to spend $100,000 on an independent audit. Some hope it will put to rest the biggest political issue in the city. Others say it might expose bad decisions and possibly bad acts.
In March, the city sent a letter to the Orange County District Attorney’s Office seeking a criminal investigation of former Assistant City Manager Steve Badum after an internal investigation found he may have failed to report dozens of meals and other perks given by contractors on the project. Badum has said he did nothing wrong.
By this time next year, leaders and others in one of Orange County’s wealthiest cities hope to know how every penny used on the Civic Center was spent.
“They’ve taken our money for the next 30 years so they could have a pretty City Hall,” said Bob McCaffrey, a staunch political activist who describes the City Hall as “Taj Mahal.”
“If you spend that kind of money I want to know where it went.”
STOMPING TO WARN THE RATS
By the turn of this century the city’s former City Hall, which opened in 1945 on Balboa Peninsula, wasn’t big enough to house the city’s roughly 700 employees.
Trailers popped up on the City Hall’s front lawn. Some city office employees sat just inches apart from each other; others worked in hallways converted into offices. A few took to stomping their feet upon entering an empty office, alerting the rats that it was time to scatter.
Worse, at least from a taxpayer point of view, many believed the aging City Hall hindered business.
Rosansky said when he was mayor he had to give up his office so an employee could have a desk.
“The mayor didn’t have a place to go,” Rosansky said. “It was a problem.”
The initial vision for a new City Hall was, as civic projects go, relatively modest.
In 2005, the city approved a complex that included a 72,000-square-foot City Hall, a community room, a new fire station and a 350-space parking structure. It was to be built on the same campus as the old City Hall, and it was projected to cost about $49 million.
But some residents took issue with the location. Balboa Peninsula, they said, was difficult for many to get to and not central in the city.
A group that included local architect Bill Ficker pushed to relocate the new project to city-owned land behind the Central Library, then slated to become a park. Even McCaffrey, who in recent years has taken to calling former Civic Center decision-makers “arrogant” and “clowns,” was, at the time, a supporter of moving city government.
In 2006, the city decided to take another look at the project. Officials considered about 30 sites, mostly around Newport Center.
The City Council voted against moving the City Hall off its previous spot, but more than 15,000 residents signed a petition to put the question to a vote.
The city didn’t generate any estimates on the cost of the project, but a mailer sent to voters said building on the Newport Center site could save “more than $10 million.” A proposed design, drafted by Ficker, was included in the mailer.
In February 2008, nearly 53 percent of voters approved moving City Hall to its current spot in Newport Center.
THE PROJECT CHANGES
The new location led to new goals.
Rosansky, a longtime real estate broker who now heads the Newport Beach Chamber of Commerce, said the council saw a chance to build a facility that would serve the city for decades. The Civic Center also could include a few other projects that were already on the books.
“If we were going to build it, we were going to build something we’re proud of,” he said.
That meant add-ons. The library needed more parking, so 100 spaces were added to the 350 spots originally slated for City Hall. Neighbors needed to keep their views, so many buildings would need to be sunk into the ground.
A dog park was added. And a bigger community room.
Some people also wanted an emergency operations center in the basement of the building. And adding a connection between City Hall and the library made sense to the council, so a new entrance to the library was added along with a 17,000-square-foot library expansion.
So what was once a City Hall plus a fire station became a City Hall, an emergency communications center, an expanded library, a public gathering room and kitchen, a parking structure and a footbridge.
The new design parameters, which included recommendations from a citizen-led design committee, were accepted by the Newport Beach City Council in April 2008.
THE PRICE CLIMBS
With a new location chosen, the city charged ahead.
In November 2009, consultants told city staff and the council that the new Civic Center could cost about $140 million. Staff tried to figure out ways to cut that down to about $105 million and presented a proposal to council that detailed how that would work.
But that $105 million proposed budget relied on several things going right, City Manager Dave Kiff said recently.
Delays in construction, for example, weren’t included. Neither was the cost of dirt removal, which the report suggested might be lowered if citizens and businesses would remove the dirt for free. (Few did, and construction costs of excavation and shoring walls eventually ran to $8 million.) The report also didn’t include the cost of the pedestrian and bicycle bridge over San Miguel Drive.
The city’s timing, however, was good. The recession meant few big projects were underway in late 2009 and early 2010, so contractors, in theory, were charging less.
But the plans weren’t totally nailed down. Like many building projects, there was room to make some changes as needed during construction.
“It was a really good time for us to bid this project out, get really good prices for materials and labor,” former Assistant City Manager Badum said during a 2013 council meeting.
“The downside of that was the plans were pushed out the door probably a little less complete than we would’ve liked.”
Badum retired in May at 57, after questions were raised about his relationship with Civic Center contractors.
A city review of Badum’s expense reports over several years found 41 instances of meals and other gifts from people doing business with the city that may have been unreported as required by law.
Badum has denied that allegation, saying he reported everything appropriately. He did not return email and calls seeking comment for this story.
In April, Badum said he did not accept gifts and his retirement had nothing to do with the city’s investigation.
“As far as I’m concerned everything was appropriately reported. Some of these things may be social things.”
In March, following a review of Badum’s expense reports, the city asked county prosecutors to launch a criminal investigation, though an internal memo written by City Attorney Aaron C. Harp noted “we have not concluded that Mr. Badum has accepted a bribe or fraudulently allowed a contract.”
A county investigator said at the time a review of the case was underway. Since then, the county has not said if a decision has been made on whether to investigate.
As construction of the Civic Center started, Newport Beach was laying off workers and cutting services. Other capital projects were on hold. And as cost estimates grew – from $131.4 million to $135 million in February 2011 – the huge Civic Center project became a highly visible lightning rod.
On opening day, in April 2013, the Civic Center included a 88,000-square-foot City Hall, a 450-space parking garage, a library expansion, a 14-acre park and a children’s space consisting of a cluster of cement rabbit statues evoking a sort of bunny Stonehenge.
The final bill – including more than 800 change orders – was $140.2 million.
Residents had a case of sticker shock.
In November 2014, residents voted in four new City Council members, a group that ran on a platform of fiscal responsibility and billed itself as Team Newport. Political mailers included images of the new city offices – or “Taj-ma-City-Hall” as they dubbed it – with money raining down from the sky.
Last month, the council approved an audit of the Civic Center, agreeing to spend $100,000 for a report due in March. The report is not intended to be a full forensic audit, which might be aimed at finding fraud, but instead is aimed at looking at the general direction of spending over time.
Councilwoman Diane Dixon said she hoped it could put to rest the “political back-and-forth” that has surrounded the project. The audit will be based on city documentation, up now on the city’s website. It also will compare spending by Newport Beach with industry standards during that period.
“I want to know what guidance and choices led us to spending upwards of $600 per square foot and approving some 800 change orders,” Dixon said. “This is not to cast blame or score political points; I want to know this so we will understand what to watch out for in the future.”
Rosansky said while the Civic Center’s scope changed dramatically over the years, that was based on public input.
“Nothing was done in a vacuum. Nothing was done behind closed doors.”
McCaffrey said he’s frustrated that the 30-year bonds that financed $127 million of the construction will be paid by future taxpayers.
Ed Selich, the current mayor, said even if the project has drawn criticism, what was built is more than just a City Hall. He calls it the “intellectual and cultural hub” of the city.
The park and public art around Civic Center get a lot of use, Selich said, noting that a recent concert on the grounds drew a few thousand people.
Selich said he even saw a family using space near the council chambers for a game of croquet.
“I think it’s awesome. I think we created a symbol of our city for many generations to come.”
On Tuesday, the council approved 10 new statues they’ll rent for the park for two years – a $125,000 project.
Staff writers Deepa Bharath, Laylan Connelly, Tony Saavedra and Nicole Shine contributed to this report.
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