SS3 - Civic Center Project - Correspondence

Received After Agenda Printed January 13, 2015 Item No. SS3 January 11, 2015 PLEASE DISTRIBUTE TO CITY COUNCIL MEMBERS AND ENTER INTO THE PUBLIC RECORD- reference January 13, 2014 City Council session Subject: Final Accounting Closeout and Lessons Learned re: Construction of Newport Beach City Hall /Civic center and, Request to City Council for Improved Fiscal Controls Mayor and Council Members: We appreciate the direction of Mayor Pro -tem Dixon to staff to provide a report detailing the final Closeout Accounting for the construction of the new City Hall at the upcoming January Council meeting, and comments regarding "lessons learned ", presumed to include opportunities for improvement going forward. We are pleased that this opportunity is being provided. Residents have been waiting for over 18 months for answers to questions posed at the May, 2013 Council meeting during which City staff first presented a request to Council for an additional $6 million to "complete the closeout accounting" on this project. $4.3 million was to be used for what was characterized as "design omissions ", nor was a fully detailed schedule provided to consider the merits and amounts. Residents expressed desire for further explanation and information, also including understanding of the role ,actions and accountability of the third party CM at risk . Residents submitted oral and written testimony, and asked that the Council not approve the request until such time as the requested supporting information was provided; particularly as there were potential issues of both cost and risk(safety and claims - related) associated with 'omissions ". The Council proceeded to unanimously and without condition or request for additional information, approve the extra funds. We have reviewed the Staff Reports throughout the course of this project, and including those prepared in preparation for the January 13, 2015 Study Session. Following are our key concerns which we request that the Council consider and affirmatively address in its direction going forward. Capital programs represent one of the three largest areas of financial expenditure and commitment of the City. The City cannot provide true Fiscal Control and accountability until its approach to capital programs is addressed. Therefore, it is critical that the City and its leadership: 1)ldentify specific points of concern relating to policy and practice associated with capital program planning and management, and 2) Establish specific policy direction, procedures, commitments to fiscal budget discipline, contractual and project management controls, and 3) maintain clear roles and accountability going forward .