Newport Beach may have overpaid for its new civic center by as much as $1.2 million, according to preliminary independent audit of the decade-long, $140.2 million project. The audit by Harris & Associates and R.W. Block Consulting was commissioned by the city last year to investigate suspected lack of oversight of the construction of the Taj Mahal, as the new civic center has been dubbed by some residents.
The Newport Beach City Council voted in early July to submit the draft audit and direct the city attorney to seek reimbursement for the $1.2 million overcharged by the construction firm C.W. Driver. The vote to seek recovery was not unanimous. Councilmembers Tony Petros, Ed Selich and Keith Curry voted against pursuing C.W. Driver for the overcharge. Curry said the city should give the construction firm more time to respond to the draft report before requesting a refund. A spokesperson for C.W. Driver did not comment on the draft audit or the council’s decision to seek compensation.
The 10 year project was marked by delays, cost overruns, lack of oversight and an ever-increasing budget. When the project began in 2005, its total cost was estimated at $49 million. By the time of its completion in 2013, the cost of the Taj Mahal’s construction had nearly tripled to $140 million.
The draft audit identified a potential conflict of interest that may have contributed to the high cost of the new civic center. The city hired C.W. Driver as both the project manager and construction manager, removing a key element of oversight. The program manager is legally responsible to act on their client’s behalf, to keep the costs down, while the construction manager has an incentive to charge as much as possible. The report said that hiring the same firm for both roles was not the best practice and likely contributed to cost overruns.
The report also faulted city staff for not properly tracking the project’s development from the design phase to final construction. More than two-thirds of monthly financial reports that should have been filed were missing, according to the draft audit, a lack of oversight that could have contributed to the project’s overinflated final price tag.
When the project was initially proposed in 2005, the bulk of the project was a 72,000-square foot City Hall with a community room, a new fire station and a 350-space parking garage located on the same site as the old City Hall on the Balboa Peninsula.
Then the project relocated to Newport Center. The parking garage grew by 100 spaces, the community room was expanded, an emergency communications center was added, a new public gathering room with a kitchen, a footbridge and a host of giant rabbit statues. Public backlash against the expansion of the project and the cost overruns led to the election of four new city councilmembers on a platform of fiscal responsibility.
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