Audit of Great Park Spending Highlights Consultants’ Windfall

The iconic balloon at the Orange County Great Park.

The iconic balloon at the Orange County Great Park.

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The initial results of a long-awaited forensic audit of spending at the Orange County Great Park indicate that officials spent millions of dollars that couldn’t be accounted for, handed out questionable contracts to politically connected firms and allowed Irvine Councilman Larry Agran, the park board’s former chairman, to have an abnormally tight grip over park affairs.

However, while auditors addressed these serious issues and others regarding one of the largest public works projects ever in Orange County, they say a lack of cooperation by some Irvine officials and consultants kept them from getting complete answers to their questions.

Several consultants demanded questions in writing, and one key former park employee who approved invoices declined to cooperate in any way.

Consequently, the auditors reported their findings as only preliminary. The audit recommends that the council use its authority — probably its legislative subpoena power — to compel those not cooperating to speak with auditors.

The auditor “couldn’t get to the real meat and potatoes,” said Republican Mayor Steven Choi, who supports using legislative subpoena. He added that the audit’s preliminary findings “are a very, very shocking discovery, and we need to continue our investigation.”

(Read the full audit here.)

Here are some of the specific findings made in the audit done by Newport Beach-based Hagen, Streiff, Newton & Oshiro Accountants:

  • Payments to public relations firm Forde & Mollrich totaled $7.2 million between 2005 and 2012. But the findings beyond that are slim. Officials with the firm and the former park employee who approved its invoices, Marsha Burgess, refused to speak with auditors, according to the audit report.
  • Park officials hired consultants — most notably San Diego-based Gafcon Inc. — as project manager without a proper vetting process, the audit states. There were also double payments, “work performed before it was approved,” poor budget planning and “considerable political pressure upon Great Park staff and its contractors” by Gafcon.
  • Another consultant working for the assistant city manager later discovered that Gafcon wasn’t a member of a major construction managers association and that according to a port official the firm’s contract at the Port of Los Angeles was terminated because of “over-billing, poor quality of work, and inability to meet deadlines.”
  • Gafcon hired as a subcontractor George Urch, a public affairs consultant, by inappropriately including his services under a change order for schematic design. Urch spent hundreds of hours mostly on tasks for Agran, then chairman of the park board of directors.
  • Gafcon was then awarded a sole-source contract on Feb. 1, 2010, that included Urch as a subcontractor retained at a fixed monthly fee of $17,000. The total amount paid for Urch under that contract was $544,000, according to the audit. What Urch did for that money was impossible to determine exactly, because he wasn’t required to submit invoices. Urch refused to be interviewed by auditors.
  • The original $27.3-million schematic-design phase of the contract with the park’s design team, which included Gafcon and designer Ken Smith, went through 50 change orders totaling $15.4 million, making for a 56.36 percent increase. The final contract amount was $42.7 million.

The audit also highlighted an unusual level of control by Agran — leader of the previous Democratic council majority and arguably the most influential politician in Irvine — over matters such as change orders. There were also millions of dollars the auditor couldn’t track because city officials told the auditor such a review was outside the auditor’s scope.

Agran said he never personally directed change orders.

“Somebody said that they had heard from somebody else that this was being done at my behest. Well, that sounds to me like a pretty irresponsible thing to be putting into an auditor’s” report, Agran said.

Regarding his contract, Urch said in an interview with Voice of OC that he worked on planning efforts to grind up and sell the former air base’s concrete, attempts to get a museum at the park through the National Archives and other “government-affairs issues with various public agencies.”

“When Gafcon brought me on, my impression was I had a significant amount of relationships and knowledge of the governmental process,” Urch said.

Urch also said he was paid “significantly less” than $17,000 but refused to specify his actual compensation. And he refused to speak with the auditor, he said, because he worked for Gafcon.

“I didn’t work for the Great Park. I worked for Gafcon. Gafcon was the entity that had the contract. That’s who they should be talking to,” Urch said.

The findings will be presented at Tuesday night’s City Council meeting. Whether to exercise subpoena power and see through to its end an investigation into what happened to tens of millions of dollars in public funds will likely be the central decision before the council as city leaders consider moving into a second phase of the audit.

But that decision won’t necessarily be made at the upcoming meeting, because the first step is to ask the auditors to broaden the scope of work for a second audit phase, said Councilwoman Christina Shea. She said she supports using subpoenas if auditors request them.

The Democratic minority on the five-member council will almost certainly vote against using the subpoena power.

Agran is satisfied with the audit’s findings, saying even that it confirms the park has been managed well. And he said that asking for questions in writing is a reasonable demand given the breadth of documents and detail in such an investigation.

“An audit should be an orderly, disciplined financial review, not a bullshit session,” Agran said.

The audit declares that accepting written questions is unacceptable because, among other reasons, “it inhibits the discovery of all relevant facts.” The audit points to instances where park consultants didn’t respond or provided inadequate answers to written questions in past audits.

Urch described the audit as little more than a political witch hunt by the Republican council majority, saying that the audit’s 49 pages aren’t worth the $240,000 spent on them.

“Everybody knows there’s nothing criminal in here. If there was, everybody would have gotten in trouble a long time ago,” Urch said.

Republican Councilman Jeffrey Lalloway is probably the swing vote on using subpoenas to compel officials to be interviewed, and it remains unclear where his vote will land.

“I need to hear more about it. I need to understand all the ramifications of it,” Lalloway said. “But I’m open to suggestions to make certain we get to the bottom of what happened to the Great Park.”

The current Republican council majority requested the forensic audit a year ago when they unseated the Democratic council majority that had for years held the levers of power over the city administration and the governing arm — the Orange County Great Park Corp. — that controlled the park.

The Great Park, first approved by county voters in 2002 as an alternative to transforming a shuttered military air base into an international airport, was envisioned to compare with the likes of New York’s Central Park. But construction stalled for years, and then the criticism mounted.

Agran and his allies blamed the lag on the Great Recession and the housing bust.

The park’s financial plan was rooted in a huge property tax revenue stream expected from development of thousands of homes around the park. But the recession hit, freezing home construction, and then redevelopment, the mechanism to capture that revenue, was axed by Gov. Jerry Brown.

Meanwhile, the council steered generous sums to consultants, including many who had helped bankroll the former council majority’s election campaigns, and the park gained a reputation for wasteful spending.

Perhaps no contract symbolized this sentiment more than the $100,000-per-month public relations contract with political powerhouse Forde & Mollrich. While the firm collected millions, critics howled that such an expensive public relations effort wasn’t required for a park that wasn’t yet built.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek

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