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The Irvine City Council Monday night in a 3-2 vote decided to ratchet up a forensic audit of Great Park contracts to a more in-depth investigation, which will include the use of legislative subpoenas to compel uncooperative consultants to speak with auditors.
Earlier this month, Christopher Money with the firm Hagen, Streiff, Newton & Oshiro Accountants presented to the council the results of a forensic audit that a Republican council majority, which unseated the former Democratic council majority in the 2012 election, had requested more than a year ago.
Money had gone through a 100-slide presentation that included examples of waste, abuse and lack of oversight of no-bid contracts. In some cases, the park’s former board chairman — longtime Irvine councilman and power broker Larry Agran — had exercised an abnormally tight grip over matters such as contract change orders, according to the auditors.
Perhaps the most noteworthy fact Money presented was a $12,000 change order to delete just one word from a groundwater report. There were also double-billings, a consultant’s feasibility studies so shoddy that city staff had spent all night fixing them and a $10-million contract practically awarded “over the phone.”
According to the audit, the report was only preliminary, because several consultants and a key former park employee who reviewed and approved invoices for $100,000 per-month public relations consultant Forde & Mollrich refused to speak with auditors.
The threat of subpoena has already gotten one contractor to say publicly that it will cooperate. San Diego-based Gafcon — singled out in the audit as being particularly problematic — released a statement Tuesday declaring that the report “contains numerous factual inaccuracies, incorrect assumptions and speculative preliminary conclusions.”
And although the statement didn’t explicitly state that Gafcon officials would agree to sit-down interviews, it declared that Gafcon “looks forward to assisting” the city with its investigation. Gafcon also insisted in its statement that it had previously offered to cooperate with auditors.
Forde & Mollrich, among others, had demanded that questions from auditors be put in writing before providing answers. The auditors said that would be time consuming, expensive and allow for orchestrated responses that could stymie efforts by auditors to corroborate facts.
The new $400,000 contract with the auditors, which would bring the total paid to them to $640,000, has a broader scope of work, including a “complete performance review” of Forde & Mollrich. The auditor will also “analyze the reasonableness” of some $15.4 million in change orders — considered by the auditor as excessive — for a schematic design contract, among other tasks.
The council was sharply divided over the issue. The three-member Republican majority said that the investigation was necessary to get to the bottom of what happened to more than $200 million in funds spent on the park.
“It’s the most important question I get around the city, around the county frankly: What happened to all that money out there?” Councilman Jeffrey Lalloway said. “The issue is, do we have $215 million worth of things at the park.”
Democrats Agran and Beth Krom have said that the investigation is a political witch hunt and that the agenda is to smear what’s been accomplished at the park, which as of now includes soccer fields, a palm court complex and a balloon ride, among other amenities, and hosted events like the recent academic solar decathlon.
Krom particularly took aim at the Orange County Register and Voice of OC for reporting what she said were the auditor’s blatant lies, specifically a statement in both publications that millions were unaccounted for.
“Every penny that went into this project can be accounted for and has been accounted for,” Krom said.
Krom said it was part of a political agenda, accompanied by complicit news media, to paint a false narrative about the park motivated at least in part because of Forde & Mollrich’s involvement in stopping an international airport from being built at the shuttered El Toro Marine air base — the site of the park — and helping to raise the park’s profile.
“I’m sorry you don’t like the term [political]. Mr. Lalloway, but I have to call it like I see it,” Krom said.
According to the audit report, city staff precluded auditors from investigating what happened to $38 million in tax increment revenue because it was outside the auditors’ scope of work.
The audit reported that the money was never received by Great Park funds.
The report also cited $6.5 million that the auditor couldn’t track because city staff wouldn’t answer questions about the funds.
At the previous meeting, Money said that he hadn’t intended for the audit report to indicate that the money couldn’t be accounted for, only that auditors couldn’t get the answers from staff.
City staffer Donna Mullally explained that the majority of the $38 million went to pass-through payments for affordable housing and schools. As for the other $6.5 million, the city kept that revenue to pay for costs incurred by the city before Great Park Corp. was created, Agran said.
At Tuesday night’s meeting, Republican Councilwoman Christina Shea said that the subpoenas will also be used to compel individuals — possibly employees of consultants and the city — who said things off the record that included “serious allegations.”
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