Attendees at this week’s Irvine City Council meeting experienced one of the most dramatic scenes yet in the years-long political drama over the city’s controversial Great Park project.
On the agenda Tuesday night was an update on the ongoing forensic audit of over $200 million spent on the 1,300-acre park, which has long been under suspicion because of consulting contracts awarded to close allies of former council leader Larry Agran and the perception that relatively little has been built.
The audit is a huge dividing point between the council’s Republican and Democratic factions. Members of the Republican council majority say it is necessary to find out what really happened to all the money spent, while the council’s minority Democrats say it is a political stunt aimed at bolstering their opponents’ chances in the November election.
Those two arguments clashed at the council meeting, with shots exchanged over the Orange County District Attorney’s involvement in the audit, a video rebuttal produced by a consultant in response to an earlier preliminary audit, and Agran’s own call for an investigation into the audit as a misuse of public funds, among other issues.
At one point, things got so heated that Agran tossed a letter from the DA's office across the dais after refusing a request from Republican Mayor Steven Choi to read it aloud. The letter included a request for documents related to the audit.
“You read it, Mr. mayor,” Agran said.
“Stop acting like a child,” Republican Councilwoman Christina Shea fired back after the letter was thrown about.
Republican Councilman Jeffrey Lalloway became so fed up with Agran that even an apparent scoff or snicker from Agran drew Lalloway’s ire.
“Is that funny?” Lalloway asked as he stared at Agran. “Are you trying to make fun of me? By making that noise?”
Before things got nasty, attorneys Dave Aleshire and Anthony Taylor from the firm Aleshire & Wynder presented their update on the audit’s progress and an explanation for its delay.
The audit was supposed to be completed before the election, but Taylor said stalling tactics from consultant Forde & Mollrich – whose $100,000 per-month public relations contract with the park became the poster-child for critics alleging park waste and corruption – had significantly lengthened the audit and used up 20 percent of its budget.
Forde & Mollrich has insisted that it has always been cooperating with the audit, even though the company’s owners say the audit is a witch hunt.
However, the attorneys said it wasn’t until Forde & Mollrich was threatened with a court order that auditors received 30 boxes of records from the firm, including documents that had and had not already been produced.
Lalloway asked Agran to “please” ask his close allies to cooperate so the audit can finish.
Also, 17 depositions the firm took of various players involved in the project went longer than expected, and the DA’s involvement in the audit has been holding up the audit’s completion, according to the attorneys.
What the DA is doing – whether it is a cursory review or a more serious investigation – was one of several flashpoints in the night’s discussion.
Agran described the DA’s review as simply an occurrence after allegations – “sometimes wild ones” – are made, and it doesn’t rise to the level of an in-depth investigation, using the DA’s letter, which only references a “review” of audit documents, as his basis.
Taylor said that the DA’s office has asked him not to reveal certain aspects of what they’re doing, and then went on to say that investigations are typically confidential.
“You’re saying there’s some secret investigation underway?” Agran responded.
Taylor didn’t confirm or deny the assumption in Agran’s question, citing the DA’s request for confidentiality.
But Lalloway and Shea were more blunt.
“I can tell you for a fact that the DA doesn’t review matters like this. They investigate,” Lalloway said. “I know Anthony can’t get into that… but they investigate, they conduct criminal investigations.”
Meanwhile, employees of San Diego-based Gafcon, Inc., the manager of the park’s team of consultants known as Design Studio, showed up in force to the meeting and filled up two front rows.
They wanted to play a nine-minute long video rebutting allegations in an earlier preliminary audit by Newport Beach-based Hagen, Streiff, Newton & Oshiro, Accountants PC (HSNO.)
But Choi refused to allow it because of a three-minute time limit on public speaking. The employees offered to play the video in three minute segments shared between three different speakers, but Choi ruled that it was akin to having multiple speakers cede time to one person, which he said isn’t allowed.
That set off a confusing and intense debate that lasted over 30 minutes about whether Choi’s decision amounted to regulating speech content. At one point, Choi angrily pounded his gavel when an Agran supporter in the audience stood up and tried to say something in protest.
In the end, only three minutes of the video was shown. In it, Shea makes positive statements about Gafcon’s qualifications and experience assembling project budgets, and HSNO auditor Christopher Money gives a dumbfounded shrug in response to an alleged inaccuracy in his report about the fate of $38 million in public funds.
The video was a preview of an hour-and-a-half long video that rebuts every allegation in Money’s report as false or misleading, but mostly false.
Gafcon officials insisted they did their job on the project and have cooperated with the audit, and they also accused the council majority of using public resources for partisan politics, calling it “government at its worst.”
“What have we received in return? We’ve been tried and convicted in the media,” said Gafcon general counsel Paul Najar.
Shea said the statements in Gafcon’s video were taken out of context and well before a 2009 park audit that found problems, including a potential double-billing.
“You should be ashamed of yourself,” Lalloway said in response to the video and saying that information taken out of context wouldn’t be admissible in court. “Your silly video shouldn’t be admissible either.”
Finally, Agran read aloud his letter to the state Attorney General requesting an investigation of the audit, saying that the entire process – which has cost over $1 million – was a “circus” constructed with an illegal “conveyor belt for lies and smears for political purposes.”
Issues The Audit is Still Investigating
According to Taylor, one of the major problems the audit is looking at is a 2010 contract closeout agreement with Design Studio.
There was a dispute over how much the city owed the entity, a joint-venture between Gafcon and master designer Ken Smith.
According to Taylor, an agreement was made to pay Design Studio $1.4 million, but the agreement never came before the council or the Great Park Board of Directors. Also, the council two approved a payout of only $554,000, even though the agreement contained a provision to pay $800,000 more.
A former park director, Bill Kogerman, said in a deposition he would have never voted for the closeout agreement had he seen it.
Taylor suggested that the agreement could be illegal, and compared it to the situation in Bell, where city leaders composed secret and illegal documents in order to enrich themselves.
That drew an angry reaction from Agran.
“I have to tell you when the city of Irvine and the city of Bell are put in the same sentence it is just completely offensive,” Agran said. “This happens to be recognized as the best managed, best run city in the United States of America.”
The audit is also looking at discrepancies with billings and payments to Forde & Mollrich, according to Taylor, and a possible conflict of interest stemming from Forde & Mollrich’s alleged hiring of Rutan & Tucker – which isn’t clear – while the law firm worked for the city.
Another issue the audit is looking at is a potential conflict of interest involving San Juan Capistrano Mayor Sam Allevato, who also worked for Forde & Mollrich.
As a member of the San Juan Capistrano City Council, Allevato voted to approve a contract with Gafcon. Taylor said given Forde & Mollrich’s relationship to Gafcon as a Design Studio subconsultant, that vote could have violated a contract provision barring even the appearance of impropriety.
Stu Mollrich, a principal of the PR firm, immediately criticized Taylor’s remarks as yet another false attack in a pattern of “misleading and defamatory allegations against Forde & Mollrich and our employees.”
“It is especially disturbing that Aleshire and Wynder is now attempting to smear Sam Allevato who served the city of Irvine with honor as a police officer and public information officer,” Mollrich wrote in an email to Voice of OC. “The attack upon him is one more shameful example of a politically motivated investigation which lacks objectivity and credibility.”
A Preview of The Audit
Democratic Councilwoman Beth Krom has criticized the audit has focusing too much on personalities, and in particular their disdain for Agran.
But Aleshire said while the media has focused on personalities, the final audit will include a chronology of events and attempt to find a point in time when “things weren’t meshing.”
The attorneys specifically referred to fluctuating budgets. A high-level city official at one point estimated the total cost of the park to be $350 million. That jumped to between $1.3 billion and $1.6 billion under oversight consultant Bovis Lend Lease. And finally, Gafcon had internal figures showing a $3 billion to $4 billion budget.
Another theme they mentioned was the lack of experienced management. Effectively, Arnold Forde, Agran’s political consultant and a person with little expertise running massive public projects, was the de facto project manager, they said.
Krom attacked Taylor’s offhand mention of the collapse of redevelopment in 2011 as an expressed reason for why the project didn’t come to fruition when in fact the project was scaled back in 2009.
She noted that the reason the project was downsized back then was because of the housing bust and its affect on the ability to generate revenue for the project, and she criticized the whole audit so far as “out of context.”
Aleshire said that every point would be taken into consideration by the audit’s completion.
“We need to pull this together and put a conclusion that hopefully a majority of people will feel is a fair summation of what occurred,” Aleshire said. “I think the community needs an end to this discussion.”