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The Laguna Niguel City Council is adding more oversight and transparency to dealings with its 674 city contractors by having the council’s Investment Banking Audit Committee start reviewing the contracts and spending.
The council voted unanimously to approve $2.1 million for 18 contracts that had run over their initially approved amounts. At the Sept. 19 meeting, council members also directed the Audit Committee to begin reviewing other city vendors to determine if they also exceeded the contracted amounts.
“I had no idea that some of these could go from … $466,000 to over a million dollars,” Councilman Jerry Slusiewicz said, referencing a landscaping contract. “These numbers are quite shocking to me … we’ve got to come up with some way on getting a handle on being fair to the taxpayers.”
Although the contracts don’t have a spending cap, Interim City Manager and Financial Director Steve Erlandson told the council the city needs to increase the base amount it pays the vendors. Some of the base amounts doubled from last year to this year, while another increased from $5,200 to $245,000. Erlandson said the city’s budget has already allocated funds for the increases, so they’re technically not overages.
Slusiewicz urged the council to direct the audit committee to begin looking at the rest of the contracts to help prevent such increases catching the council off guard.
Mayor Fred Minagar suggested adding spending caps “so when you reissue … any purchase order we have that clause of not to exceed so that maybe we can protect our taxpayers.”
Meanwhile, Mayor Pro Tem Elaine Gennawey said the increases shouldn’t be a surprise to anybody on the dais.
“We did approve the updated compensation amounts, that was approved in our budget. So that’s no surprise to us. If it’s a surprise, then you know, I don’t know, maybe someone’s not paying attention to what we approved in our budget,” Gennawey said.
Some of the bigger year-to-year increases include: a landscaping contract with Nieves Landscape Inc. which went from $466,000 to $1 million; another landscaping contract with RGI Landscape which increased from $273,000 to $626,000 and a traffic signal maintenance contract with Siemens Industry that jumped from $5,000 to $245,000.
“Please keep in mind that these are vendors who provide routine maintenance,” Purchasing Manager Jarod Nazowa said during his presentation on the contracts. “These vendors perform extra work … beyond their original base amount”
Slusiewicz called for a complete audit of all city contracts.
“We’re still only at 30 contracts out of 670, which is why we need to do the audit,” Slusiewciz said, referring to the city’s audit of 21 contracts released Sept. 5. “If they’re allowed to exceed, we can’t let them exceed double — in my opinion, without somebody reviewing that.”
In that audit, the accounting firm Pun Group found a cost overrun of $410,000 for a tree trimming contract over two years.
Slusiewicz brought up the overage before the audit was released earlier in the year and found that the company, West Coast Arborists, did work at former City Manager Rod Foster’s house, even though the company doesn’t typically do residential work. Since then, he faced allegations of bullying and intimidation made by Foster and others around town.
Slusiewicz resigned his largely ceremonial title of mayor last month and has been steadfast in calling for a full audit of all the 674 contracts the city has.
However, Councilman John Mark Jennings said city staff should be overseeing all contracts so money isn’t spent on an outside group to review contracts, but acknowledged some of the increases were unnerving.
“It’s a little daunting if we’re going to be twice the amount on a contract,” Jennings said. “This is exactly what I would like staff to do: I would like for you to take a look at the other contracts … before spending outside money.”
Jennings didn’t agree with Slusiewicz’ assessment of the situation and said people should be cautious of using words like “overspending” and “surprise.”
“What we’re doing here is actually make our contracts match the budget,” Jennings said. “I’d like to reiterate that all of these sums have been approved (in the budget).”
Spencer Custodio is a Voice of OC reporter who covers south Orange County and Fullerton. You can reach him at email@example.com.