State Auditor Report on Great Park Audit: Poor Governance Compromised Report’s Integrity

Jeff Lalloway and Christina Shea with Irvine Mayor Steven Choi-2014
Jeff Lalloway and Christina Shea with Irvine Mayor Steven Choi-2014
Jeff Lalloway and Christina Shea with Irvine Mayor Steven Choi-2014

The long awaited Audit of the Great Park Forensic Audit is out and it’s highly critical of HSNO and the City of Irvine for how the entire process was managed.  It’s critical of the sub-committee consisting of Council members Christina Shea and Jeff Lalloway and basically accused the Republicans running the city council of the same sloppiness they accused Larry Agran of in managing the development of the Great Park.

You can read the full report here.

From an August 9 letter sent to Governor Jerry Brown and legislative leaders, the audit takes the city to task for favoring one vendor (HSNO) over others, releasing partial depositions before a key election, and not providing consistency in allowing deposed witnesses to comment on their testimony transcripts, among others.  All of which effectively confirms the highly-politicized nature of the Great Park audit that cost taxpayers nearly $1.7 million — nearly seven times the amount of the original $240,000 estimate.

Here are the findings summarized:

  • The City of Irvine Did Not Ensure That the Orange County Great Park Review Used Appropriate Industry Standards, and It Conducted a Flawed Selection Process of Firms to Perform the Review

  • Disjointed Contract Management Decreased Transparency Related to the Park Review’s Cost and Scope, and It Also Led to Cost Overruns

  • Creating an Unnecessary Park Review Subcommittee That Was Exempt From State Open Meeting Laws Compromised the Park Review’s Integrity

  • Irvine Could Have Better Handled Depositions, and It Released Preliminary Park Review Results Before a Key Election

  • Whistleblower Protections Exist for Those Who Report Improper Governmental Activities, and Irvine Recently Improved Its Processes for Receiving Complaints

Here’s the text of the letter:

As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the city of Irvine’s management of the Orange County Great Park contract performance review (park review).

This report concludes that poor governance of the park review, which ultimately cost the city about $1.7 million, compromised the review’s credibility. Specifically, Irvine did not ensure that the park review was conducted according to the industry standards most appropriate for achieving the city’s goals.

City council members had stressed the importance of an independent audit. However, the standards under which Irvine chose to conduct the park review did not require the independence or rigor intrinsic to an audit. Further, the city’s request for proposal for the park review did not stipulate that Irvine was seeking bids for an audit.

Also, Irvine did not always follow its policies and procedures when selecting and overseeing the consultants performing the park review. Specifically, in 2013 Irvine altered the way it selected a consultant to perform the review. Toward the end of a competitive process to select a consultant for the park review, Irvine modified its selection and evaluation process by augmenting the scores of one bidder, and by including interview performance in its scoring and finalizing the methodology used to calculate scores after it had conducted the interviews. This, coupled with not notifying bidders of the changes to the process, unnecessarily cast doubt on the impartiality of Irvine’s selection of the consultant that would conduct the park review. Further, Irvine’s disjointed management of its contracts with consultants for the park review limited transparency related to the review’s cost and scope, and it also led to cost overruns.

Additionally, in January 2013, the city council unnecessarily created an advisory committee—a subcommittee composed of two city council members—to oversee the park review. State law allows the creation of such committees and allows them to conduct their business without adhering to state open meeting laws. Although we found no evidence to conclude that the subcommittee operated outside of its legal authority, we found that the subcommittee added little value to the process. For example, Irvine contracted with outside law firms who undertook many of the oversight activities that the subcommittee should have performed.

Further, we found little evidence that the subcommittee advised the city council, even though the role of an advisory committee, in the context of open meeting laws, is to counsel, suggest, or advise. We believe Irvine would have been better served had the city council chosen not to establish a subcommittee for this high-profile review, but instead chosen to deliberate and decide openly at city council meetings the issues regarding the park review. Greater transparency could have increased public confidence in the park review.

The audit is harsh towards Lalloway’s and Shea’s two-person subcommittee.  From the report, this:

Further, although the city council charged the subcommittee with overseeing the park review, Irvine contracted with outside law firms who, particularly during the second phase of the park review,

undertook many of the oversight activities that the subcommittee should have performed. During the first phase of the park review, the subcommittee was to receive findings from HSNO and provide information to the city council. However, minutes of city council meetings indicate that the subcommittee did not report to the council during the first phase of the park review. During the second phase of the park review, the city council required the subcommittee to oversee the park review and ultimately to report to the full city council the results of the investigation.

However, one subcommittee member stated that she understood Aleshire was the project manager over the park review because the contract indicated it was the project manager. Further, both subcommittee members stated that Aleshire was managing the work of HSNO.

Nevertheless, as described previously, Irvine’s contract with Aleshire specified that it was to facilitate the work of HSNO, not manage the firm’s work.

We also found little evidence that the subcommittee advised the council. The role of an advisory body, in the context of open meeting laws, is generally described as counseling, suggesting, or advising. We expected to find evidence that the subcommittee, in accordance with its assigned responsibilities, had recommended to the city council that it consider taking certain actions regarding the park review, such as whom to subpoena, how much funding to provide to Aleshire and HSNO, and what objectives HSNO should be directed to investigate further.

Although a memo from city staff to the city council indicates that the subcommittee participated in developing the initial RFP for the park review, there is no evidence in city council minutes that the subcommittee provided any advice to the council in 2013. In January 2014, the subcommittee did recommend to the city council that it authorize the second phase of the park review. However, subsequent to that meeting, proposals related to the second phase of the park review were not presented as recommendations by the subcommittee but as recommendations by either an individual city council member or Irvine’s special counsel for the park review.

According to available information, the subcommittee’s actions did not exceed the authority of an advisory committee; however, we believe the subcommittee was unnecessary and compromised the integrity of the park review process. The subcommittee members provided varied responses when we asked them why Irvine needed to conduct the park review using an advisory committee. One of the subcommittee members stated that the subcommittee’s purpose was to add authority to, and oversee, the park review. This member also stated that although city staff would normally take a lead role in a subcommittee, in this case they did not because city staff was among the subjects of the park review and would not be able to give dispassionate and unbiased guidance to the subcommittee about the park review. Nevertheless, Irvine contracted for two other reviews of Great Park that were published in 2009 and in 2012, as we discuss in the Introduction, without creating an advisory committee to oversee the reviews. Although these reviews were smaller in scope and cost compared to the park review, these previous reviews were similar in that they also required the input of Irvine’s staff. Further, the other subcommittee member explained that the subcommittee was able to provide historical perspective to the firms conducting the park review.

However, we believe an advisory committee was not necessary to provide this perspective. Specifically, members of the city council could have provided such perspective either through formal city council meetings or in individual meetings with the firms. Finally, we found scant evidence that the subcommittee acted to oversee the park review.

Recommendations by the State Auditor were offered and Mayor Steven Choi responded objecting to many of the findings but capitulated in adopting several of the suggested reforms reflecting a tone-deafness to the way the city handled this politically motivated auditor; that letter starts on page 52 of the PDF and the State Auditor’s response which starts on page 63 amounts to “you just don’t get it.”

Council member Beth Krom did not support Choi’s letter, “facts” or conclusion.

The LiberalOC takes this moment to note that HSNO failed to depose the one person in Irvine who knows more about the Great Park than anyone — Krom.

 

7 Comments

  1. No doubt Fat Pat (Ltpar) will shortly chime in with a longwinded blustering comment in defense of corrupt Christina (Shea) consisting primarily of variations on the word “Agranista.” He will then respond to criticism by calling his critics child molesters.

    • John, as I always say, “if the shoe fits wear it.” Since I have no first hand knowledge regarding the Audit, I will leave it to those who do to defend it. That said, considering who the State Government is controlled by, I wouldn’t expect anything but a critical biased response. Where was the State Auditor, when Larry Agran screwed the pooch for ten years at the Not So Great Park, awarding no bid contracts to his political friends and contributors. End of discussion on this topic.

      • Not the end of the discussion because Shea played a part in award what amounted to a no-bid contract to HSNO by changing terms and not telling other bidders….

        Where was the state auditor 10 years ago? Seeing that every Park contract was conducted via an open process that included a vote of the GP board.

  2. These results are exactly what I would expect from Choi and corrupt Christina. It was always about the election.

    • Hypocritical for Shea & Company to single source a vendor while being critical of Agran. And I’m not surprised by the cost overruns in the hunt to discredit the public process followed by the Democratic Majority.

  3. Funny comments on this story at VOC. Lucas and Zenger accessing the interwebs from free wifi at Fullerton Library with Cantor’s approval. That’s what happens to the unemployed

  4. The city structured its request for proposal so that it nearly ensured the winner would receive another contract without having to undergo a competitive bidding process. Hagen, Streiff, Newton Oshiro received a $400,000 contract partly based on recommendations from its own initial report. The city should have discussed and decided the park review at open council meetings, instead of the advisory subcommittee, to ensure transparency.

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