Final Great Park audit report cites mismanagement, financial waste

The final Great Park audit report concludes that the project was rife with mismanagement and budgetary irresponsibility, leading to significant waste of tens of millions of dollars among the more than $200 million spent between 2005 and 2012.

The 143-page report with an additional 13 pages of exhibits released Monday includes the potential for legal action to recover money paid to contractors for professional negligence, under false claims or conflicts of interest.

The audit that was approved by the Irvine City Council in January 2013 with an original budget of $240,000 and expected to be completed in four months has taken more than two years and cost in excess of $1.2 million.

Newport Beach accounting firm Hagen, Streiff, Newton & Oshiro conducted the forensic portion of the audit before handing off findings last year to the legal firm Aleshire & Wyndner.

Special counsel Anthony Taylor conducted 23 depositions of city staff members and contractors connected to Great Park development and presented the findings with independent oversight from retired Orange County Judge Nancy Wieben Stock.

Findings include that former Mayor Larry Agran mislead the public beginning in 2006 with his statement the park could be constructed at a total cost of $401 million while knowing landscape architect Ken Smith had estimated the total cost at $998 million in 2005.

Agran’s deposition confirms he heard the figure $998 million, “almost a billion,” from Smith during the International Design Competition. Smith was awarded the design contract without any budgetary stipulation for total constructibles.

As mayor, Agran also served as chairman of the Great Park Corporation from 2005 to 2010. The report is critical of the management structure from the start, noting that “the process resulted in melding together a small New York architectural firm, various consultants, and a San Diego construction design and management firm, where the assembled team had never collaborated before on a major public project.”

It further states: “The design of the Great Park was allowed to escalate past any level of possible funding, that no real budget constraints were imposed until the 2009 Business Plan, and that as a consequence, the city has spent $350 million, and now only has improvements in the 75-acre Western Section which cost $65 million to build.”

Examples of budgets that ballooned out of control include a $4.1 million contract to build the Preview Park. After three phases of change orders, the section that includes the signature Great Park balloon ride ultimately cost $25.4 million to complete.

Newport Beach public relations firm Forde & Mollrich was singled out along with San Diego project management company Gafcon for potential billing abuses. The audit revealed Forde & Mollrich was paid $3.2 million as a subcontractor on the Western Sector after the firm was already paid more than $3.9 million in part on a $100,000 per month retainer as a subcontractor to the Design Studio, which was dissolved in 2009.

The total Forde & Mollrich compensation of more than $7.2 million for public relations work was nearly as much as the $7.87 million paid to architect Ken Smith. Gafcon was paid more than $13.45 million as the largest beneficiary of the total $46.87 million payout to the Design Studio.

A potential conflict of interest surfaced during former Irvine Mayor Sukhee Kang’s deposition when it was revealed Gafcon may have had an agreement to remodel Stu Mollrich’s Laguna Beach house in 2008. The report states Forde & Mollrich was contractually obligated to disclose all potential conflicts of interest involving other Great Park contractors.

Agran also remains under scrutiny for his role in recommending his “longtime political acquaintance and friend” George Urch for a position with the Design Studio. At the conclusion of Agran’s audit deposition on March 13, special counsel reserved the right to ask the City Council to authorize a court order to compel Agran’s testimony about political campaign volunteer consultants.