Newport to be reimbursed $365,000 by Civic Center builder

The lead contractor and project manager of Newport Beach’s Civic Center project has agreed to reimburse the city $365,000, more than a year after an audit identified $1.2 million in possible overbilling.

The city and the company, Pasadena-based C.W. Driver, reached a settlement agreement Oct. 9.

“Despite a good-faith basis for their submission, C.W. Driver has agreed to reimburse certain of these costs,” the city and C.W. Driver said in a joint statement Wednesday.

“The city notes that there is no finding of wrongdoing on the part of C.W. Driver, but rather a good-faith difference of opinion in the interpretation of a complex construction contract. City staff has learned much from this project that will benefit future city projects and is satisfied that any questions as to the accounting for the project are now fully behind us.”

City spokeswoman Tara Finnigan said there would be no further comment.

Preliminary audit results released in June 2016 showed the city made about $1.2 million in payments to C.W. Driver without substantiating documents. It also criticized the city for assigning C.W. Driver the roles of both program and construction manager, roles that typically are separate to avoid potential conflicts of interest.

Costs for the Civic Center project — which included City Hall, an expansion of the Central Library, a 14-acre park, a pedestrian bridge over San Miguel Drive and a 450-space parking garage — swelled from about $105 million at the start of construction in 2010 to $140.2 million by the time the complex opened in 2013.

Incomplete financial documents, missing monthly reports, lack of detail in processing change orders, inconsistencies in project reports and a less-than-comprehensive set of architectural design documents may have contributed to the increased cost, according to auditors R.W. Block Consulting and Harris & Associates.

Current Mayor Kevin Muldoon, Mayor Pro Tem Marshall “Duffy” Duffield and City Council members Diane Dixon and Scott Peotter ran for the council in 2014 as a slate known as “Team Newport.” They campaigned on a platform of fiscal responsibility, which included taking aim at the costly Civic Center project. Dixon and Muldoon called for the audit not long after taking office in 2015.

Muldoon said Thursday that the reimbursement settlement is “a good and healthy thing for the city of Newport Beach to see come to a closure.”

Peotter, a vocal critic of “what I lovingly refer to as the Taj Ma-City-Hall,” said strict document control that is typical of construction projects didn’t exist here, meaning the audit could be done only on documents that existed.

“It’s nice to be able to recoup some of the money,” he said. But he said he still thinks Newport Beach taxpayers “got soaked.”

Dixon said the audit articulated best practices in project management that the city can apply to future developments and that every construction project needs a close-out audit to ensure money was spent wisely.

She said she also was pleased that the audit, which cost about $300,000, ended up paying for itself and then some.

“The value is really in the lessons learned,” Dixon said.

hillary.davis@latimes.com

Twitter: @Daily_PilotHD

UPDATES:

12:45 p.m. Oct. 19: This article was updated with comments from City Council members.

This article was originally published at 5:45 p.m. Oct. 18.