Additional Cost Overruns Likely on Civic Center in Beverly Hills


The Beverly Hills City Council was left reeling once again this week by the disclosure that there may be additional cost overruns of an undetermined amount on the new civic center, which has already been declared "a financial tragedy" by one council member.

"This feels like deja vu in a terrible way," said Beverly Hills City Councilwoman Vicki Reynolds at the council's informal afternoon session.

One of her colleagues, Robert Tanenbaum, was less understated. "What we have here is distortion of government," he shouted. "I'm not going to tolerate it any more."

Tanenbaum's anger was directed at city staff members, who he contended had withheld information from the council regarding the discovery of possible code violations and had ordered changes in construction plans that could require additional work and increased cost on the center.

City Building Official Ronald Clark also disclosed that subcontractors had performed some electrical and mechanical work on the center without having submitted final plans to the city.

"When we reviewed the plans two weeks ago," Clark said, "we had good structural plans. We did a field investigation at that time."

It was not unusual, Clark said, for subcontractors' plans to lag behind main architectural drawings. "I think what happened on this job all the way through was that everyone was in a big hurry," he said.

Mayor Max Salter said the news that the city had ordered changes without having plans in place was "brand new information. I am very bothered by this," he said.

Both Tanenbaum and Salter are candidates for reelection on April 3.

Tuesday's revelations were only the most recent episode in what has been an unfolding story of financial problems surrounding the civic center. When architect Charles Moore submitted his original design in 1982, it was to have cost $30 million. City officials now believe the overall cost will approach, or perhaps even exceed, $100 million.

On Nov. 7, city staff members had assured the council that completion of the largest single phase of construction--the portion involving a new police station, library and courtyard--would cost no more than $53 million. But in mid-January, general contractor J. A. Jones Construction Co. walked off the job a a result of a payment dispute with the city.

Shortly after the dispute flared with the construction company, City Manager Ed Kreins, increasingly under fire for his role in the civic center project, announced his retirement.

Jones is now back on the job after working out an agreement with the city covering payment for the work still to be done.

The squabble over work already performed, however, may take years to resolve. The dispute involves asbestos removal and problems encountered with ground water that Jones contends could not have been anticipated--work that the city argues is covered in the original contract. Jones estimates the cost at more than $14 million.

JLH Consulting Inc., a construction management company that had been hired to keep the city informed about the project, was fired shortly after the dispute with Jones erupted. By early March, the council had resigned itself to a civic center that could cost as much as $75.5 million.

Gary Turk, project executive with the construction management firm of Lehrer McGovern Bovis, with whom the city is negotiating as a replacement for JLH, said Tuesday that "it would be unrealistic" to say that costs would not rise above the $75.5 million mark. "In walking the job, I have seen aisles in the library that might not meet (Beverly Hills) code requirements and some possible handicap code violations," he said.

Tanenbaum, sounding like the attorney he is, fired questions at Clark and Assistant City Manager Bob Walsh as though he were cross-examining them at a trial.

"Did you ever think it was important enough to notify council that work was being done without plans?" he asked Clark.

Clark said he always reports to proper channels.

"Because you work for the city manager, not the council--is that correct?" Tanenbaum asked. "Yes," Clark replied.

"Well, we're going to correct that," Tanenbaum said.

After the council meeting, Tanenbaum said he thought ordinances should be rewritten to assure that the council has an advise-and-consent role in the hiring and firing of all department heads.

Vice Mayor Alexander agreed that "communication to the council leaves a great deal of room for improvement. I'm not sure we need to change an ordinance," he said, "but we need to have personnel that understand that the council has to be advised of all significant matters involving the city.

"The critical person in making that happen in my estimation is the city manager. . . . I know Mark Scott, our new city manager, supports the view of open communication."

On a more positive note Tuesday, the city's director of finance administration, Donald J. Oblander, assured the council that despite the cost overruns on the civic center, Beverly Hills' financial position remains strong.

Revenues continued to grow faster than the rate of inflation during the period from July 1 to Dec. 31, 1989, Oblander said, summing up his quarterly report to the council.

Property tax revenues are up nearly $777,000, with business-license taxes up $847,000. (The council noted, however, that with the recent bankruptcy of the Drexel Burnham Lambert securities firm, the city has now lost its largest single taxpayer.)

"A major surprise was sales taxes," Oblander said, with revenues up nearly $976,000.

By contrast, he reported, "transient occupancy (hotel) taxes continued to lag behind projection." Competition from new hotels on the Westside could be the reason occupancy was down in Beverly Hills, he said.

The finance director urged caution as the city plans for the future, citing the potential for a general downturn in the economy. City subsidies for the school district and recent refinancing of the city's long-term debt were further reasons to guard against draining the general fund, he said.

Recommending that "extreme care be used in adding new services or expanding existing programs," Oblander advised, "the city would be wise to allow its reserves to be replenished before making major new commitments."

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