Great Park audit raises questions about financial management

Preliminary findings of an audit of the Great Park showed irregularities and raises questions about the financial and structural management of the $200-million project.

Among other things, the review concludes that some contractors who were awarded low-bid contracts ultimately billed the city far more than originally estimated, in most cases, due to change orders approved by the Irvine City Council.

The contractor that won the right to construct a preview park, for instance, ended up billing the city five times its original bid.

In some instances, services were paid for twice, and some work done by a public relations consultant for individual council members was billed to the park, the report says.

The results of the audit will be presented to the council next week.

The Great Park has been an ambitious proposal to transform a former Marine base into what was supposed to be a municipal park on par with Balboa Park, or even New York City’s Central Park.

But only a portion of the park has so far been built, and most of the money set aside for it has been spent.

The audit, ordered last year by the City Council, raises more questions than answers, stating that in some cases auditors were “precluded from further analysis.”

For instance, only $5.5 million in tax increment revenue, billed as a main source of funding, was received by the park. The firm was told that determining how the remaining $38 million was used was outside the scope of the audit, the report states.

According to a Times analysis late last year, most of the tens of millions set aside for the Great Park went to pay for plans, designs, administrative costs and consultants. Less than a fifth of the money went toward actual park construction.

The nearly $250,000 contract for accounting firm HNSO was approved in June and was extended from Oct. 16 to Jan. 1 to allow auditors enough time to complete their review.

The firm looked at the period from July 1, 2005, to Dec. 31, 2012, and reviewed documents including business and design plans, contracts, invoices and interviewed 23 current and former employees of the park, city and subcontractors.

Several key players refused to speak with auditors, the report notes, including architect Ken Smith, political strategy firm Forde & Mollrich and a Great Park employee charged with reviewing invoices.

However, Stu Mollrich of Forde & Mollrich, said he never received written questions from the auditing firm after requesting them Oct. 10. Written responses allow for more accurate, informed answers and provides a clear public record, he said in a statement.

The audit concluded, though, that a written dialog would not be cost-efficient and would inhibit free dialog.

The Great Park Design Studio, which includes Smith, program and construction management firm Gafcon and Forde & Mollrich, said in a statement that it has been willing to cooperate with auditors and that its award-winning work was completed on time and on budget.

Some individuals who told auditors that they witnessed or were subjected to political pressure declined to speak publicly with auditors, but no further details were listed.

Councilwoman Christina Shea said the report uncovers irregularities that many have long been concerned about, but that there’s more investigation to be done.

“It’s really sad that the city is having to face this sort of black eye,” she said. “There’s just so many areas, double billings, paying those huge amounts of money.”

She said the scope of the audit should be expanded into a second phase to answer questions the report noted were outside its scope, with the possibility that some money could eventually be recouped from consultants down the road. If the audit moves into a second phase, Shea said she hopes staff fully cooperates with auditors.

“We finally have people coming out on the record, that people are starting to talk,” she said. “I don’t want anyone … to be afraid that there’s going to be retaliation if they’re going to come forward.”

Councilman Larry Agran, who had only superficially looked over the report before speaking with The Times, said he didn’t believe there was much of concern.

“It’s unnecessarily political in its tone and content. An audit should be about the finances, it shouldn’t be about the politics,” he said, adding that the subcommittee comprised of Shea and Councilman Jeff Lalloway, part of the council majority, adds to the political perception.

Nothing in the report warrants an extension of the audit, he said, and doing so would be a waste of money.

“How many audits are we going to do here?” he said. “If this firm could not get its work done on time with a quarter of a million dollars, why would we want to award them additional funds?”

In November, the Irvine City Council approved developer FivePoint Communities’ plan to build a scaled-down version of the park in exchange for the right to construct 4,606 homes.

The 688-acre park is a stark contrast to the 1,300 acre municipal park with forests, a lake, museums and a wildlife corridor promised to county voters in 2002 at the site of the former El Toro Marine Corps base.

In its place, county residents will get a more active space, with a sports complex twice the size of Disneyland, a wildlife corridor and an 18-hole golf course.

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Twitter: @Sam_Schaefer

Samantha.Schaefer@latimes.com