Tacoma staffers OK'd Cheney work, didn't tell council of cost overruns

More than four months ago, the city’s top managers overseeing the Cheney Stadium renovation authorized work beyond the construction contract amount that had been approved by the City Council, records obtained by The News Tribune show.

But the council, which generally must approve changes to contract amounts under city law, didn’t hear about the cost overruns – or others that came later – until this month.

Council members learned of them only after a requested increase of $821,000 was added to the June 7 meeting agenda. Questions raised shortly before that meeting led the issue to be postponed.

For months leading up to the request, city project officials had told the council the ballpark project was on time and on budget.

“That’s a problem,” said City Councilman Jake Fey, who separately reviewed the change-order records obtained by the newspaper. “We were not given an accurate picture of where we were at. We’re only now seeing the true picture on the back end.”

Mike Combs was the city’s public assembly facilities director who approved the change order that first exceeded the contract. Combs, now retired, conceded Wednesday the council should have been notified earlier.

“That was just an oversight,” Combs said. “It should have gone to the council sooner, back in February or March. I don’t know why it didn’t. Probably because we were running around like crazy trying to finish the project.”

Public works staff is set to deliver a detailed report about the project to the council today. Meantime, the request to the council – which would increase the $26.5 million contract to $27.4 million – has yet to be rescheduled.

Even with the construction overruns, all expenses are within an overall project budget of $30 million, Combs said.

“We didn’t really exceed anything,” he said.

Jim Parvey, an assistant public works director assigned to look into the matter, said that Combs and former project manager Rick Melvin may have been confused by a spending exception in city code.

Melvin recently was fired for what officials called unrelated reasons.

The exception allows spending without council approval for certain special projects up to the “total project cost” – in this case, the $30 million.

But even in those cases, project officials must obtain approval from the city manager, the code says.

“It’s not clear to me right now that they officially had that authority,” Parvey said. “Maybe they just thought they did.”

Combs said he doesn’t believe the project team sought the approval of City Manager Eric Anderson, nor did Combs know they needed to.

Regardless, Councilman Marty Campbell said the council should have been informed.

“It’s incumbent upon staff on projects like this to be explicitly clear to the taxpayers, and especially to the council, about how funds are being dispersed,” he said. “I don’t think we’ve ever had a clear feel about spending on this project.”

OVERLOOKED APPROVALS

On Feb. 8 and 9, Melvin and Combs approved a change order that paid for a range of extra work that put the ballpark project’s total at $24.42 million, according to records.

It was that change order – the fourth of seven that were authorized – that eclipsed the original contract amount approved by the council in March 2010. The contract with Mortenson Construction was for a $23 million base and a $1.4 million contingency fund.

Three more change orders totaling about $591,000 were approved, records show. All were signed by Melvin, with subsequent approvals by public works managers and the public facilities director.

Combs approved two change orders above the contract amount. After he retired in late April, interim director Rob Henson approved two others, records show.

Melvin did not respond to requests for comment for this story.

Henson, who assumed Combs’ job on May 1, said he largely relied on Melvin’s input.

“Mike had retired and I wasn’t involved in this project,” Henson said. “People are shoving stuff at me, saying ‘We have to get stuff paid. Sign this.’ So I asked, ‘Has this already been documented and approved?’ And Rick tells me yes. So I signed it.”

Change orders are routine in any construction project, Combs said.

“But you can’t bring every change order up to the council,” he said. “It would take too much time. You do it on a periodic basis when there is a significant amount.”

Records show at least three of the change orders each amounted to more than $200,000 – the city’s typical purchasing threshold that requires council approval.

Part of the extra work already has been paid to the contractor, a Mortenson executive said.

“A portion of it, we have been paid,” said John Nowoj, a Mortenson vice president.

Nowoj recently provided figures to The News Tribune showing Mortenson is still owed about $777,000 – about $44,000 less than the requested contract increase. The unpaid bill covers a combination of work done by Mortenson under the original contract and additional work authorized in change orders, Nowoj said.

Whether Mortenson has already been paid for change-order work is significant; it would mean the city has spent money the council has not authorized it to spend.

City Finance Director Bob Biles said he believes Mortenson has not been paid anything beyond the original contract amount.

As for the discrepancy in the city’s and company’s unpaid work figures, Biles said a difference in book-keeping methods accounts for about $20,000. The remainder – roughly $24,000 – is for work included in the requested contract increase that hasn’t been authorized or performed, Biles said.

That work – adding stairs to a new viewing berm in right field – wasn’t explicitly noted in the staff report to council. Henson said the way Melvin explained it to him, the stairs were required by the fire marshal. City officials now say the stairs might not be needed.

LEFT IN THE DARK

The way city public works contracts are intended, the council should be notified when spending reaches three-quarters of the total amount and could go over it, Parvey said.

“That didn’t happen on this one,” he said.

Most public agencies notify governing bodies before approving work that exceeds contracted amounts, several other officials and contract experts have said.

A possible explanation for why that didn’t happen with the ballpark, Parvey said, is an exception for special projects costing $10 million or more. The city manager has authority in these cases to approve change orders up to the overall project amount without council approval.

That explanation doesn’t fly with some council members. Some have noted the Mortenson contract already had a built-in contingency fund for overruns.

“I seriously doubt it was the intent of this council, or any previous council, for there ever to be the appearance of a blank check,” Campbell said. “You cannot just spend as you wish.”

When council members finally were informed of the increased costs – at least a month after records show Anderson knew about it – they learned about three ballpark features they’d wrongly believed Mortenson was providing at no cost. “That must have been a misunderstanding,” Combs said.

Change orders also show that most of the added expenses cover optional ballpark features.

Parvey noted a lease extension with the Rainiers obligated the city to spend the entire $30 million budget on ballpark improvements.

“I think that’s what these guys were doing,” he said. “I haven’t seen any improvements or change orders that didn’t fall within the direction of the lease.”

Added Combs: “I think that everyone is missing the bigger story – the fact we have a wonderful ballpark and that we saved baseball in Tacoma – not all this grumbling about what he said or she said or where’s the money coming from. That’s inconsequential to the bigger picture.”

Lewis Kamb: 253-597-8542

lewis. kamb@thenewstribune com

blog.thenewstribune.com/politics