In 2022, I wrote that cost overruns on Stockton’s new City Hall were “entering boondoggle territory.” Three years down the road, the potential waste of money has grown worse.

It’s not just the ever-increasing price tag — the renovation and relocation project has soared to closer to $100 million, if you factor in other costs like the parking lot — but the delays. Eight years on, the money-sucking towers at 501 and 509 West Weber are yet to be completed.

The city’s contracting system seems like “a moving target that keeps increasing,” one expert said in a well-researched story by Stocktonia reporter Aaron Leathley.

NEW CITY HALL |
A STOCKTONIA INVESTIGATION

SEE MORE:

Special report: Contracts started at more than $40 million. Then they kept growing, mostly unseen.

Timeline: A nearly 20-year history of delays, cost increases

Video: How to understand the growing costs, and why they matter

A moving target? How about a staggering display of government waste?

There appear to be at least four reasons the Waterfront Office Towers project became so costly.

  • Inadequate property inspection before purchase
  • Pandemic inflation
  • Pricey, last-minute change orders
  • And a formula for council oversight that has the perverse effect of leaving  most cost overruns unseen by the council and the public.

Let’s look at each.

Inadequate inspection: The city forked over $13 million for the building purchase originally. Without adequate scrutiny.

“It’s insane, when you look at it,” said Dan Wright, who while serving on the council voted to approve the purchase. “Foundationally this building is a piece of crap.”

The deficiencies the city has had to address include cracked foundation and floors, antiquated elevators, damaged insulation, an obsolete HVAC system, as well as—to quote from a city analysis—”new and renovated lighting systems, fire alarm system, power systems, data and telecommunication systems, fire sprinkler and fire suppression systems … plumbing systems, interior metal wall framing…” 

There’s more. But you get the idea. 

Even the blueprints were bad. They failed to accurately diagram certain structural elements. The city then paid contractors to X-ray the buildings to find them, at greater cost. Cue Nicholas Cage and a sequel to “National Treasure.”

Pandemic inflation: COVID-19 disrupted supply chains, increasing costs and delays. Stockton has the worst luck. You may recall construction of the Events Center was bedeviled by relentless late-season rains that slowed progress to a crawl and ballooned costs. It’s like the gods keep sending Nemesis to humble Stockton’s aspirations.

Last-minute change orders: Change orders — amendments to a  construction contract, usually adding work — are to be expected. But Leathley cites an example of city staffers waiting until the designs were all but complete to submit “an unprecedented 219 IT-related comments.” 

“The IT comments should have occurred much earlier,” objected the Davis architecture company, Indigo. 

Responsible city execs should have told the IT Department — and any other Johnny-come-latelies — sorry, you missed the boat. Instead, the boat returned to port to pick up stragglers. 

A flawed cost oversight policy. Councilmembers must vote on cost overruns of 10% or more — but only on the line item that caused the cost to exceed 10%, not the rest of the costs. An odd policy.

Moreover, the newly approved, higher, cost figure resets the 10% to zero. Meaning every time the council approves higher costs, the amount of money city staff can spend with no council or citizen oversight grows bigger.

The Waterfront Towers boondoggle demonstrates this faulty policy is a tapeworm in the belly of the body politic.

This faulty policy can be fixed, said fiscal watchdog Dean Andal. 

The solution is not to reset the 10% figure when the Council approves a cost overrun, he said.

“If you have a $1 million contract which goes over budget by 10%, that would require a vote of the City Council to authorize that.” The overrun figure would not reset. “Then (later) it goes over 7% more. Now it’s 17% over,” Andal said.

And the Council stays involved in an oversight role. “It should be the cumulative expense over the initial estimated value,” Andal said. “I don’t think anybody believes, if the project goes 10% over budget, that elected officials should not be involved.”

Requiring more council votes on cost overruns means the issues would be agendized. There could be debate. The press could report on it. The public could weigh in. Voters could oust bad stewards of tax dollars.

Mayor Christine Fugazi seemed skeptical.

“Council oversight works only if you understand the needs, the costs, and you are getting verifiable numbers,” she said in response to emailed questions.

Fugazi offered an alternative solution. “I do believe that we should institute incentives for early completion and meeting contract milestones like our MUD Rehabilitation Project.”

The mayor said she is, “Working with city staff to make sure that our contracts shift responsibility for overruns and faulty bidding whenever possible to the contractors and the vendors. They do this in the private sector and there is also precedent with municipal contracts.”

Admittedly, Andal’s reform would be less efficient. Democracy is inherently inefficient. But it can hold people accountable. That’s not happening now. 

Michael Fitzgerald is on X (Twitter) and Instagram as Stocktonopolis. Email: michaelf@stocktonia.org.