In the mid-2000s, Stockton’s leaders set out on a plan to consolidate government workers in a new City Hall.
Nearly 20 years later, after the purchase of two different buildings, they’re still using the old City Hall and have yet to relocate to a new, permanent home. In the meantime, costs for the project continue to climb. The Waterfront Towers, a plan once pegged at about $25 million, have now cost more than triple that amount, with more expenses yet to be tallied, and more work yet to be done.
An investigation published this week by Stocktonia focuses on figuring out why costs keep growing. The answer, the investigation found, can be tied at least in part to an obscure financial policy that has allowed contract expenses to grow — and grow, and grow — largely out of the public eye.
The larger story of the City Hall relocation is also one of bad timing, unexpected changes and plans gone awry.
Here’s a look at the plan and the investigation’s findings:
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 and cost increases
Video: How to understand the growing costs, and why they matter
How it started: A plan to buy one office building … then a different one
In October 2007, city officials concluded the ornate but aging City Hall on El Dorado Street was too old to remain serviceable. They decided to purchase an existing office tower downtown — a former bank branch sometimes referred to as the “WaMu building.”
The purchase was financed by municipal bonds. But misfortune struck almost immediately. The housing downturn and accompanying Great Recession soon battered Stockton’s finances, and the city eventually was unable to pay its bills. Stockton declared bankruptcy. As it couldn’t pay the debt on its bonds, bond insurers ultimately took over the WaMu building as part of a bankruptcy settlement finalized in 2015.
STOCKTONIA’S TIMELINE: 18 years of delays
By then, though, some city departments had already moved into the WaMu building, so the city paid to maintain a lease on that space, with plans to continue renting and remodel parts of the building for the city’s needs.
That remained the plan through 2016. In early 2017, the city received exactly one bid for remodeling work, for $5 million — more than officials had expected it to cost.
Later that year, officials started closed-door negotiations about other downtown properties. The content of those talks wasn’t publicly disclosed, but by fall, city staffers proposed a new plan in public session: The city could reject the too-expensive remodel bid and instead buy a totally different building. It’s actually a pair of buildings, known as the Waterfront Towers. The council voted in favor of the deal.
The price tag so far
At the time, officials put the purchase cost at $13.6 million, with an estimated $11.9 million in remodeling. For just over $25 million, they said, the New City Hall project would make the towers by the marina into Stockton’s new home. (In the meantime, the city continued paying to lease space at the bank building.)
The plan to remodel the Waterfront Towers: Three key contracts
Stockton spent the next several years working out details of how to refurbish the Waterfront Towers. By 2019, the city had an architecture firm do initial design work on the building and then hired that firm to design the renovations.
This becomes the first of three main contracts underlying recent years’ work on the New City Hall project.
Contract: Indigo Hammond + Playle, architecture
Original cost: $1.4 million
Next, in 2021, officials decided on a construction management firm.
Contract: Griffin Structures
Original cost: $722,000
And in 2022, the city was ready to begin actual construction on the remodeling. By this time, officials weren’t talking about the earlier estimates of $11.9 million. The city solicited bids for work that staffers estimated would cost $33.5 million. Instead, the lowest bid came in far higher. The council OK’d it.
Contract: Roebbelen Contracting Inc.
Original cost: $42.3 million
The price tag so far
The next round of public costs could be tallied at the total of those contracts. That’s about $44 million, plus the original purchase price.
But Stocktonia’s investigation found those contracts grew — perhaps more than most people would have imagined.
How contract costs increased over time
Stocktonia’s investigation zeroed in on those three contracts and the many documents called “change orders” that followed.
When contractors and clients need to make changes to a previously approved contract, a change order documents the extra work and cost. As Stocktonia reported, change orders don’t necessarily signal problems — they can happen for lots of reasons.
But the change orders on the Waterfront Towers kept coming. And because of a twist of city policy, most of them could be worked out solely by the contractor and city staff, with the city manager’s sign-off.
Under this rule, the only time the City Council has to approve changes is when the order exceeds 10% of the original cost, plus $100,000. But the council only has to approve the single change order that tips the limit — whether it costs $1 or $1 million.
And after that, the total cost resets: Any new change orders can be approved — without a council vote — up to 10% plus $100,000 of this new, larger total.
The result, Stocktonia found, was like compound interest. As costs increased, oversight shrank. Of 33 cost increases, only nine got a public vote.
The total increases were $17.5 million — at least in the public documents obtained by Stocktonia through May. But the City Council directly approved only about $4 million.
It’s possible for the council or the public to see the details of these increases — but not by going to a City Council meeting or reading publicly posted documents.
Instead, Stocktonia obtained hundreds of pages of contracts, change orders and other memos to piece together the details of the total costs, most of which were never publicly aired.
As Stocktonia’s investigation showed, this means true costs were harder to see. But beyond that, it was harder to see the construction problems that were driving up those costs — and the timeline delays that resulted.
The price tag so far
The tally now sits at about $62 million for the three main contracts, which began at $42 million.
That’s on top of the original $13.6 million building purchase. That’s more than $75 million on those items alone.
That’s not including other costs incurred before starting in with the contractors.
It’s not including the previous attempt to purchase the bank building, or the rent the city pays there.
It’s not including other costs that may come after the construction contracting is complete. There’s still an adjacent parking lot, and the cost of actually moving staffers, furniture and equipment into the new building.
It’s not clear how much more that will cost, or how many other change orders may still add to the total.
What is clear is the previous estimates of the “all-in” cost of the move were far lower than what the city has actually spent.
And as of today, the city has yet to move into New City Hall.
INVESTIGATION: Read Stocktonia’s special report