Stockton’s City Council has voted to increase spending on three contracts for construction on its New City Hall by about $1.1 million total.
Yet in recent months, the city increased spending on the same contracts by almost triple that amount, without a public vote or discussion.
The most recent vote illustrates how a system of unseen spending first revealed in a Stocktonia investigation in September continues to drive up the project’s cost — even as a top city official publicly acknowledged the construction expenses are far out of line.
Stocktonia’s Sept. 8 investigation found that the three main contracts for design, management and construction on the project to refurbish the downtown Waterfront Towers buildings into Stockton’s new city headquarters had ballooned from about $44.5 million to about $62 million. But only about $4.2 million of the roughly $17.5 million in increases received a City Council vote or saw any public discussion.
NEW CITY HALL |
A STOCKTONIA INVESTIGATION
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
This unseen spending is possible due to a little-known Stockton policy governing how city contracts over $100,000 are increased. Under the “10% rule,” the city manager and department leaders can raise contracts by up to 10% of their total value, plus $100,000, without a City Council vote.
The result is like compound interest: the amount that can be spent without council approval increases over time.
When the city manager and department leaders reach their spending limit, the next contract increase must go before the City Council, but only that single increase. After that, the process can repeat.
This unseen spending left many Stocktonians baffled about what was driving New City Hall project’s escalating costs.
That frustration has continued, Vice Mayor Jason Lee said at the Nov. 4 meeting.
“The bane of my existence right now is responding to people online that ask us, ‘When is City Hall opening? How much money has been poured into City Hall?’” he said.
More unseen spending
But the Nov. 4 vote means the answer may elude the public, at least for now. Although the City Council only voted on about $1.1 million in contract increases — $186,000 for architectural company Indigo Hammond + Playle, $400,000 for construction manager Griffin Structures and about $497,000 for building company Roebbelen, council documents show — the contracts had already increased by about $3 million since the last council approval. And under the 10% rule, the new vote authorizes another $6.9 million in unseen spending.
The vote passed 7-0, with no discussion of the future spending it enabled.
Councilmembers did express their own frustration about the project.
“At some point, we can’t be left holding the bag,” Mayor Christina Fugazi said.
“The people that we’ve hired to do their job, if they’re not doing their job, they need to feel it in the pocket and not the taxpayers of Stockton.” She received scattered applause from those listening in the council chambers in response.
Seated as mayor in January, Fugazi served as a councilmember from 2014 through 2021, and is the only person on the dais who was also in office for the council’s 2017 vote to buy the Waterfront Towers.
Fugazi voted in favor of the $13.6 million purchase. Renovations were estimated at $11.9 million at the time.
The city can indeed work on tightening its contracts, Reed told Fugazi at the Nov. 4 meeting. But for some of the cost increases, “the city has culpability, in the sense of, we kept changing the design,” he said.
Total cost remains unknown
In response to questioning by Lee, the deputy city manager said he didn’t have the project’s current price tag on-hand. But it has cost about $750 per square foot to renovate the 133,000-square-foot property so far, he said. That works out to about $99.8 million. Reed didn’t say if that includes the cost of buying the building.
In contrast, building a new City Hall of the same size from scratch would’ve cost about $1,500 per square foot, Reed said.
Councilmember Michael Blower asked Reed if the city ever inspected the Waterfront Towers for problems before closing the purchase. “I wasn’t on council at the time, or I’d have been screaming from the rooftops, ‘get this thing inspected,’” he said. It’s advice even homebuyers spending far less should take, he said.
Reed didn’t answer directly, saying he wasn’t leading public works at the time. “But that’s great advice. I highly recommend it.”
On Wednesday, Reed confirmed through a city spokesman that “there was an inspection completed as part of the due diligence process, prior to the City completing the purchase of New City Hall.”