Piedmont Neighborhood News

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Something is Rotten in Piedmont

Posted by Len Gilbert on March 11, 2010

Something is Rotten in Piedmont

By Timothy Rood and the members of POGO, the Piedmont Organization for Government Oversight

After two separate million-dollar “emergency” appropriations, the Piedmont City Council has buried over $2.4 million in public funds in a utility undergrounding special benefit district that benefits only 144 homeowners – a subsidy of over $17,000 per household. These actions violated City policy and possibly state law as well. It is the City’s policy to have these private underground districts pay 100% of their cost, consistent with Proposition 218. But taxpayers in the rest of Piedmont have now paid nearly half the cost of what was supposed to be a private beautification project, the official documents of which state that any benefit to the public at large is incidental and limited to no more than 5% of the cost.

The City of Piedmont has similarly poured public funds into other utility undergrounding districts and studies for privately-championed projects on public property, such as the controversial Moraga Canyon sports fields, and is poised to pour in hundreds of thousands more, even as its highly-ranked school system faces a $750,000 funding shortfall. Citizens are outraged, and an election may have been affected by an information blackout that involved senior City staff and elected officials.

The Piedmont Hills Undergrounding Fiasco

How did this happen? Flawed construction documents, no prior geotechnical investigation, and inadequate oversight by City staff resulted in massive cost overruns for tunneling through bedrock in the Piedmont Hills Utility Undergrounding District. The change orders were approved by Public Works Director Larry Rosenberg, despite there being no funds left in the project budget or contingency fund. Bedrock was discovered in the first week of digging, and staff met in July to discuss the problems. But the overruns were kept out of public view for months, until the project was so far along that it could not easily be shut down. Rosenberg’s boss, City Administrator Geoff Grote, must also have been aware of the extent of the overruns as early as September 11, 2009, when invoices had been received from the contractor totaling 98% of the project budget.  At this point, staff allowed the project to keep digging blindly. The City Administrator did not publicly inform the City Council, nor did anyone inform the undergrounding district. Then-Mayor Abe Friedman said Grote told him about the August overruns but that he “didn’t know what to do” and that he “can’t remember” whether he heard in September, October or November.

By Oct. 12, 2009, City staff had received invoices totaling $2,206,869, which is $144,574 more than the total available funds including project reserves. Significant amounts of bedrock had been found, yet City staff let the contractor continue digging. Staff did not inspect the geotechnical maps on file at City Hall or the many geotechnical reports on file for the project area, which the City requires on all private construction projects – many of which indicated the existence of extensive bedrock in the project area. Staff did not stop the project to do basic geotechnical exploration by core samples, simple stake driving or ground penetrating radar.  The digging and overruns continued throughout October and November 2009, with no public notification. When heavy rains in November caused the collapse of inadequately protected open trenches, the City made an initial bailout of $296,000 from its sewer fund, which attracted little attention.

The true extent of the problems first came into public view on the morning of Saturday, December 5, 2009, when the staff report for the December 7 council meeting appeared on the City’s website, requesting an appropriation of $1,004,832 to complete the project, with assurances from staff that this amount would be adequate to complete the project. A massive outpouring of emails from all over Piedmont protesting the appropriation and the minimal public notification did not sway the Council, although the vote was postponed five days to a special Saturday meeting. The resolution cited public benefits of the project, including safety and beautification, but the primary motivation was City Attorney George Peyton’s assertion, in a seriously flawed handwritten guesstimate, that the liability to the City of not completing the project, while it could not be reliably quantified, would vastly exceed the amount of the appropriation. Peyton has not fully responded to repeated requests for clarification as to whether he received a considered legal opinion from outside counsel as to whether this appropriation of public funds for a special benefit district was in fact legal. After significant pressure from Mayor Abe Friedman for a unanimous vote, the Council unanimously approved the appropriation.

The influx of public funds allowed the digging to continue, along with the overruns. It appears that material information about the extent of the overruns was kept out of view until after an election. On the eve of Piedmont’s Feb. 2, 2010 City Council election, in which challenger Julie Watters had repeatedly called for an independent audit of the problems, City Clerk Ann Swift told the Council that additional errors in the contract documents had been uncovered and that the $247,000 remaining would not be adequate to complete the project, but she could not say how much additional money would be needed. Watters was defeated in the election, and two days later, a staff report revealed that a second appropriation of $1,150,000 was being requested to complete the project. After another lengthy special meeting, the Council approved the second bailout by a 3-2 vote.

Homeowners in the District, which is among the wealthiest areas in Piedmont, have raised only about $100,000 toward the $2 million overruns and have angrily protested that they did nothing wrong and should not have to pay the full cost of the beautification project. The City Council says it hopes to recoup some of the funds by suing its engineering consultants, even as the City is spending hundreds of thousands of public dollars defending  an adjacent undergrounding that likely has the same problems of bedrock and is effectively dead.

A sham investigation

The Council has ignored citizen requests for a legal validation action, essentially a court’s stamp of approval as to the legality of its action. An “audit subcommittee” consisting of two Council members who voted in favor of both appropriations was announced after the December bailout. Charged with producing a report by April 15, the audit subcommittee had not even met once as of March 10.

A group of concerned citizens filed a complaint with the Alameda County Civil Grand Jury in February. Whether the Grand Jury will have time to investigate the matter before its term expires at the end of June or will turn it over to the next Grand Jury is unknown and will not be known, given the secrecy of its proceedings.

At the same Feb. 16 meeting at which he was sworn in as the new Mayor, Dean Barbieri announced his appointment of retired Judge Ken Kawaichi as the sole citizen representative to the audit subcommittee. Left unsaid was the fact that Judge Kawaichi’s wife Susan is the foreman of this year’s Alameda County Civil Grand Jury. While no one is questioning either Kawaichi’s integrity, the appointment of Judge Kawaichi to represent the citizenry of Piedmont in the official investigation creates at least the appearance of a rather blatant conflict of interest.

How Things Are Done

When Piedmont was flush with real estate transfer taxes, it was par for the course for staff to expend large amounts of public money on sole-source consulting contracts and subsidies of projects that were supposed to be privately funded. Most cities have their municipal budgets peer-reviewed, but Piedmont hasn’t done this in at least 10 years. At least two former Piedmont mayors say they are shocked by the actions of former Mayor Abe Friedman, who championed the undergrounding project and assumed the role of negotiator with the utility contractor, in apparent violation of the City Charter limiting the mayor to a purely ceremonial role. But Gray Cathrall, editor of the privately-owned local newspaper, the Piedmont Post, rejected all letters to the editor on the subject, citing his own legal opinion. (Mr. Cathrall, a former sportswriter, is not an attorney).

Citizens are calling for a supplemental assessment so that the 144 homeowners pay the full cost of their beautification project, charter amendments prohibiting staff from spending City funds without prior approval, a free press that publishes the full range of views on issues of public importance, and a commitment to transparency, honesty and public oversight.

For more information:
Timothy Rood PiedmontPOGO@gmail.com

Click to view a PDF of this graph

Click to view a PDF of this table

City Of Piedmont – Piedmont Hills Undergrounding Utility District
Timeline showing trenching cost overruns including overruns before Feb 2nd Election.
Mar. 10, 2010 Original Valley Bid 1,515,295
Project contingency 547,527
total 2,062,822
Valley Valley
Note Invoice Paid Pmt Invoice Retention Paid Invoice % of total Balance
below Date Cate Req # Payee To Date Amount Amount Totals available available
1 07/20/09 07/30/09 1 Valley U. 223,038 22,304 204,734 223,038 14.7% 1,839,784
08/03/09 08/11/09 5 Valley U. 283,601 28,360 255,241 506,639 33.4% 1,556,183
09/03/09 08/28/09 7 Valley U. 387,946 38,795 349,151 894,585 59.0% 1,168,237
09/04/09 09/15/09 8 Valley U. 334,039 33,404 300,635 1,228,624 81.1% 834,198
2 09/11/09 09/25/09 9 Valley U. 254,849 25,485 229,364 1,483,473 97.9% 579,349
09/25/09 10/07/09 12 Valley U. 282,588 28,259 254,329 1,766,061 116.5% 296,761
10/12/09 10/14/09 13 Valley U. 228,404 22,840 205,563 1,994,465 131.6% 68,357
3 10/12/09 10/22/09 14 Valley U. 212,404 21,240 191,165 2,206,869 145.6% (144,047)
10/29/09 11/05/09 17 Valley U. 33,060 3,306 29,754 2,239,929 147.8% (177,107)
10/24/09 11/05/09 18 Valley U. 54,711 5,472 49,240 2,294,640 151.4% (231,818)
11/08/09 11/18/09 19 Valley U. 120,637 12,064 108,573 2,415,277 159.4% (352,455)
4 11/16/09 11/16/09 — Valley U. 296,000 0 296,000 Crest Rd. Repair (352,455)
11/22/09 12/17/09 20 Valley U. 112,069 11,207 100,862 2,527,346 166.8% (464,524)
12/06/09 12/23/09 22 Valley U. 207,711 20,771 186,940 2,735,057 180.5% (672,235)
5 12/12/09 12/12/10 — PHUUD 1st allocation 1,004,000 Balance + $1,004M => 331,765
01/08/10 01/11/10 25 Valley U. 8,775 878 7,898 2,743,832 181.1% 322,990
12/20/09 01/11/10 26 Valley U. 229,199 22,920 206,279 2,973,031 196.2% 93,791
6 01/03/10 01/21/10 27 Valley U. 115,099 11,510 103,589 3,088,130 203.8% (21,308)
01/28/10 02/08/10 28 Valley U. 280,678 28,068 252,610 3,368,808 222.3% (301,986)
01/28/10 02/08/10 29 Valley U. 31,790 3,179 28,611 3,400,598 224.4% (333,776)
7 01/28/10 02/08/10 32 Valley U. 12,328 1,233 11,095 3,412,926 225.2% (346,104)
02/02/10 City Council election. Including the $1,004,000 the project is over budget at least => (346,104)
8 02/06/10 02/06/10 — PHUUD 2nd allocation 1,060,000 Balance + $1,060M => 713,896
Total Excluding Crest Road => 3,412,926 341,294 <= Total Retention Holdback
Notes Valley Utility bid $1,515,295; additionally the entire project has a $547,295 contingency. All figures are actual
invoice amounts taken from data supplied either in staff reports or email from staff (see attached). This does
not include any overruns on the project other than those from Valley Utility for mainline trenching. Balance
available does not include the $296,000 taken from the City Sewer Fund for the Crest Road repair.
1 Trenching starts and “Blue Granite” bedrock is found in the first week. 80,000 psi mining equip. is required.
2 Sep 11: 98% of the original $1,515,295 trenching bid is invoiced. Trenching is far from complete.
3 Oct 12: Valley billing exceeds the trenching allocation plus entire project contingency by $144,279.
4 Oct 16: Council takes $296,000 from City Sewer Fund to repair Crest Rd. water damage.
5 By Dec 6 staff has received invoices for trenching that exceed the Valley bid and project contingency
by $672,467. Staff tells council 2,300 linear feet of trenching remain. Council appropriates $1,004,000 for
Valley Utility for the project. $331,533 remains to complete the project.
6 By Jan 3, despite $1,004,000 extra funding, the project has exceeded council authorizations again.
7 Jan 28: Four days before the Feb 1 Council meeting and five days before the city election, staff has received
invoices which total $346,336 over the Dec 12 $1M + the original Valley bid + the entire project reserve.
Feb 1: Staff does not inform council of amount of the overruns. Council is told 3,950 feet of trenching remain.
8 Feb 6: Council appropriates another $1,060,000. Total taxpayer funds to PHUUD are $2,064,000. Including
Crest Road repairs $2,360,000 of taxpayer money is spent on this project.
Data sources:
Feb. 6 Mark Bichsell finance report to Council, pages 1 and 5
Feb. 12 City accountant Ken Lee’s spreadsheet with invoiced amounts and missing dates
Feb. 18 Mark Bichsell/Ken Lee email clarifiying Pmt Req 23
Feb. 18 Ken Lee email clarifying Sewer Fund as source of $296,000 (typo as $296)
Dec. 7, 2009 Staff report June 12, 2008 61 Glen Alpine Geotechnical Report
note: Excluded from calculations above are: (1) Pmt Req 23 in three parts and evidently for lateral work;
see Feb 18 Ken Lee email. (2) Pmt Req 31 is total retention fee est. $355,058; see Feb 12 Ken Lee email.

Read More…

 

East Bay Express – Build or We Sue:

http://www.eastbayexpress.com/ebx/build-or-we-sue/Content?oid=1643366

Piedmont’s Seaview-Hampton Undergrounding Problems:

http://www.contracostatimes.com/piedmonter/ci_14656008

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