Portland’s auditor released a troubling review Wednesday of how a new city building tripled in cost from initial design to completion.
The Bureau of Environmental Services first planned the Columbia Building as a new home for city employees who had been working in trailers next to the Columbia Boulevard Wastewater Treatment Plant.
In early 2010, BES asked Portland City Council to fund an office building for $3.2 million.
City council signed off.
Over the next three years or so, the building’s cost ballooned to $11.5 million.
There are several factors for the higher costs, according to an audit just released by the Portland Auditor.
First, the whole approach to the building changed, from an office building with a few environmental features, to what the auditor’s office calls a “showcase” building.
“Elements like a radial, or rounded design, rather than straight walls, lots of angles and planes on a roof, a roof made out of concrete - features like that, tended to increase the cost,” says the city’s Director of Audits, Drummond Kahn.
And those aren’t all. Input from the public directed the Bureau to add a meeting space. The Bureau prioritized seismic preparation of the building, to the tune of $500,000.
The audit identified $1.5 million in project spending directed less for the new building and more for the treatment plant next door. Those include a new security gate, fencing, landscaping, as well as a “timeline of local history about water… etched into a new circular concrete walkway.”
The response from Bureau of Environmental Services director, Dean Marriott responded to the audit questions using the earliest cost estimate of $3.2 million to judge the project against. He says Portlanders should focus, instead, on the $8.9 million cost, presented in December 2010.
“Starting with this adjusted budget would provide the reader with a better comparison to the final $11.5 million,” Marriott writes.
Upgrading the building from an office complex to more of a signature project was only part of what inflated the costs, though, according to city auditors.
The Auditor’s office acknowledges that part of the cost increases came from the Bureau following city goals, such as for green building. A city requirement for public involvement gave rise to a recommendation to add a large meeting room - which was included.
The audit suggests the city’s preference for minority- or women-owned contractors, or “emerging small businesses” may have contributed to cost overruns. The audit says the contractor was “new to public projects.”
“Weaknesses in oversight during the design stage resulted in additional costs,” the audit says in its summary.
Audit director, Kahn, pointed out two particular red flags.
After the Bureau had amended the design contract multiple times already, the commissioner in charge, Dan Saltzman, told staffers in 2013 that he wouldn’t support further cost increases.
Auditors say that bureau managers got around this cap by spending money on the construction contractor - and then having the design firm bill that contractor.
“(The Bureau) took the money through the construction contractor, to pay the design contractor,” Kahn summarizes. “(It) certainly could’ve been a more transparent process to pay the design contractor.”
In addition, the audit highlights a BES staffer who took a job with the design firm contracted for the Columbia Building. Kahn says the city attorney is considering possible action on that front.
City commissioner Nick Fish asked the city auditor to evaluate this project. The audit finds that in general, city council approved the escalating costs, as required - though sometimes after the money had been spent.
In his response to the audit, Fish writes “this audit raises serious and troubling issues.” As the current commissioner in charge of the Bureau of Environmental Services, Fish says he’ll bring contract changes of $500,000 or more to the city council - as part of the regular agenda, rather than on the consent agenda, where issues are not typically discussed.
Fish also said he “accepted” the audit’s findings, and its nine recommendations. They mostly focus on oversight, transparency, identifying early on a project’s goals and key features.