End-of-term report card
By David Broadland, November 2014
Key votes at City Hall raise questions about the judgment of some councillors seeking re-election.
The primary role of media in a democratic society is to provide citizens with information and analysis on important issues that allow those citizens to hold their government accountable for the decisions it makes and the actions it takes. This is particularly important in the period just before an election. If a politician has played a significant role in enabling an unfolding fiscal disaster, for instance, the period just before an election is the time to make that clear. For that politician, though, just before an election is a really inconvenient time for truth-telling. It’s an excellent time to say things like, “It’s with the lawyers, so I can’t talk about it.”
That’s what’s going on right now with the Johnson Street Bridge project. At the beginning of the current council’s term, the official budget for the project was $77 million. Since then the cost has apparently escalated to $108 million, but nobody at City Hall will talk about it. This is a déjà vu moment if ever there was one. The same thing happened before the last civic election and that led to one of the most revealing episodes in the term of the mayor and councillors. I am referring to the City’s attempt to silence analysis and criticism of its management of the bridge project. Councillors distinguished themselves one way or another on this issue, and now all but one of them is seeking re-election.
Here are the basics of what happened. In March of 2012, the price tag for the Johnson Street Bridge project suddenly rose from $77 million to $92.8 million. Focus filed an FOI and the information released to us a couple of months later showed that senior City staff knew two days after the 2011 civic election that the price tag had risen by at least $5.8 million due to an escalation in construction costs. A question occurred to us: Did City Hall actually know this before the election? This was an important question of accountability: then City Manager Gail Stephens had made a very clear and public report to City councillors 45 days before the election in which she stated that the project continued to be within the $77 million budget. Had she misled councillors and the public just before an election?
At the same time that Focus obtained this information, a City Hall insider provided Ross Crockford, a freelance journalist, with a tip: there was a “smoking gun” in the City’s finance department records that would show that Stephens and other senior bridge project managers had been told the project had incurred significant expenses that were not included in the council-approved budget.
In May of 2012, Crockford filed a carefully-worded FOI for records from the finance department that was practically guaranteed to find that “smoking gun,” if it existed.
While Crockford negotiated a fee for the requested records, the City made a Section 43 application to Information and Privacy Commissioner Elizabeth Denham. The application covered Crockford, Focus Editor Leslie Campbell, myself, and “any persons acting on their behalf.” The practical effect of this application was to immediately cut off all of our rights to access public records, including Crockford’s request for the “smoking gun.” In doing so, the City became only the second public body that had ever used this provision of the Freedom of Information and Protection of Privacy Act to limit a journalist’s access to public records.
The City said that it had to make the application to Denham because it was being overwhelmed by requests from Crockford and Focus. But in the first seven months of 2012, aside from the “smoking gun” information request, Crockford had filed only two FOIs. Focus had filed five, only one of which had taken enough City staff time that a fee had been applied. (This fee was later appealed by Focus as being unreasonable and Denham’s office agreed, directing the City to return 60 percent of it.)
In other words, the City’s claim that it was being overwhelmed with requests was unsupportable. You may recall the City withdrew its Section 43 application without submitting any evidence of its claims to Denham’s office. But before it did that, a vote was held by City councillors on the issue. That vote boiled down to whether councillors supported City staff’s attempt to limit press access to public records, or whether they opposed it. For the record, those councillors in favour of limiting press access to public records included Mayor Fortin and councillors Alto, Coleman, Thornton-Joe and Madoff. Those opposed to limiting press access to public records included councillors Helps, Young, Isitt and Gudgeon.
A few months later, the “smoking gun” Crockford was seeking was released to him by the City. It was a memo from acting Assistant Finance Director Troy Restell that showed Stephens had been warned by her finance department in August, 2011 (well before the election) that $5.2 million in project costs had not been included in the council-approved budget of $77 million. When added to the $5.8 million in additional construction costs the City was officially notified of two days after the 2011 civic election, it became clear that Stephens may have misreported the financial state of the project just before an election.
In April, 2013, a group of Victoria citizens, including Crockford, wrote to Stephens asking her to provide a legitimate explanation for why she had reported the project was on budget. Not receiving a response, they then asked Mayor Fortin to hold an inquiry. Fortin’s position was that Stephens hadn’t made a full report and at the time she claimed the project was on budget, she believed it was on budget. Councillors Young and Helps were very vocal in their support of the citizens’ request that Stephens provide an explanation for why she had reported the project was on budget. Under the chilling influence of a threatened lawsuit, however, the issue disappeared from public discussion.
Stephens’ lawyer Joe Arvay told Focus,“[I]n the fall of 2011, Ms. Stephens was advised that some of the estimated costs had actually been reduced, based on changes to the cost of materials and that such cost-savings would offset any of the added costs set out in the [finance] memo.” Focus then filed an FOI seeking the record that would support Stephens’ claim. The City could find no such record.
The issue boiled down to whether the mayor and councillors supported the right of citizens to hold Stephens accountable for her report that the bridge project was on budget. The record shows that Mayor Fortin did not support that right; Helps and Young made it clear they did. Other councillors were publicly silent on the issue.
Three months later, Stephens resigned.
The central event that led to the current mystery about the project’s cost happened on the last day of 2012, when councillors approved the contract City staff had negotiated with PCL Constructors Westcoast. The meeting was closed to the public but Focus obtained the minutes through an FOI request.
City staff provided councillors with a report that stated, “The City’s Consultant, MMM Group, has reviewed the contract documents prepared by FMC [the City’s legal adviser on procurement] and the City, including optimizations, contingency, project risks and the value engineering opportunities, and in their professional opinion recommend that the City proceed with the project and enter into a contract with PCL Westcoast.”
According to the minutes of that meeting, the wisdom of the 3.9 percent contingency that the agreement depended on was questioned by some councillors, notably by Young and Isitt. A vote was held on whether to award PCL the construction contract. The issue boiled down to this: Was the assurance councillors had been given that City engineers and their professional advisers had all their ducks in a row, including that small contingency, credible?
The minutes show that only councillors Lisa Helps and Ben Isitt had doubts strong enough that they voted against City staff’s recommendation to sign the contract with PCL.
The minutes also show that none of the councillors questioned MMM’s recommendation, or even asked to see it. What, exactly, did it say? Focus filed an FOI for MMM’s written recommendation but the City now admits that no such written record exists. It was just someone at MMM providing a verbal recommendation to someone at the City of Victoria that, sure, it seems okay to us.
In February, PCL submitted a $9.5-million change order to the City. The company has since submitted an additional change order for an undisclosed sum. The City handed over the first change order to MMM for advice.
MMM’s advice to the City was that PCL’s request for more money should be refused. Ironically, MMM argued that PCL’s bid proposal contained such extensive design changes that its bid should have included a much higher contingency, on the order of 40 percent. With no written proof that MMM did, in fact, recommend the City accept PCL’s bid, including the small contingency, the prospects of any legal action by the City against MMM for providing dubious advice seem limited.
Whatever the quality of MMM’s advice, it has been expensive. In June, 2010, MMM told the City that project management and engineering costs would amount to 12 percent of construction costs. That’s the industry standard. The City has already paid, or committed to pay, $12.5 million to MMM since April 2009, and MMM recently told the City they and their subcontractor will need an additional $2.4 million to complete the job. If they get that, their $14.9 million would represent 23 percent of the $66 million construction cost the City is counting on, almost double the industry standard.
The key MMM employee the City has been working with since 2009 is Joost Meyboom. Meyboom conducted the original condition assessment of the Blue Bridge back in 2008. His first recommendation to the City, following his examination of the bridge (the Delcan Report), was to “retrofit rather than replace.” Back then Meyboom told City staff that a retrofit “to lifeline standards can be achieved by installing a new, relatively flexible foundation to relieve the existing timber pile arrangement. Together with electrical/mechanical upgrades, painting and other rehab items this retrofit option is currently estimated to cost in the order of $8.6 million.” This recommendation was hidden from the public until an FOI by Focus found it. But by then momentum for a new bridge was so strong it didn’t matter: nobody believed it.
At consequential turning points in the project’s history, City staff have hidden the difficulties the project was encountering. Perhaps that’s not surprising. What was unexpected was the degree to which that secrecy would be supported by Mayor Fortin and several of his councillors. Such secrecy not only frustrates deliberation by the public, it can also lead to exceedingly expensive government. The preliminary estimate for fixing the bridge was $8.6 million. The project is now sporting a $108-million price tag. That’s a 1200 percent ballooning from the preliminary estimate. Now consider this: A preliminary estimate of the City’s infrastructure deficit is “$600 million.” Voters might want to ask themselves, as they mark their ballots on November 15, if they’re confident the candidates they’re voting for have what it takes to keep that from blowing up by 1200 percent. Just say’n.
David Broadland is the publisher of Focus Magazine.