Response to Auditor’s Report – October 5, 2011

The California Capital Group (CCG) is proud to have been a member of the Fox Theater team.  It was a complex project and CCG followed all of the directions of the Oakland Redevelopment Agency (ORA) and applicable rules and regulations in the performance of its contracts.  CCG stands behind its work and is thrilled to have facilitated the ORA’s receipt of millions of dollars in private capital, grants and philanthropic donations and the successful completion of the project.  While public projects may often be controversial due to a lack of definable benefit, the Fox Theater is a rare redevelopment project that has received universal acclaim that has delivered demonstrable, concrete benefits to the City of Oakland.

With respect to the recently released audit of the Fox Theater project, CCG applauds its stated goals of improving contracting procedures and reinforcing accountability; however, CCG is concerned that the document incorporates apparent factual inaccuracies and we are disappointed that CCG was not provided with the opportunity to provide additional facts prior to the release of the final document.  CCG has reviewed by the response that the ORA provided to the auditor and we support the bulk of its facts and findings.

CCG would like to take this opportunity to respond to some of the issues raised in the audit document.

 

  1. The audit erred in determining that the implementation of the Fox Theater project lacked appropriate oversight.  The project was the subject of over 24 public hearings conducted by the ORA Board and 14 Board resolutions providing review and direction on the project’s scope, goals and budget.  The project was the subject of 1,000’s of man-hours of direct oversight by ORA and CCG staff.
  2. The audit appears to place undue emphasis on a concern that the project contracts provided CCG and others with an incentive to increase the project budget in order to increase fees.  This undue emphasis is made clear when the audit itself concludes that no actual conflicts of interest of city employees or CCG officials were revealed.
  3. The audit erred in determining that CCG received approximately $178,000 in unsupported cost reimbursements.  As set forth in Section 4(b) of the ORA’s response, all of the reimbursements paid to CCG were supported by the documentation required by the applicable contracts.  The ORA has stated that this documentation was provided to the city auditor prior to the issuance of the final document.
  4. The audit erred in determining that CCG received approximately $178,000 in unearned fees.  CCG performed the work requested by the ORA, submitted appropriate invoices and was paid pursuant to those invoices.  Further, as set forth in Section 4(c) of the ORA’s response, the work related to the payments at issued was properly authorized by Fox Oakland Theater, Inc.  The only amount subject to further review is approximately $36,000 in previously paid fees for work performed in 2005/2006.   CCG is confident that its invoices are appropriate, has offered to escrow the amount pending final resolution and welcomes the opportunity to review this amount with the ORA through the previously proposed process.
  5. The audit fails to recognize that the project exceeded the ORA’s then current goals for participation by local and small local business enterprises by 17.47% and 9.41%, respectively.

The auditor also expressed concerns about future contracting procedures related to the Oakland Army Base (OAB).   The ORA has already implemented enhanced contract review and coordination procedures in its work with CCG on the OAB master planning work.  These procedures are in compliance with FHWA/DOT, State of California, ORA and Port requirements and based in part on the experience with and successes of the Fox Theater project.  CCG is confident that these procedures will be carried forward into any construction work for the OAB project.

 

 

Also

 

Attached please find Amendment 4 of the OAB Accounting Protocols.  Williams Adley’s scope, in which they will review each CCG (or CCIG Oakland Global, after the 3rd Amendment to the ENA is executed) Reimbursement Request to the City for satisfaction of their conditions of approval prior to payment of the consultants.

 

This document includes the following:

 

Protocols:

  1. Amendment 4
  2. Williams Adley Consultant Payment Checklist

Forms Required for Consultant Payment:

  1. Consultant Payment Request Cover Sheet
  2. Non-Design Consultant Payment Request Cover Sheet
  3. Conditional Waiver and Release Upon Progress Payment
  4. Unconditional Waiver and Release Upon Progress Payment
  5. Reimbursable Request Form
  6. Change Order Request Form
  7. Record of Negotiations

Forms Required from CCIG Oakland Global:

  1. Prompt Payment Invoice Transmittal
  2. Progress Payment Form
  3. Affidavit Reporting Subcontractor Payment
  4. CCIG Oakland Global Reimbursement Request Cover Sheet

Required Exhibits of Consultant Contract:

  1. Exhibit A: Scope of Work
  2. Exhibit B: Contract Price
  3. Exhibit C: ADA/Nuclear Free Zone Disclosure
  4. Exhibit D: Ownership, Ethnicity and Gender Questionnaire
  5. Exhibit E: Project Consultant Team Form
  6. Exhibit F: Exit Report and Affidavit
  7. Exhibit G: Declaration of Compliance (Living Wage Ordinance)
  8. Exhibit H: Declaration of Non-Discrimination (Equal Benefits Ordinance)
  9. Exhibit I: Acknowledgement of Campaign Contribution Limits
  10. Exhibit J: Declaration of Compliance (Arizona Resolution)

 

A sample Progress Billing Worksheet is also attached.

 

 

Phil Tagami
Managing General Partner
tagami@californiagroup.com

CALIFORNIA CAPITAL & INVESTMENT GROUP
The Rotunda Building
300 Frank Ogawa Plaza, Suite 340 | Oakland, CA 94612
Office 510.268.8500×11 | Facsimile 510.834.5380

Assistant, philsadmin@californiagroup.com

Commercial Brokerage | Development | Asset Management | Lending | Government Affairs

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2 thoughts on “Response to Auditor’s Report – October 5, 2011

  1. As someone who worked on this project, I can attest to the high caliber of ethic and detail our team undertook. The City Auditor fails to understand the complexity of this project and while I am disappointed by the City Auditor’s Staff for the volume of factual errors in their report, it does not change the fact that this project was a pivotal factor in the re-birth of Uptown Oakland – which is continuing to expand as we speak. A full analysis of the Fox Theater renovation must take into consideration the ancillary benefits that we as the development team hoped to accomplish. As I reflect on the transformation that this neighborhood has undertaken the past 6 years, I cannot help but be angered that one of our City leaders would attempt to undercut our efforts. Oakland needs to encourage these types of visionary projects, not lambast them in the shadow of their success.

  2. Hi Phil,
    I appreciate your candor and thought, though I disagree with you about many aspects of the situation.

    Would you be willing to be interviewed by email for a special edition newspaper covering Oakland Occupation?

    I’m emailing the addresses I can find for you online today– you can reach me at
    Oakland native (at) g mail (dot) com

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