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(Nov. 15, 2021, 2:45 p.m.) -- Long Beach City Auditor Laura Doud hired an outside accounting firm to analyze financial transactions and activity between the City its now-former (bankrupt) Queen Mary lessee Urban Commons and on that basis has issued a report concluding that poorly written aspects of a City lease with the Queen Mary operator, combined with missing payment information, excessive subcontractor markups and management fees, items purchased not for urgent and critical repair projects, lack of vetting subcontractors and a competitive bidding process; and lack of consistency regarding scopes of work and subcontractor invoices" resulted in now questionable city payments to the ship's operator and some of its subcontractors. The net effect has left 20 of 27 Queen Mary urgent repair projects uncompleted with a last-estimated cost of roughly $23 million. The Auditor's report also acknowledges that city taxpayers spemt roughly $2.4 million to date to cover payments on a debt bond (that put city funds at risk) as part of the City's lease transaction. The Auditor's report doesn't fault - or even mention -- any city elected official by name: Mayor Garcia (whose 2020 State of the City message hailed the transaction); Councilmembers who voted to approve the lease (over dissent by Councilwoman Suzie Price); or City Attorney Charles Parkin (now poised to retire) whose office drafted the lease. "As the City agreed to provide $23 million in upfront funds for capital repairs and renovations to the Queen Mary, the City’s funds were at risk. When City funds are used, it is important they are safeguarded to the highest level to ensure they are spent appropriately and as effectively as possible. This means that accepted best practices and the City’s own purchasing policies should be applied to those transactions. The lease agreement with Urban Commons did not reflect these high standards and requirements. For the urgent and critical repair projects the proper vetting, competitive bidding, detailed scopes of work, proper documentation for invoicing, and review of costs and project details are all essential controls that should have been in place so that the City could be confident that its funds were spent as intended. This was not the case," Doud's report states. "The lease agreement does not address markups that can be billed by subcontractors for work performed on the repair projects. City staff stated that it is typical for subcontractors to add markups to invoices and that they approved the markups. However, the City did not provide specifics on a limit for an acceptable markup percentage, what type of work was eligible for markups, or when markups could be charged. There were multiple instances where markups seemed excessive," her report adds. [Scroll down for further.] |      |
