Memo: Smale Park construction violated law, leaves city at financial risk

CINCINNATI — The Cincinnati Park Board used agreements set up for building repairs and maintenance to construct much of Smale Riverfront Park, violating city law in the process and potentially leaving taxpayers on the hook if the work doesn't hold up over time, according to the official in charge of purchasing for the city.

The revelation comes as the Park Board is the focus of an outside audit into how it spends money. Questions arose about the board's spending habits in October, while Mayor John Cranley and the board were asking voters to approve a new tax for the parks system. The results of that audit are expected in May.

MORE: Park commissioner calls audit 'huge waste of money'

According to Patrick Duhaney, the city's chief procurement officer, the lack of competitive bids for Smale Park construction raises even more questions about how the Park Board spends public dollars -- specifically, why the parks department chose certain contractors and if the city got the best deal for its money.

Parks Director Willie Carden disputed any impropriety in awarding construction contracts for Smale Park, saying it's a Park Board policy to comply with city regulations.

Duhaney, who wrote he first learned of the situation in November, detailed the problems in a memo to City Manager Harry Black released late Tuesday.

He found the Park Board spent nearly $15 million among 12 so-called master agreements to build Smale Park, but only about $1.6 million of bonding was in place for that work. In doing so, the work violated a portion of the city's municipal code requiring construction contractors to have a performance bond covering 100 percent of the work they're doing for the city, Duhaney wrote; it's intended to protect the city if work isn't completed or done to specification.

Worse yet, eight of those master agreements have already expired; of the four still active, about $840,000 is bonded against $11.5 million in construction work. The city is trying to fix the discrepancies with the people behind the master agreements that are still active, Duhaney wrote. But "(i)t is unlikely that the City will be able to require the holders of expired (master agreements) to up their performance bonds."

And, Duhaney wrote, a lack of specificity in the work's scope creates more problems:

"Also, since the Parks Board utilized these (master agreements) in this manner, the City may ultimately have a difficult time identifying the contractor or contractor(s) responsible for any construction issues should they arise, since the project was not contracted to one general contractor. This is further complicated by the use of subcontractors who did not go through the City’s standard subcontractor approval process."

Instead, the Park Board should have gone through a standard process for construction work: inviting contractors to bid on the work, putting out a request for proposals, or a request for qualifications followed by a request for proposals from the contractors qualified to do the work.

A project of Smale Park's massive scale "should always be competitively procured and never done under a contracting mechanism, such as orders issued against (master agreements), that evades the public light," Duhaney wrote.

Carden defended his department's use of master agreements, saying in a prepared statement that he considers the bonding issue to be "moot" for work done between 2012 and 2015, because bonding typically expires a year after the project is complete and contractors and subcontractors are paid.

And, he wrote, the master agreements had already been put out for competitive bid before Parks used them for Smale Park construction:

"Each and every construction project and park feature constructed under these contracts was based on a cost proposal reviewed by the Park Board and submitted to the City Purchasing Department for approval. All these proposals used to build (Smale Riverfront Park) were approved by the City. Other aspects of (Smale Riverfront Park) were carried out as specific bid projects while parts of the park were built by the U. S. Army Corps of Engineers."

He also disputed the notion that taxpayers didn't get the best value, writing "the Park Board... routinely used these Master Agreements for many projects since these contractors had previously been vetted and approved by the City as being most advantageous and the best price for their services."

According to Duhaney's memo, the city has added the Park Board's contracting practices to the outside audit already underway; required the master agreement holder with the largest discrepancy between work done versus their bond amount to increase their bonding; deactivated the questionable master agreements so they can't be used until the issues are resolved; started to revamp the process for maintenance and repair contractors; and added stricter controls into its financial system.

Under the city's charter, the Park Board is independent of the city manager; park commissioners are appointed by Cincinnati's mayor, and Carden reports to them.

WCPO has reached out to Black and the mayor's office for comment.

CLICK HERE TO READ THE MEMO

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