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    Hasty remodeling project costs taxpayers $1.1-million

    Swiftmud fixes up a moldy office building at a cost nearly twice what private business would pay.

    By COLLINS CONNER and DAN DeWITT
    © St. Petersburg Times
    published April 20, 2002


    A year ago, board members of the Southwest Florida Water Management District faced this question: Should they approve the proposed fixup of a moldy office building -- at a price nearly double what a private business would pay?

    Sure it was expensive. Sure they would be spending taxpayer money. But the board said the project could be a learning experience.

    "Let's examine this when it's over," suggested board member Monroe Coogler. "Let's just sit down and compare it ... and do an analysis (of) why, when the public does it, it costs almost double what anyone else could do it for."

    By the time the office reopened in February, Tampa Bay taxpayers had spent $1.1-million to remodel a building not much larger than astandalone Walgreens. Even counting only basic remodeling work, that was $344,000 over the going rate cited by board vice chairman Tom Dabney, a developer considered the expert by other board members.

    Swiftmud sets water policy and imposes property taxes on residents of 16 counties. The agency blamed the high remodeling cost on unanticipated construction problems and the hurried work schedule.

    But a Times review found:

    Swiftmud handed the job to a contractor who had practically no experience with such work.

    Swiftmud bosses did not seek a single competitive bid.

    They did not design the project before work started, nor did they provide clear specifications.

    "Those are the best jobs from the contractor's point of view," said Ellen Cianciaruli, Swiftmud's former facilities manager. "It's like cracking open the piggy bank."

    Even though the building cost nearly twice what private business would pay, Swiftmud executive director "Sonny" Vergara said the district acted responsibly:

    "My view, at the end of the process, is that it was a reasonable job done."

    Mold crisis?

    The mistakes started with a critical decision: The building's yearslong mold problems had reached emergency proportions.

    Building 2, next to Swiftmud's huge Brooksville headquarters, was 25 years old. Four employees had filed workers' comp claims because of the mold.

    The mood was mutinous during a meeting with Building 2 employees in August 2000. After listening to their complaints of chronic respiratory problems, Lloyd Roberts, Swiftmud's general services director, ordered the building emptied.

    Roberts said evacuating was the "right thing to do" even though air quality tests did not show extraordinary levels of airborne spores in most of the building.

    Lucy Petrucelli, the district's risk management director, called the health complaints mostly "psychological."

    "In my mind it was not an emergency situation," she said. "There was no reason to get everyone out of the building" other than to reassure the employees that they were being taken care of.

    Several weeks after the interview, Swiftmud spokesman Michael Molligan said he believed the Times "misconstrued" Petrucelli's comments.

    "Lucy's definition of emergency means action must be taken within 'minutes' or 'hours' or at the most 'days,' " said Molligan. "If the question was, did the employees need to be moved as soon as space could be made available (e.g., within a couple of months), the answer is yes."

    Haste makes waste

    Here's what happens on a typical project:

    An architect or engineer examines the building, prepares a scope of work, a cost estimate, a detailed asbestos survey, construction specifications and engineered drawings, and uses those documents to get competitive bids.

    Swiftmud did none of that.

    According to John Robinson, Swiftmud's former facilities manager, the district's construction chiefs "never sat as a group of professionals to discuss the scope of the problem and to determine the available courses of action."

    Instead, in December 2000, Roberts went to Swiftmud's unpaid, appointed governing board with a proposal: remodel the now-empty building to get rid of the mold problem.

    He recommended hiring Asbestos Certified Technicians of Land O'Lakes -- without competitive bids -- to remove some asbestos, moldy carpet and drywall. Roberts said the district could hire ACT under a special state contract, thus avoiding the time-consuming bid process. ACT did not respond to telephone messages and a letter from the Times.

    Cleaning out the contaminants would cost $65,000, Roberts said; he gave no estimated cost for the remodeling. Without asking a single question, the board's finance committee okayed the project; the rest of the board members concurred the next day.

    Within weeks, workers found more mold; all the drywall had to come down. The demolition cost grew to $120,000.

    Meanwhile, the district's purchasing department red-flagged ACT's bill. The problem: The state contract that Swiftmud used to hire ACT without bids can't be used when costs exceed $25,000.

    On the advice of Swiftmud attorney Rose Hilbelink, ACT's fee was split into four payments of $24,999 and one of $20,004, a violation of state rules.

    Attorney Bill Bilenky, Hilbelink's boss, said the state rule had "some funky language" that she misread. He noted that Hilbelink's opinion wasn't sought in advance of ACT's hiring; instead, she gave her interpretation "looking back at work that had already been done." He denied that she was asked to justify an improper contract.

    The job grows

    With the asbestos removal under way, Roberts asked ACT to manage the remodeling job. He trusted ACT, he said, because it had managed a similar, though less ambitious project for the district a year earlier.

    According to Roberts' project outline, ACT would get $630,000, including $66,000 for painting and sealing, $67,000 for drywall, $93,000 for electrical, $51,000 for construction management.

    Several contractors reviewed elements of the project for the Times.

    Swiftmud paid $228,000 for a new air-handling system and fire dampers. D.R Vause, an air conditioning construction manager for the state of Florida, said not only did the agency not need a new system, it overpaid by $50,000 for the system it bought.

    The district paid $282,830 for the interior work. Certified building contractor Edmond Council Jr. said the district paid 44 percent too much.

    Swiftmud spokesman Michael Molligan dismissed the contractors' estimates.

    "There's a significant difference between asking someone what something should cost and getting a contractor to sign on the dotted line to do a project," he said.

    The day before Roberts took his remodeling proposal to the board, Nick Spirakis objected. Spirakis was Swiftmud's project manager on the job.

    "I question (ACT'S) ability to act as a general contractor," Spirakis wrote in a memo to Roberts. The firm's experience is almost exclusively in asbestos removal -- not general contracting.

    Spirakis also complained of the way the work was being managed.

    "While trying to expedite this project we have forsaken all semblance of coordination," he wrote. "I feel this memorandum merely touches the tip of the iceberg. I feel we have minimized planning for the sake of expediency."

    The next day, Roberts asked the Swiftmud board for extra demolition money and $630,000 to remodel the building.

    Despite Spirakis' warning, Roberts recommended that the board hire ACT -- without seeking bids -- to serve as construction manager and general contractor.

    Roberts said the district could bypass the bid process since the renovation was an "emergency." An approaching rainy season threatened "further deterioration of the facility" and it was inefficient to have the building's employees scattered on the Swiftmud campus.

    Though board members questioned the cost, they unanimously approved Roberts' request. The job was begun without engineered drawings or specifications, two safeguards that keep costs down and mistakes to a minimum.

    "Shame on Swiftmud," said Robert J. Koning, director of the Contractors Institute, a Hudson school that prepares building contractors for their licensing exams.

    "There's no way whatsoever that the district should have ever, ever started a job without a complete understanding of what it had to do, from A to Z.

    "They waded into this pond. They should have known how deep it was."

    Falling walls

    As workers removed moldy drywall, the walls crumbled. Cianciaruli said the district shouldn't have been surprised -- a simple examination would have shown flimsy, pre-fab structures.

    The building had to be virtually gutted.

    The expanded project now had to comply with stricter building codes. Costs climbed accordingly: $20,000 for new framing, $22,000 for new doors, frames and hardware, $5,135 to paint the new doors, $20,000 for handicapped access bathrooms, $6,600 to fix the corridor, $4,800 to modify corridor air ducts.

    Once work is under way, it's too late to dicker over costs, said Koning, the Contractors Institute director: "At that point, price-shopping is not a factor."

    To contractors, said Cianciaruli, the former facilities manager, such jobs are a gift.

    "It's like cost plus 155 percent," she said. "The contractors are just wringing their hands, saying 'Mommy's getting a new boat.' "

    All the demolition and more than half of the remodeling work was finished before the county issued a permit, in October 2001. Roberts said pulling permits and meeting code was ACT's job. In any case, he said, the county ultimately okayed the project, so the work must have been adequate.

    But Swiftmud board member Janet Kovach called that stance hypocritical for an agency that demands citizens follow its own permitting rules. "We were totally wrong to do that," Kovach said.

    Besides the money paid to ACT, the district spent more than $160,000 for electrical and building supplies and services, charging the purchases to various Swiftmud accounts. Roberts said he was not trying to hide the escalating costs.

    Roberts said he kept costs down by having district employees perform carpentry, drywall, plumbing and electrical work.

    Koning of the Contractors Institute said that was a mistake: "You've just exonerated your contractor from any liability for the project. Co-mingling district employees and contractor's employees should never, never happen. That's a liability nightmare."

    Complaints

    Throughout the project, three construction chiefs -- Spirakis, Cianciaruli and Robinson -- warned it was a debacle.

    All three traced the project's problems to the management failures of their boss, Lloyd Roberts.

    In addition, the district received three anonymous messages, including one to Gov. Bush, that criticized the project's cost and management.

    Robinson quit in disgust in April; his replacement, Cianciaruli, quit in February. Spirakis was removed as project manager days after he wrote his critical memo. Roberts said he wanted to lighten Spirakis' heavy workload.

    Because of the complaints, the board asked its internal auditor, Kurt Fritsch, to review the project. He found no evidence of "gross mismanagement." He said that the remodeling was a "moving target project" and that Swiftmud "received reasonable value for the money we spent."

    Roberts told the Times it was "a very typical project. You start with X and you end up with 3X."

    In March 2001, when board members debated whether to remodel the building, the price was well above the commercial rate.

    "In the private sector," board chairman Ronnie E. Duncan said then, "we wouldn't go there -- for all the right reasons."

    At that March meeting, vice chairman Tom Dabney, who is a developer, said the going rate for commercial remodeling was $25 a square foot.

    "We're taking brand new space today, that has no air conditioning" and putting in "walls, doors, carpeting, paint, ceiling, lighting," Dabney said then.

    At that rate, Swiftmud still overpaid by 78 percent.

    Dabney says now he is "fully comfortable with the costs."

    He said remodelings always cost more than expected.

    "In terms of the outcome," he said, "this is a success story."

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