Saying they have a "moral obligation to pay," Reynoldsburg City Council on April 27 approved spending nearly a half-million dollars to cover bills due on the new community-center YMCA.
In a meeting conducted via Zoom and livestreamed on the city's Facebook page, council voted 6-1 to appropriate $450,000 from the capital-improvements-project fund to cover expenses related to the center at 1470 Davidson Drive.
At-large councilman Barth Cotner voted no.
The appropriation by council marks the second time members have agreed to allocate money because the project has exceeded its original $28 million budget.
Council appropriated $1.3 million from the CIP fund in July to the community center's construction, raising the budget to $29.3 million.
Then-Mayor Brad McCloud said rising steel and labor costs, along with a paltry contingency fund, led to items being "value-engineered" out of the project to cut costs.
Much of the $1.3 million appropriated by council last summer was used to put those items -- including pickleball courts, a splash pad and an outdoor pool slide -- back into the community center design. However, officials said, items often were added through change orders that failed to account for costs associated with re-engineering them back into the plans, such as a $12,785 charge for the crane needed to install the pool slide.
Some things increased in cost between the time city officials removed them from the plans and then returned them to the project. For example, costs for center furnishings increased by $4,864 to a total of $77,709 and the cost to ship ballet barres climbed by $1,985 to a total of $5,497, according to a spreadsheet of project changes provided to council.
An estimated $65,000 is needed for a radio-antenna repeater system, according to information provided to council. Required under Ohio law for a building this size, the technology allows signals from police and firefighters' radios to reach outside in the event of an emergency.
Mayor Joe Begeny and council members bemoaned the project's $350,000 contingency. Contingencies are a portion of a project's budget set aside to cover unforeseen costs or changes.
A project of this size would typically have a contingency of nearly 10% of the total cost -- or $2.8 million -- officials said.
The small contingency, a lack of communication and a rush to finish the largest project in city history -- coupled with the resignation last May of former public-service director Bill Sampson and the election of a slate of new city leaders who took office in January -- led to mistakes, officials said.
Sampson had been overseeing the project, and the public-service-director position wasn't filled until late January when William Dorman took over.
Although former city attorney Jed Hood had a "reasonable basis" to conclude that project changes didn't need to go before council, this "promoted a lack of communication with council ... and put us in a position where the last mayor and the current mayor ended up signing purchase orders that put the city over budget," said City Attorney Chris Shook, who took office in January. "Especially the change orders, those are documents that should have run through the triumvirate of the city attorney, auditor and mayor. The change orders themselves are contracts; that's why they need to go through that process.
"There were some balls dropped."
City auditor Stephen Cicak said his office uncovered the shortfall in mid-February and has worked with other city departments to audit the project's accounting process. Each city department is responsible for monitoring its budget, Cicak said.
"The city auditor's office never issued checks for things not authorized by council," he said. "The control of money is when council passes an ordinance, the money is appropriated and a purchase order is opened. Nothing can be paid without an appropriation.
"This time, the work has already been done."
Bills still owed
Begeny, Cicak and other city officials met with CT Consultants, the project's construction manager, and Gilbane Construction Co., its general contractor, to review the items still outstanding on the community center project.
Final costs submitted March 26 show an outstanding balance owed of $382,044, most of it to Gilbane Construction.
From that amount, the city will set aside about $21,485 to pay for increased insurance premiums on the new building.
The city also owes CT Consultants $95,670, according to a March 31 project breakdown provided to council.
The $450,000 appropriation includes a "cushion" of about $67,000 to ensure the city has enough money to pay bills associated with filling and opening the outdoor pool, Begeny said. Any unused money will be returned to the CIP fund, he said.
The $30 million community center YMCA opened Jan. 25 but closed in March when central Ohio YMCAs were closed in response to the COVID-19 coronavirus pandemic. The center is temporarily housing a portion of the Truro Township Fire Department while Station 161 on East Main Street is under construction.
Voters in 2017 approved an income-tax increase, in part to help build the 75,000-square-foot community center. The tax increase to 2.5% is expected to generate about $6.5 million annually.
The community center was built as a partnership between the city and the YMCA of Central Ohio. OhioHealth also leases about 13,000 square feet for primary-care physicians. The city owns the land and building, with the YMCA and OhioHealth paying the city under 15-year leases.
The YMCA operates the center and charges membership fees. Those who live or work in Reynoldsburg receive a 10% discount.
At-large councilman Stacie Baker called the process a "debacle" and said residents are "owed an apology."
"This is their money -- this is the taxpayers' money," Baker said. "We're moving past it, but I do want to apologize to the community for this."
Louis Salvati took office in January as Ward 2 councilman and also is the finance committe chairman. He said communication on a project of this size was "woefully inadequate" from its start. He also said there should have been a bigger contingency fund.
"The project was allowed to move forward with, basically, no contingency," Salvati said. "This pretty much guaranteed ... that we would be in this position at some point in time. We need to learn from this mistake and not let it happen again. While the steps leading us here are not to be ignored ... we still remain far under the industry-standard contingency that should have been included from the beginning."
Begeny said department directors now are required to submit contracts to both the city attorney and auditor for review. He said the city attorney will review contracts against payment requests and the auditor will certify funds are available, before they reach his desk for a signature.
"The safeguards are in place through the auditor and city attorney's office to make sure this doesn't happen again," he said. "We've hired a new, full-time service director. He and the auditor, myself, the city attorney, everyone is taking on the Y to finish it, so nothing gets missed."
Cicak said Reynoldsburg could still receive a citation from the Ohio Auditor's Office.
"There probably will be citations issued (by the state auditor) to the city for the way that this has been handled," Cicak said. "We'll cross that bridge when we get the information. Appropriating this money -- or not appropriating this money -- won't be the end of this discussion. We will talk about this more in the future.
"There's a higher obligation when you're working with the public's money."
The next City Council meeting is Monday, May 11.