Performance audit set for Burlingame

ASPEN The city of Aspen is preparing to hire a consulting firm, at a cost of $40,000, to study how the city might do better in conducting its controversial, expensive and to date highly praised affordable-housing program.But the performance audit for Phase I of Burlingame Ranch report from the Alvarez & Marsal Real Estate Advisory Services firm, headquartered in Denver, will not look into questions about whether voters were misled by city officials in 2005, when a brochure cited erroneous cost estimates for the proposed Burlingame housing project.Instead, said City Manager Steve Barwick, any investigation into the finances and fiscal management of the project will be handled by the citys regular auditors.The Alvarez & Marsal audit will deal solely with whether the city could have done better in building phase I, financially or otherwise.Mayor Mick Ireland quoted what he said was a Japanese aphorism, Which goes something like this: In Japan, we fix the problem. In America, they fix the blame. He said he was not interested in continuing to try to figure out who is to blame for a feeling among voters that they were misled three years ago when asked to give approvals for the Burlingame Ranch worker housing project.The current Burlingame financial controversy erupted in May when local media began reporting the discrepancies between what the voters were told in 2005 and what is being revealed now.City officials have admitted that a 2005 campaign brochure touting Burlingame Ranch which said it would cost $74.3 million in total, with the overall taxpayer subsidy being $14.7 million was incorrect.In reality, city officials acknowledged, the taxpayer subsidy is now expected to be $85.5 million nearly a six-fold increase with a total cost estimated at $138 million.The 2005 figures, which covered only the construction of the buildings but not land costs, infrastructure or other expenses, were said at the time to cover all three phases of a project destined to contain 236 units.A city official conceded in mid-May that a revised estimate included nearly $33 million in inflated construction costs and more than $15 million in infrastructure costs, such as utilities and other items.The revised estimate amounted to some $70 million that voters were unaware of when they passed the Burlingame ballot question in 2005.Only phase one, with 84 units, has been completed so far. Another 152 are slated to be built as part of phases two and three.City officials plan to ask voters this fall to approve up to $75 million in bonds to finish the development. But because the costs have increased so dramatically, elected officials acknowledge that voters might be reluctant to approve funding for phases two and three at Burlingame.The Alvarez & Marsal report, according to a memo to the council from Barwick and Assistant City Manager Bentley Henderson, will have to do with construction operations and process improvement as related to the citys role as a housing developer.But while the firm tentatively has agreed to the $40,000 price tag for its services, the memo cautioned the council that the figure might change. Henderson told the council that the contract for the firms services still is being worked out, and that the cost of the audit likely will change as the contracts tasks are refined and finalized.In fact, said Hunt Holsomback of Alvarez & Marsal, the price tag initially was considerably higher before Barwick agreed to provide certain kinds of information and assistance to the firm.Council member Dwayne Romero labeled the terms set out in a draft memo from Alvarez & Marsal as somewhat boilerplate and aggressive, expressed the hope that as the contract negotiations continue it will be more specific to Aspens needs.Hosomback acknowledged that the scope of the project is aggressive, in that the firm estimated it would take roughly 150 hours to do the work. He said that depends on city staffers being able to sit down with Alvarez & Marsal researchers to answer questions in a timely way. Delays, he indicated, would stretch out the time line of the project and likely affect the overall price tag.City staff members will continue to work with Alvarez & Marsal representatives to hammer out the contract for services and bring it back to the City Council at a future meeting.jcolson@aspentimes.com