Toronto’s auditor general has released a scathing report about another city-owned entity, this time related to the redevelopment of the Sony Centre for the Performing Arts.
Auditor-General Jeffrey Griffiths found “significant issues” with the way $23 million in construction contracts were awarded, he says in a new report obtained by the Star.
“The majority of contracts we reviewed were not awarded through open and competitive procurement processes,” Griffiths wrote. “In addition, documentation relating to the justification for sole sourcing contracts is deficient and in some cases does not exist.”
Certain transactions were also not appropriately accounted for, he wrote. “These transactions should have been identified and questioned by city staff during their review of the Sony Centre’s annual financial statements.”
Costs connected to the renovation jumped 43 per cent over budget, and are now expected to top $40 million, up from a projected $28 million. Some $11 million of the increased spending was funded by the developer, the report says.
External financial auditors of the Centre will determine whether or not the centre’s financial statements require amending.
Prepared at the request of the city’s executive committee, the 83-page report suggests “controls” over the construction project were “inadequate” and cites examples of cost overruns, substandard administration and bookkeeping practices and incomplete record-keeping.
The city’s audit committee will consider the report at the end of the month.
Griffiths laid some of the blame on city staff for taking a hands-off approach that left the redevelopment with people “inexperienced in managing large-scale projects.”
“Clearly there was a missed opportunity for the Sony Centre to benefit from the construction management expertise at the City,” the report says. “If the City had been more involved in the redevelopment of the Sony Centre, many of the issues identified in this report would not have occurred.”
While there has been a significant investment in the renovation of the centre, “the Sony Centre continues to receive over $1 million annually in operating subsidies,” as well as future capital requirements, Griffiths noted.
Contained in the report is the response from Sony Centre management. No one is named. “Sony Centre Management agrees that certain records (for the construction project) were not 100 per cent complete,” the report says.
“Without knowing that there was a retention policy applicable to the Centre, the Centre kept all those documents that it thought pertinent in connection with the construction and post construction time periods.
“Had management been alerted to the document retention policy, all of the records would have been available to the Auditor General.”
The 3,100-seat Sony Centre, located on the southeast corner at Front and Yonge Sts., is the former home of the Canadian Opera Company and National Ballet of Canada. It closed in June 2009 and reopened in October 2010 after the renovation. A public plaza is still under construction.
Dan Brambilla, CEO of the Sony Centre, who is stepping down next month, could not be reached for comment, nor could councillors and Sony Centre board members James Pasternak, Paula Fletcher and David Shiner. All are recent appointees.
Councillor Gary Crawford, a former Sony board member who chaired a task force on the future of three city-owned theatres, declined to comment Monday.
The report contains 12 recommendations that “should be viewed as having relevance for the Toronto Centre for the Arts and the St. Lawrence Centre for the Arts,” particularly given the renovations planned for the former, the report says.
Four recommendations relate to improving coordination and cooperation between the city and its agencies and corporations. The remaining eight relate to improving board oversight.
The auditor notes he has issued a “significant number” of reports on construction contracts, contract management and procurement-related issues over the years. “Many of the issues identified in this report could have been avoided if the recommendations contained in previously issued audit reports had been considered,” he wrote.
By: Betsy Powell City Hall Bureau, Published on Tue May 13 2014