FINAL REPORT - San Bernardino Superior Court

Executive Summary
never completed and ultimately cost the Southern California Logistics Airport over $50 million
in losses with over $76 million invested to date. City management did not conduct proper due
diligence before initiating the project, entering into an onerous and open-ended agreement with
Inland Energy Inc., or entering into a high risk $182 million agreement to purchase power
generation equipment from General Electric. Further, City management did not enforce all
contract terms and has not formally managed the use of an open-ended provision in the
agreement. In addition, the agreement with General Electric was adopted without proper
transparency in closed session, likely violating the Brown Act.
In June 2004, the City began procuring no-bid professional services from Carter and Burgess, an
architecture and engineering firm, to design, develop, and construct, a cogeneration power plant
to service the energy needs of certain tenants at the Foxborough Industrial Park. The project was
undertaken by the City without a thorough assessment of risks, a formal business plan or budget,
or sufficient controls in place. Through a series of mishaps the project was never completed,
resulting in the loss of tens of millions of dollars in public funds. Ultimately, the City was
awarded $52 million as a result of civil trial litigation against Carter and Burgess and its parent
company, but this award, even if fully paid, would still leave the City with approximately $40
million in losses.
Based on these findings, the Victorville City Council should:
3.1. Draft and implement planning policies and procedures for all City and SCLAA capital
projects. Such policies should incorporate best practices, including an independent
evaluation of risks and fiscal impact.
3.2. Draft and implement capital project controls, policies and procedures for all City and
SCLAA capital projects. Such policies should incorporate best practices such as:
a. Establishment of a project plan, including a project budget, which is periodically
re-visited and formally approved by the City Council and/or SCLAA Board of
Directors in open sessions. The policies should also include requirements for
implementing performance measures that are regularly reported to the Council
during the life of a project.
b. Establishment of procurement controls, including requirements for competitive
bidding, increasing levels of control over approval of professional service
contracts based on cost to the City, and standard documentation requirements for
the payment of invoices.
3.3. Schedule a workshop on transparency in municipal government, including an information
session on the requirements of the Brown Act. Following the workshop, the City Council
should establish policies to ensure that its operations are consistent with the requirements
of the State Government Code relating to open meetings and best practices, as they relate
to government transparency.
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Harvey M. Rose Associates, LLC