Novato Is About to Spend $36 Million a Mile. Has Anyone Checked the Math?

Before Novato Spends $24 Million, Someone Should Read the Contract

By Mike Little, candidate for Novato City Council, District 2

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Tonight, the Novato City Council votes on a construction contract for Novato Boulevard. The base bid is $16,824,357.50. Add construction management, staff time, and a 20 percent contingency, and the total project cost comes to $23,983,357.50. The work covers about two-thirds of a mile, from Diablo Avenue to Grant Avenue. That works out to roughly $36 million per mile of road.

I'm not writing this to say the project is a bad idea. Novato Boulevard needs new sewer and water lines underneath it, and it makes sense to install those at the same time the road gets rebuilt instead of tearing up the same street three times over the next decade. That part is sound engineering. What concerns me is what happens when a City Council gets handed a 21-page staff report and a $24 million price tag, and nobody slows down to check it. Here's what I found when I did.

The contract has two different numbers in the same document. The staff report's request section, its fiscal impact table, and its alternatives section all list the award at $16,824,357.50. But the recommendation paragraph, the actual sentence tied to the resolution the Council is adopting, says $16,824,940.50. That's $583 off from every other reference in the same report. I doubt anyone is hiding $583 in a $24 million contract. I think it means nobody proofread the paragraph that matters most before it went to print. If the City can't keep one number consistent across its own report, residents should ask what else wasn't double-checked.

The Council may be approving money before its partners have actually agreed to pay it. This isn't just a City project. Novato Sanitary District and North Marin Water District are installing new sewer and water lines in the same trench and are supposed to reimburse the City for their share. Their cost-sharing agreements with the City say that if a construction bid for a district's portion comes in higher than that district's own engineer predicted, the City and district must sign a new written agreement on splitting the difference, within three working days for the Sanitary District, thirty days for the Water District, starting from the bid opening. Bids opened August 19. The staff report says plainly that the winning bid came in above what the districts had budgeted. It never says whether that follow-up agreement got signed. Yet tomorrow's vote includes an extra $7,056,638 in spending authority, built on the assumption that the Sanitary District will pay $4,574,638 and the Water District will pay $2,482,000. If those two agencies haven't signed off on those exact figures yet, the Council would be appropriating money on a number nobody has confirmed. If a dispute surfaces later, Novato taxpayers carry the exposure, since the City pays the contractor upfront and collects reimbursement afterward.

Can one official represent both sides of the same multimillion dollar transaction? Sandeep Karkal is also the General Manager of the Novato Sanitary District, one of the agencies expected to reimburse the City millions of dollars for this project.

Holding both positions does not by itself establish a legal conflict of interest. But this particular transaction raises questions that deserve answers.

Did Karkal participate on the Sanitary District side in developing the project, reviewing the bid, calculating the District's share, negotiating the cost sharing agreement, or determining how much the District would reimburse the City?

If so, he may now be sitting on the other side of the same transaction as a City Councilmember, considering spending authority that depends in part on the reimbursement his other agency is expected to provide.

That is particularly important because the winning construction bid exceeded what the districts had budgeted, potentially requiring additional agreement over who pays the difference.

Has the City Attorney reviewed Karkal's participation in this specific decision? Has counsel considered both California's financial conflict rules and the issues that can arise when a public official serves two agencies with interests in the same transaction? And if that review has occurred, what was the conclusion?

There may be a completely satisfactory legal answer. Residents should hear it before the vote, not after.

Six property owners, one of them now in court. The project needs small parcels from six properties along the corridor. Five owners reached agreements with the City. The sixth did not, and on July 23 the City filed an eminent domain lawsuit to take that property. Cities have the legal right to do this, and sometimes a fair deal genuinely can't be reached. But that lawsuit is moving forward in the same month the City hands a $16.8 million contract to a private construction company. Residents deserve to know what was actually offered to that sixth owner and why it didn't work out.

None of this requires a law degree or an accounting background. It requires reading the document before voting on it. That's the job.

If Novato wants a City Council that catches a $583 error before signing a contract, and confirms its funding partners have actually agreed to pay before appropriating their share, that's the standard I'll hold myself to. It's also the standard every resident should be demanding right now, regardless of who's on the dais Tonight.

Mike Little is a utility infrastructure distribution design engineer, foster parent, adoptive parent and candidate for Novato City Council, District 2.