Key players connected to a $1.8 million construction cost overrun on a building leased by the North Dakota Attorney General’s Office dispute when top officials were made aware of the project’s overages and whether they properly handled the matter.
Former Chief Deputy Attorney General Troy Seibel told the Tribune on Wednesday that there was nothing improper or done incorrectly in regard to the building leased in south Bismarck to house the state crime bureau, fire marshal and lottery offices.
Attorney General Drew Wrigley told lawmakers on Tuesday that his late predecessor Wayne Stenehjem and Seibel were told of the issue in January 2021 but didn’t inform staff budget until June 2021. The issue predates Wrigley’s tenure.
Seibel attributed the overage to unforeseen material costs due to supply shortages, and said he notified the attorney general’s finance department as soon as he learned of the issue in spring 2021.
“I’m at a loss as to this idea that Wayne and I knew about this for months and never said anything to anybody, including our finance department,” Seibel said.
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Brought to light
Wrigley took office Feb. 9 upon Gov. Doug Burgum’s appointment of him to fill the remaining months of the term of Stenehjem, who died Jan. 28 at age 68 from cardiac arrest. Seibel resigned in March when Wrigley told him he intended to appoint a new deputy. Wrigley must win election in November to continue serving beyond this year.
Wrigley said he learned of the cost overrun in March and moved immediately to address it, gathering documentation and meeting with the state auditor.
Wrigley said the Attorney General’s Office in July 2021 paid $1.4 million from its previous budget to cover much of the overrun, and is now making monthly payments to cover the remainder, tapping salaries of vacant positions and holding back on certain budget items. About $300,000 remains to be paid off.
The building is at 1720 Burlington Drive. Bismarck-based Stealth Properties LLC owns it.
Former chief deputy
Seibel said the plan for the building was to consolidate divisions of the Attorney General’s Office in one location rather than have the three spreads across north Bismarck.
He was a point of contact on the project and said he kept up to date on costs until the property developer informed him of the overrun but couldn’t immediately provide the amount.
Seibel said he later learned the total cost overrun in May or June 2021 — “the first I learned of it” — and immediately notified the office budget director.
“There was at no point did I or Wayne have this information and just sit on it,” Seibel said.
The office used $1.4 million from its previous budget, and rolled the remaining $400,000 into a new rental rate of the lease.
Change orders for a garage and a reconfigured heating, ventilation and air conditioning unit affected costs, according to Seibel.
He said he was never aware of additional footings or redundant cabling for the building that Wrigley said contributed to the cost overrun.
The 2021 legislative session was over by the time he had learned of the cost overrun, “and it was something that we could handle within both our ’19-’21 budget and our ’21-’23 budget, so from a fiscal perspective, there really wasn’t a need,” Seibel said.
He and Stenehjem discussed the project “at least a couple of times during the session at our budget hearings,” but didn’t know about the cost overrun then, he said.
The office also disclosed the expenditures in its end-of-biennium reports, he added.
Seibel said he doesn’t know why Wrigley is raising the issue now. Wrigley said he did so to be transparent and because it’s possible his office might have to ask the 2023 Legislature to help cover the overage.
Top Democratic lawmakers blasted the overrun on Tuesday after Wrigley brought it to light. House Minority Leader Josh Boschee, in a statement referring to “the highest ranking attorney and his deputy,” said, “We need to understand their motivations to fleece the public.”
Seibel said, “The idea that it was something that we just did in the cover of darkness I just do not think is accurate.”
The Legislature’s Budget Section on Tuesday directed two interim committees to probe the issue after Wrigley spoke to the group.
The Legislative Audit & Fiscal Review Committee met Wednesday and voted unanimously to direct State Auditor Josh Gallion to work with the Attorney General’s Office to gather and review documentation and other information related to the lease agreement and remodeling and construction of the building, and report back in September.
The audit panel heard from Parkway Property Management Owner CJ Schorsch, who said plans for the building “got bigger and bigger as it went along” with added shop space — a “build-to-suit” punctuated by coronavirus pandemic delays, overages and change orders.
The original lease was signed without an additional shop space, which was an extra nearly 1,800 square feet, a “pretty substantial building cost to add those extra footings in there,” he said.
“The remodel cost went up with the price of doors and everything else during the construction phase, during when COVID started there and the delays for that got it way more excessive than when we started,” Schorsch told lawmakers.
The shop and overages on electrical wiring and requirements of the Federal Bureau of Investigation, including bullet-proofing, were outside of the original plans, according to Schorsch.
“Those were all change orders on the fly,” he said.
The Attorney General’s Office was aware of the overages in January 2021, according to Schorsch.
The original lease bid was for $3.7 million, and it went to more than $5.5 million, he said.
Committee members cited the Budget Section process and marveled how the project unfolded as it did.
Rep. Mike Nathe, R-Bismarck, said, “It’s obvious the proper procedures were not followed when they had these cost overruns or when they were looking to expand it to do this.”
State Facilities Management Director John Boyle, who signs all state leases, said he learned of the situation in August 2021.
Division directors of the AG’s office worked with Schorsch on change orders and additions, “but there was no one really there to kind of tie everything together, especially with any construction management experience,” Boyle said.
The issue could have had “a lot more transparency” had the Legislature’s Budget Section been involved earlier, according to Boyle. His office is working with the Legislature’s interim Government Administration Committee on the situation.
Once a lease is signed, “then it’s so decentralized, I’m out of it,” Boyle said. The Attorney General’s Office did not ask Facilities Management for assistance, he said.
“An agency can basically make those decisions on their own the way it’s set up now. They don’t have to ask us for any assistance, but we’re available to help in any way possible,” Boyle said.
Sen. Judy Lee, R-West Fargo, said, “I don’t think anybody was trying to cheat. I think it just evolved … If everybody is following all the rules, it shouldn’t be onerous but it does need to be disciplined.”
Reach Jack Dura at 701-250-8225 or [email protected].
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