Auditor Finds Overpayments, Slow Payments in Oakland Capital Projects

Public Works and Transportation Committee • OaklandOctober 13, 2026

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Oakland's City Auditor told the Public Works and Transportation Committee on Oct. 13, 2026, that the city's capital program has run for years without a long-term plan, a consistently followed rulebook or adequate oversight of bond dollars. The committee voted 3-0 to send the audit to the full City Council on Oct. 20 for a public presentation. It also advanced a ready-mix concrete deal that waives the city's sanctuary and border-wall contracting rules, and a $5.06M East 12th Street bikeway contract.

Capital program audit lands 17 recommendations, including a 10-year capital plan. Management agreed or partly agreed with all of them.
Up to $4.8M concrete purchase advances with sanctuary waivers after Oakland's only two suppliers refused ICE and border-wall certifications.
$5.06M East 12th Street bikeway contract heads to the council consent calendar. Construction is expected to start in spring 2027.
Councilmember Ken Houston presses staff to track payments to small local subcontractors, citing gaps in city oversight.
$4M MLK Jr. Way consultant contract advances as staff cite an 80% vacancy rate in construction management.

Audit: Capital Projects Lack a Plan and a Rulebook

Why it matters: The audit covers fiscal years 2023 through 2025 and roughly $300M in capital spending. It found inconsistent approvals, overpayments, late payments and no multi-year capital plan since FY2022-23. It was the meeting's longest discussion, at about 39 minutes.

Where things stand: City Auditor Michael Houston presented four findings.

The city's construction management manual was never adopted and is followed inconsistently. In 34 of 65 sampled cases, orders to proceed did not meet its requirements.
Payments took an average of 47 days, and the city paid $66,000 in interest on one project.
Oversight of Measure KK and Measure U bond spending is weak, and required annual audits were not done.
Short-term planning without a multi-year capital plan drives change orders.

"The city overpaid $35,000 for 7 capital projects out of the 46 that we reviewed," said City Auditor Houston. He said the city administrator "should recommend that the City Council adopt a 10-year capital improvement project plan." The audit also calls for regular reports to the council.

A Finance Department representative said "management has agreed or partly agreed with all 17" recommendations and has "committed to updating that manual by February of 2027."

Pressure from the dais: Councilmember Zac Unger, the committee chair, zeroed in on vendors. "It seems like capital projects are consistently the slowest to be paid," said Unger. He also asked whether residents can easily find a list of capital projects. "I would say no," the finance representative answered.

Councilmember Houston pushed on how projects are delivered. "I'm still trying to understand why we're not doing design builds," he said. He also asked that large change orders return to the council: "Because these change orders are astronomical."

The other side: Public Works Director Liam Garland said "we are very open to the idea of design-build on our projects." He drew the line at more council review, however. "If we came back to committee for every change order, that would essentially mean slowing our capital projects down considerably," said Garland.

Public commenter Kevin Daly praised the audit and noted that bond spending has slowed. He also criticized "how frequently departments come to council with an urgent contract where it's way too late to make any changes but still expects an approval from council." Public commenter Asada Olabala said she did not hear a city response on vacancies, management systems or bond oversight. She cited a design-build project whose cost rose.

Decisions and stakeholder impacts: Unger moved to forward the report to the Oct. 20 council on non-consent so staff can present it, and Houston seconded. The vote was For: 3 (Gallo, Houston, Unger), Against: 0, Absent: 1 (Wang). Contractors and small subcontractors have the most to gain from faster payments. Bond-funded projects under Measures KK and U face new scrutiny.

What's next: The full council hears the audit Oct. 20. The manual update is due February 2027.

Concrete Shortage Forces a Sanctuary Waiver

Why it matters: Oakland has only two ready-mix concrete plants, and both refused to sign the city's sanctuary and border-wall certifications. Without a deal, the city's in-house ADA curb ramp program stays suspended.

The basics: Schedule I bars city contractors from providing services to ICE, U.S. Customs and Border Protection (CBP) and the Office of Refugee Resettlement (ORR). Schedule W bars work on the border wall. The Oakland Municipal Code allows waivers when no reasonable alternative exists.

Where things stand: A 2025 request for quotes drew no bids. CalPortland and CEMEX accepted the purchase terms and prevailing wage, but both declined Schedules I and W. The resolution authorizes up to $4.8M over four years and waives competitive bidding.

A third supplier could be added on similar terms, such as a Sierra Pacific plant on Wood Street if it reopens. Without the deal, crews are limited to small repairs. "Without ready-mix concrete, our teams mix concrete by hand," said Emily Ellers of the Department of Transportation.

Daly framed the stakes around the city's ADA consent decree. "Oakland does have 30 years from the date the consent decree was signed to make Oakland sidewalks, curb cuts, etc., ADA accessible," he said. Daly supported the contract.

The other side: Councilmember Houston questioned the point of "creating policies and laws of sanctuary city and city of refuge if we're waiving them all the time." He also asked about local employment and concrete mix designs.

"I'm working on a large contracting reform package that will address some of those questions," said Unger. Olabala spoke against sanctuary policy itself and argued that immigration affects Black employment and housing.

Decisions and stakeholder impacts: Houston moved the item and Unger seconded. The vote was For: 3 (Gallo, Houston, Unger), Against: 0, Absent: 1 (Wang). Residents with disabilities and sidewalk crews benefit from restored supply. Immigrant-rights policy takes the hit, as the city waives its own prohibitions.

What's next: The item goes to the Oct. 20 council consent calendar. Watch for Unger's contracting reform package.

Bikeway Advances, With a Subcontractor Caveat

Why it matters: "The East 12th Street Bikeway Project will close a critical 1-mile gap in the city's bikeway infrastructure," said Suti Komsankeo, supervising civil engineer in the Department of Transportation's Major Projects Division. The route links International Boulevard to Fruitvale BART.

Where things stand: Four bids arrived July 2, 2026. McGuire and Hester was the lowest responsible bidder at $5,055,898. The work includes:

Protected bike lanes and paving
ADA curb ramps and signage
Signal upgrades, traffic circles and speed bumps

Funding comes from an Alameda County Transportation Commission grant, Measure U and gas tax revenue. The resolution includes 25% change-order authority, which staff called standard department practice. Construction is expected to start in spring 2027 and finish by mid-to-late 2028.

Small business follow-through: "I want to track that because the small local businesses are the most important to me," said Councilmember Houston. "The whole project, including change orders, needs to meet that minimum that was set by DWS," Ellers said.

The city still has no function to verify that prime contractors actually pay small local subcontractors. Payments are documented only on paper, said Baker, interim director of the Department of Workplace and Employment Standards. "We are in pilot with HCD to track those payments," Baker said, describing B2G tracking software. The city is also weighing amendments to city-to-prime contracts that would pass obligations down to subcontractors.

The other side: Daly backed the protected lane, noting cars have parked in the existing painted lane. "When are you going to start looking at race equity with contracts with companies?" asked Olabala. She also raised street sweeping in protected lanes and whether bike lanes are placed equitably across neighborhoods.

Decisions and stakeholder impacts: Councilmember Noel Gallo moved the item and Unger seconded. The vote was For: 3 (Gallo, Houston, Unger), Against: 0, Absent: 1 (Wang). Fruitvale-area cyclists gain a protected connection, and small local subcontractors gain a sharper oversight spotlight.

What's next: The contract goes to the Oct. 20 council consent calendar.

Vacancies Push MLK Way Oversight to a Consultant

Where things stand: Azad Engineering, an Oakland small local business firm, would self-perform 70% of the work under a $4M contract. That work covers resident engineering, inspection and testing on MLK Jr. Way between 2nd and 14th streets. The contract is fully funded by state and local grants, and the request for proposals drew two proposals.

Why it matters: "The construction management team that's managing the large streetscape projects currently has an 80% vacancy rate," said Edmund Siu, acting division manager in the Department of Transportation. Siu also cited grant deadlines.

"It is frustrating that we have to sub this out. I mean, ideally we would have in-house engineers," said Unger. Olabala asked how the project would improve air quality and about hiring equity. Daly supported it for pedestrian and cyclist safety.

Decisions: Gallo moved the item and Unger seconded. The vote was For: 3 (Gallo, Houston, Unger), Against: 0, Absent: 1 (Wang). It goes to the Oct. 20 consent calendar.

Minor Items

Liberation Park housing: The committee advanced a technical amendment to Resolution 91091 C.M.S. so the state can release $44,661,404 in AHSC funds. Olabala criticized small allocations to the Black Culture Zone and Eaton House. The vote was 3-0.
Arroyo Viejo Creek cleanup: The committee advanced a $3M EPA grant for PCB remediation, with a $1M match from Monsanto settlement and city facilities funds. The city splits the cost 50/50 with Union Pacific. The vote was 3-0.
Housekeeping: The committee approved the Sept. 22, 2026, minutes. It also removed the 2025 Safe Oakland Streets annual report from the Oct. 27 pending list. Both votes were 3-0.
Open forum: Olabala said only 32% of city employees live in Oakland and questioned pay raise demands during labor negotiations.

Looking ahead: All seven forwarded items reach the City Council on Oct. 20, 2026, with the capital program audit on non-consent for a full presentation.

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