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Charlotte overpaid contractor $1.6 million for light rail extension

A newly released audit encourages the city to try to recoup some of the unnecessary charges for the Blue Line Extension after auditors questioned $3-6 million in payments to HNTB.

CHARLOTTE, N.C. — While Charlotte's celebrating the year anniversary of the Blue Line extension, an audit found the city overpaid for the light rail project by at least $1.6 million in labor and overhead rates. 

The newly released audit questioned $3-6 million in payments to HNTB, the company that managed the construction project. As a result of the findings, auditors are recommending the city work to get back at least $298,000 in unnecessary charges.

While councilmember Tariq Bokhari welcomed the release of the audit, he called the dollar figures in the report "disturbing."

"It seems like we've uncovered a mistake," Bokhari said. "Folks are doing their job; they're transparently talking about things that didn't get that kind of transparency before. But it's kind of a hard pill to swallow, and it's embarrassing for those of us to stand up here and have to relay."

In labor costs alone, the city paid almost twice as much as estimated for the project, more than $20 million, with much of that due to construction delays, salary increases, and unforeseen circumstances, but auditors found city staff could've done more to control costs and prevent excess spending, according to the audit. They questioned everything from why the city didn't provide a field office for HNTB to why dozens of pay rate adjustments went unapproved by city staff.

"When I see these dollar amounts paired with some controls that I recognize from the private sector, controls that are very important around contracting, around procurement, I just see that these are things that we just have to be better stewards of," Bokhari said.

Much like the funding failure involving the Cross Charlotte Trail, Bokhari said he hopes city management makes sure all past administration's mistakes are brought forward.

"The big thing I want is to make sure this never happens again," he said.

In response to the audit, the city said staff members are making an effort to recoup some of the money and making changes to ensure better oversight moving forward.

Auditors said the questionable payments equated about 4-8 percent of the contract. An HNTB spokesperson told NBC Charlotte the construction management company "is working closely with the city to review this report."

The more than $1 billion, 9.3 mile Blue Line Extension, which connects 7th Street Station to UNC Charlotte, opened in March 2018 to grand applause. The city built the light rail because it promised better mobility, which in turn meant economic development.

You can read the full audit here.