
DATE: Friday, September 26, 1997            TAG: 9709260768

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY TOM HOLDEN, STAFF WRITER 

DATELINE: VIRGINIA BEACH                    LENGTH:  159 lines

BEACH OFFICIAL RESIGNS IN WAKE OF COST-OVERRUN CONTROVERSY COMMUNITY SERVICES BOARD LEADER HAD FACED QUESTIONS OVER HIS HANDLING OF A BUILDING PROJECT.

The executive director of the Community Services Board resigned Thursday at the board's request following two weeks of surprising disclosures about cost overruns on a proposed building project.

Dennis I. Wool, who has served as executive director for almost 14 years, stepped down after the board met in executive session to discuss issues surrounding the planned building project on Bonney Road.

The loss of Wool, an articulate and forceful advocate for the city's mentally retarded, mentally ill and those suffering from substance abuse problems, capped a month of soul searching by a board unaccustomed to intense public scrutiny.

``The events of the last three months were some of the most challenging in my tenure with the board or in any community activity,'' said Donald V. Jellig, board chairman.

``It was a very difficult decision for us,'' he added. ``Dennis felt it was the best thing he could do by leaving and doing so without any noise or animosity.''

The board immediately named Terry Jenkins, director of mental health, as the interim executive director.

``It was a distinct professional privilege to serve this city for almost 15 years,'' Wool said. ``What I walked away from is the best service delivery system in the state, maybe in the country. I have nothing to be ashamed of or to be embarrassed about.''

In a third move, the board requested that City Manager James K. Spore approve a procedural change that would make the board's director of finance and administration, James P. Duffy, report directly to both the executive director and the board. Previously, Duffy reported only to the executive director.

``In going forward, we want to take every precaution we can so there is no confusion on reading numbers in the future,'' Jellig said.

The reason for the resignation centered on Wool's handling of a proposed consolidation of board operations from its various offices to a central campus-like setting on Bonney Road.

The plan involved a City Council appropriation of $12 million last December to purchase three properties - a Days Inn, an Unclaimed Freight Co. and a private residence - as well as the cost to renovate them.

In doing so, the board would stop paying rent, build equity in city-owned property and have enough space for future expansion.

The board conducts the bulk of its business from about 40,000 square feet of rented space at the Pembroke Office Park at below-market rates of about $8 a square foot. Office space of its type typically rents for about $14, but because the company that operated the park had filed for protection under Chapter 11 of the bankruptcy code, the board was worried that a new owner could push rents much higher.

Indeed, no one on the City Council or the city manager's staff questioned the wisdom of trying to save the city money in the long run through the consolidation of services onto a central site.

The location, on Bonney Road just east of Independence Boulevard, was widely praised as ideal for the unique services the board oversees. It was on public transportation lines, did not raise objections from any residents, and was for sale at a reasonable price.

The problems with the board's project surfaced publicly Sept. 8 when it voted to not renovate the buildings and instead tear them down and start from scratch. The decision came three months after the board learned the renovation project costs had swelled to $19 million. By razing the building and rebuilding, the board determined that the costs could be reduced to $17.2 million - though still $5.2 million over budget.

To pay for the added costs, the board requested additional funding through the sale of lease-revenue bonds that would have required the approval of the City Council.

The bonds would not have cost taxpayers any additional money, but the decision caught the City Council by surprise and set in motion three weeks of acrimony over how the plan went awry.

In the end, it was the manner in which Wool handled the project that proved to be his undoing, including withholding important correspondence between an early project architect and the full board.

The letters were written by John H. Crouse, an architect with CMSS Architects, a company that had been on retainer by the city's Department of Economic Development to assist in evaluating the possible purchase of the Bonney Road properties.

On May 10, Crouse wrote that renovating the Days Inn alone would cost $2.4 million, a figure that Wool and Duffy believed was a realistic assessment of the cost.

Wool then used the estimate, as well as others provided by CMSS, in his argument before City Council for an appropriation of $12 million. Council members approved the money last December.

But in an interview Sept. 9, Crouse said his evaluation was based only on a cursory examination of the renovation costs. He called his work his best ``guesstimate,'' adding that a more formal and complete evaluation would reveal the true cost.

When the city hired a permanent architect, Paul Finch & Associates, it was discovered that the cost of converting the buildings would be far higher than anyone at the board expected. The Days Inn building renovation alone would have cost $1.8 million more than Crouse predicted.

Wool and Duffy were outraged at Crouse's claim that his was only a cursory examination, arguing that CMSS and its consultants had toured the site many times and never lead them to believe the work was anything less than what would be expected of a professional organization.

In addition to the Days Inn costs, the renovation costs of the Unclaimed Freight property rose by $1.2 million above what CMSS predicted.

Although Wool had maintained that CMSS provided a complete appraisal, new correspondence surfaced this week that showed Crouse informing Duffy that his was an ``abbreviated appraisal''

``The second step would involve a more detailed building evaluation of the property to better identify pertinent issues and provide a better basis for projecting a construction and renovation budget,'' Crouse wrote on April 25, 1996 - about two weeks before his other letter.

Then on Tuesday, Jellig told City Council members he was unaware of the Crouse correspondence, which he said later would have been crucial in the board's decision to proceed with the project as it was then envisioned.

``We never knew there was a preliminary study,'' Jellig said. ``When this started to unravel in June, I began my own pursuit of what went wrong. I became aware of communications and documents that were a surprise to me and all the members of the building committee.''

``We should have been made available to that correspondence,'' he added. ``I don't ask to see all correspondence, but this had such a significant impact that it should have been openly shared with the executive committee and the board.''

The greatest part of the planning was carried forward by Wool, Jellig asserted.

Reaction to Wool's resignation took time to filter through the mental health, mental retardation and substance abuse community. But one authority had high praise for Wool's level of professional dedication.

``I've known Dennis since he was appointed to the position,'' Howard M. Cullum, Wool's predecessor in Virginia Beach, said Thursday. ``He's been one of the lead spokesmen for services for the mentally disabled in the state, a real advocate.'' Cullum, now a Richmond-based human services consultant, left the Virginia Beach position to become Virginia's Deputy Commissioner of Mental Health and Mental Retardation.

He went on to become commissioner, then served as Virginia's Secretary of Health and Human Resources in the Wilder administration. MEMO: Staff writer Jo-Ann Clegg contributed to this report. ILLUSTRATION: Color Photo

TING-LI WANG/The Virginian-Pilot

Dennis I. Wool, left, executive director of Virginia Beach's

Community Services Board, quit Thursday. At right is board chairman

Donald V. Jellig.

Graphic

ABOUT THE CASE

Color staff photo

BACKGROUND: The Virginia Beach Community Services Board planned

to consolidate the operations of its various offices to a central

campus-like setting in three properties, including a former Days

Inn, above, on Bonney Road. The plan involved a City Council

appropriation of $12 million last December to purchase and renovate