January 19, 2014
Wisconsin

Adams County green plan raising red flags

By Lee Bergquist and Thomas Content of the Journal Sentinel | Jan. 18, 2014 | www.jsonline.com

The City of Adams in central Wisconsin is making a big push into green energy, but questions are being raised about whether the gambit will heap too much risk on taxpayers.

The controversy centers on charges of conflict of interest involving the mayor and details of the deal in which the city – with a population of just under 2,000 – gives big incentives to a company that says it will build a world headquarters and manufacturing plant in a local industrial park.

Adams’ mayor, JanAlyn Baumgartner, now works for the company, GEITS Corp., which has U.S. offices in Madison and lists other offices in Italy, Australia and Singapore. The city has also given GEITS office space in Adams City Hall.

One critic of the project estimates the city’s commitment will cost $22 million over the next 25 years.

City officials dispute this. With a local economy that has struggled with high unemployment, they defended their incentive package, which includes giving away industrial land and making a $1 million investment in a plan to turn garbage into electricity.

To date, Adams officials say they have spent more than $900,000 on wind-powered streetlights and wastewater treatment equipment from GEITS, even though the wastewater upgrades haven’t been reviewed by state regulators and might not be necessary.

Officials said last week that they are looking for more money, because other attempts to obtain state and federal funding for the wastewater project haven’t succeeded.

Last month, the state Board of Commissioners of Public Lands denied Adams a $2 million loan, marking the first time in nine years that Executive Director Tia Nelson declined to forward an application to her board for review, according to documents.

“Based on the representations we have received to date, and the facts staff has uncovered over the course of more than 31/2 months and 7 different loan applications, it appears to me that the community would be unable to obtain the additional financing necessary to complete the project as described,” Nelson wrote her board.

Adams’ foray into green power comes as cities are starting to look more seriously at renewable energy. Milwaukee has a single wind turbine on Lake Michigan. It’s also one of 25 cities aggressively pushing development of solar energy, according to the U.S. Department of Energy. Last week, Milwaukee County Board ChairwomanMarina Dimitrijevic said county officials should study installing solar modules at Mitchell International Airport.

Attorney Dennis M. McFarlin, who also serves as commissioner of Adams County Family Court, was asked by citizens to analyze the deal with GEITS. He concluded the value of expenditures and donated land couldcost the city up to $22 million over the next 25 years. The outlay includes monthly lease payments of nearly $45,000 by the city to GEITS for infrastructure upgrades for lighting.

More significant, however, Ellisor said is the city’s belief that GEITS will invest $100 million in Adams, including a hotel and education center. The company will create 200 jobs and provide a spinoff employment of an additional 500 or so jobs, according Ellisor.

“It’s a huge deal, conservatively estimated at taxable value of $70 million,” he said, adding that the increased tax base would be sufficient to pay city obligations.

GEITS stands for Global Environmental Infrastructure Technology Solutions, and according to its website, it specializes in renewable power generation, waste management, water management and urban renewal.

In an email, spokesman Tim Roby said the company has 10 employees in Madison and 50 consultants around the globe.

The company and the city began meeting last year after another idea the company was discussing with representatives of Adams County went nowhere. That plan called for GEITS to build large floating solar panels on Petenwell Lake, a flowage of the Wisconsin River.

On May 14, Adams and GEITS signed an agreement that a public finance consultant, Ehlers Inc. of Brookfield, described as a partnership in a report to the city.

The agreement committed the city to buying $2.9 million – later reduced to $2 million – in equipment for the city’s wastewater treatment plant and $91,800 in streetlights powered by wind or solar energy. The city says that the streetlights will be powered by “vertical wind turbine electric generating units,” a city document shows.

Under the agreement, the city also gave the company 66 acres of industrial land at two different sites for $2 that GEITS is using as collateral.

The deal also calls for a $1million payment to GEITS to help fund a new enterprise, described in documents as a “waste-to-energy facility.” The $47 million project would take garbage from Adams and other communities – 48,000 tons annually – and turn the waste into electricity.

The city also would invest $4 million from tax incremental financing from the value of the waste energy business. Because of the commitments, the city says a downtown revitalization program has been suspended.

Baumgartner, the city’s mayor, joined GEITS as vice president of public policy and government relations in late November.

Baumgartner’s job at GEITS has come under fire in the community, and one member of the city council who voted in favor of the project says he is having second thoughts as details of the GEITS partnership emerge.

Roger Marti, who is serving his second term on the council, said he asked the mayor to resign after she joined the company.

The mayor declined and produced a document from an attorney hired by the city who says the arrangement is legal if Baumgartner agrees to stay out of deliberations involving her new employer.

Baumgartner said she is earning less than in her previous 26-year career helping women in shelters for Family Center Inc. of Wisconsin Rapids. She said she has not attended some city council committee meetings when issues with GEITS come up and has left one council meeting.

“It really means a lot to me to get this community going somewhere,” she said last week.

But Marti and others said the appearance of the mayor going to work for company in which the city has made a large financial commitment doesn’t look good.

“I don’t think it’s right that she is doing this,” Marti said last week. “We now have a mayor who is working both sides of a contract, and that bothers me.”

Tania Bonnett, the Adams County district attorney, said she has been asked to look into the matter involving the mayor’s dual role, but her review is still preliminary.

Baumgartner and Ellisor tout the deal with GEITS as a “game changer” for an economically struggling city. The latest jobless figures for Adams County puts the unemployment rate at 9.1% in November – sixth highest in the state.

“Isn’t this the brass ring that every community goes through?” Ellisor said. “Let’s get a manufacturing facility in here – a clean operating firm that creates all of these jobs and creates a brighter future for the next generation.

The chief attraction to the city: GEITS’ plans to construct a headquarters and manufacturing plants in Adams’ vacant industrial park.

Among other products, the company would build floating solar panels, vertical wind turbines and proprietary equipment to remove phosphorus at wastewater treatment plants, Ellisor said. GEITS would use Adams as a model for the company’s capabilities with its streetlights, wastewater treatment and other projects.

As opposition surfaced, the city released its own three-page report touting the benefits of the deal.

“As the model for other communities, the city would be the demonstration case for how the waste-to-energy plant, vertical wind turbines and floating solar units can be integrated into and support the small urban community…,” the report said. “The jobs created as a result won’t be shipped overseas because the shipping label on the package will read, ‘Made in Adams.'”

“There’s a lot of things that don’t pass the smell test,” Gately said. “If they can do what they say they can do, God bless them; Adams County needs it.

“But I don’t want to see the city of Adams taken for a ride and become the first city in Wisconsin to file for bankruptcy.”

In his analysis for opponents, attorney McFarlin said the city’s contract with the GEITS revealed numerous deficiencies, including a failure to seek other bids for wastewater equipment and to obtain a performance bond to ensure the work will be completed.

When Julie Giese, a loan specialist with the U.S. Department of Agriculture’s Rural Development program, was told at a meeting last year there would be no competitive bidding for the wastewater project, she said that alone disqualified the project from being considered for funding.

“Everything was real secret,” Giese said. “They provided no documents. I asked for copies of plans, or information on the technology, and the contract – and I’ve got nothing.”

Ehlers, a firm hired by the city to assess the implications of the project, warned in a letter that the city needed to take steps to minimize risk to taxpayers. It also suggested that Adams officials review GEITS’ corporate financial statements and financial commitments it’s received for the project.

Even though the city has already spent hundreds of thousands of dollars on upgrades to the treatment plant, the Department of Natural Resources hasn’t reviewed a proposal and must do so before it can be used, said Mike Vollrath, a basin supervisor for the agency in west-central Wisconsin.

Vollrath said an equipment purchase might not be necessary to meet new phosphorus-reduction regulations because there are other alternatives, including better management of storm water.

When the commissioners of public lands denied Adams its loan request, officials expressed frustration.

“It has been a challenging process for BCPL (Board of Commissioners of Public Lands) because over the last several months, somany assertions (by the city and GEITS) have been made that were subsequently changed, proved unverifiable, or have been found to be false,” Nelson, the commission’s executive director, wrote Ellisor.

■ The issue that GEITS technology has not been deployed elsewhere in the United States.

Several renewable energy consultants expressed concerns about the commercial readiness of some technologies slated for Adams. For example, the wind turbines have not proved to be efficient.

“Just call me skeptical,” said Carl Siegrist, a renewable energy consultant in the Milwaukee area.

“And the reason is there are so many field-tested, field-proven technologies that can generate renewable energy. It’s beyond me as to why anyone would want to be a beta tester of a new technology.”