Warren County Report

April 16, 2010

Leaked memos may sink solar project, 100-plus jobs

Motives of town attorney, confidential document-leaker questioned

By Roger Bianchini

Hot on the heels of the Front Royal Town council’s unexpected April 12^th rejection of its $100,000 RFP process on solar power proposals described elsewhere in this issue, all hell broke loose on April13—14 in the wake of the leak of an internal memo from Town Attorney Tom Robinett to council.

The leak, cited as from an unnamed member of council, resulted in an April 14 front page banner Northern Virginia Daily  headline: “Town attorney: Incentives taint solar project.”

The cited town attorney memo references March 30^th inquiries from two unnamed councilmen following a March 29 closed session, about whether the so-called incentives from Standard Energy mentioned by Town Manager Michael Graham in closed session could be construed as “bribes within the meaning to the law”.

Consequently Robinett sought an opinion from the Richmond legal firm of Troutman Sanders, where Carter Glass IV who was the town’s contracted attorney in the 522 Corridor fee lawsuit, is a partner.  The opinion was prepared by Troutman Sanders staffer Megan C. Raham, who practices in the area of white collar & government investigations, and is prefaced by a note from Glass.  Glass states that within normal contract negotiations modifications of benefit to the contractor, in this case the town, are permissible.  However where the issue is apparently muddied legally is how contract negotiations initiated prior to the RFP process and continuing outside of it by the initial applicant could impact the RFP process itself.  Consequently Glass writes that Robinett’s idea to “withdraw the entire RFP sounds like good advice to me.”  However it appeared Glass and his staff were unaware of the full parameters of the contract negotiations described by other staff and the mayor.

Town Manager Michael Graham says the referenced incentives have been on the table from the outset of serious discussions with SolAVerde in mid 2009 and never have been secret.  Graham has been at odds with Robinett and Councilmen Carson Lauder and Chris Holloway over the dynamics of the $100,000 RFP process versus Standard Energy/SolAVerde’s initial private sector inquiry to the town dating to last spring.  The RFP process was initiated in December (see related story) at Robinett’s urging.

“This is ridiculous,” Graham said when asked about the “bribe” inquiries from council to the town attorney leaked to the local media by sources within council.  “These are all things that were proposed as business proffers.  They are incentives to the community that have been out there from the outset.  I’m not getting anything, the town is.  This isn’t cloak and dagger stuff.”

Lack of trust

Vice Mayor Bret Hrbek seemed both angry and exasperated at the situation.

“I’d like to know if Carter Glass or his staff’s opinion would be the same if they knew that all the offers or add-ons referenced were related to the manufacturing facility, not the solar field itself.  That is my understanding –they were all within the context of the manufacturing facility, which was not part of the RFP proposals, which were solely about the purchase and production of solar power,” Hrbek said.

Queried on that and other issues related to the situation, Glass said he could not comment because his communications with town staff on the matter were covered by attorney-client privilege.  However, Vice Mayor Hrbek was talkative.

“It’s like Jean’s Jewelers donating the solar clock; it’s like American Woodmark donating the wood for the benches around town and the picnic tables at the Luray boat landing; and Lowe’s donating all the plantings around town.  Is Jean’s Jewelers bribing us?  Is American Woodmark or Lowe’s?  I mean when Walmart came they were writing checks to different groups or departments around town to the police force – are those bribes?” Hrbek asks.

At issue for Troutman Sanders attorney Raham within the framework provided to her by Robinett is whether those “incentives” of jobs and money tied to a solar power field or manufacturing facility here could be considered illegal under any circumstance.  An e-mail response to Robinett from Glass accompanying the staff opinion noted that there could be liability issues if the offers were made “in secret” in order to impact the RFP process.  At issue under state code for Raham were economic gain to the entity which the person to whom the offer is made has an interest.  She writes that since to her understanding the town manager is the official to whom the offers were conveyed and since Graham has an interest in the town’s well being, her reading of the offer of jobs and revenue for community incentives could be construed as a violation of Virginia code section 18.2-445(I).  However, she adds that if the offer is not accepted no bribe occurs… and Standard Energy and the Town of Front Royal are left holding the bag in a legal limbo.

That legal limbo has Vice Mayor Hrbek fuming and asking more questions.

“I’d  like to know who the two councilmen Mr. Robinett cited as asking about bribes on March30th were.  And I wonder who gave Mr. Robinett the authority to go to Carter Glass for an opinion?  Mr. Glass was contracted to handle the corridor suit.  And he appeared to have an associate prepare the response based entirely on the facts provided by Mr. Robinett.  We pay Mr. Robinett for those opinions,” Hrbek said, offering that Troutman Sanders did not throw out opinions for free.

“There is no trust in town hall any longer.  There is no trust between staff members.  I try not to contribute to such a situation but is has gotten out of hand,” the vice mayor said bluntly.

Mayor’s perspective

“What bothers me more than anything is that we can’t keep anything confidential anymore.  There appear to be one or two members of council that take everything to the press.  I don’t know where they’re coming from but I do know we all took an oath of office to uphold the best interests of the town and confidentiality on legal communications or closed session discussions is a part of that,” the mayor said.

Tewalt also agreed with Hrbek that the town attorney had overstepped his bounds in seeking an outside legal opinion.  “He shouldn’t have gone to anyone until he got authorization from the town council,” the mayor said of Robinett’s inquiry to Glass.

However Tewalt said he did not believe the incidents and consequent abandonment of the RFP process had doomed the solar proposal, nor Standard Energy’ role in it.  “Not at all- Those proffers or whatever you want to call them have been in discussion at least since last September or October outside the RFP process, actually months before it.  I think now we can let private enterprise take its course,” the mayor stated.

An appointed opinion

“We were directed by the town attorney to send out the RFP’s .  We were also advised by the town attorney to reject all the RFP’s,” Shae Parker told us in response to question about how the brewing controversy erupted.  “I don’t know what the wording of Mr. Robinett’s inquiry to the Richmond law firm was.  But I am perplexed he would be consulting about this topic with that firm, which wasn’t authorized to my knowledge.  They were contracted to handle the 522 corridor case and I was not aware they were still under contract to the town for anything else.

“As far as back door negotiations, secret meetings—my understanding of any discussions that occurred were that they were of a type that is typical of the contract negotiations process.  Incentives to the town never came forward as part of the RFP process.  There were discussions about scholarships, bringing jobs to the community. But I don’t understand the idea that jobs could be considered a bribe.  I think a condition of EDA approval of leasing land at Avtex to them was that a number of permanent jobs be created.

“But now between the bad press, and bad egos and bad feelings all around, I am more concerned about those trying to derail something that could be good for the community that would bring jobs, bring scholarships for our children and green, sustainable energy to the community,” Parker concluded.

Defense attorney

Told he had been criticized for the third party inquiry based on the questions of two councilmen regarding potential illegalities in the RFP process, Robinett said only that his interpretation of his job description by code and town charter allowed such discussions.

“I do it every day – the difference here was that with such a serious allegation I wanted a second set of eyes to verify my opinion,”  Robinett explained.  Quoting form the town code Robinett referenced his job description as having “charge, management and control of all legal affairs of the town…”

“When two members of council call me and ask if bribes are being taken should I have to wait till the full council meets again to act on it?  That’s never been the way of it previously,” the town attorney concluded.

A professional opinion

    Councilman Tom Conkey told us that during his professional life with Raytheon he had spent 35 years in procurement and major subcontracts.  “So my area of expertise is wit the RFP process,” he told us.  The allegations of “bribes” seem frivolous to him because the town’s consultant GDS handled “the whole RFP process ‘from cradle to grave’ as they used to call it, as I did,” Conkey explained.  Consequently, consultant GDS prepared, sent out, evaluated, and summarized their findings on the RFP’s for the town’s purchase of solar power.

“So any allegations of bribes, were they true which I don’t believe they are, are irrelevant to the RFP process which was handled entirely out of the town’s hands,” Conkey asserts.

“There are two kinds of companies, one that comes into a community and takes and takes and gives nothing back.  Then there are companies that come in and make themselves a part of that community, whether it be by offering jobs, donating benches, whatever.  In our discussions with Willi [Lauterbach]  from the outset, his stance was that SolAVerde wanted to be the latter type—come in and be a good corporate citizen, whether it be with the creation of jobs through the manufacturing plant as part of their business plan, offering infrastructure support, scholarships, whatever.  It was never a quid pro quo do something for me.  I’ll do something for you, which is typically what bribery is,” Conkey said.

Insider  trading?

However, both Holloway and Lauder are suspicious of the involvement of the town  manager in the ongoing Standard Energy/SolAVerde negotiations.

“Why is it so important that Standard Energy get the contract?” Holloway asks.  He asserts that the town attorney witnessed what he recalled as a March 16 assertion by Graham the town could get $1.2 million from Standard if their Purchase Power Agreement (PPA) was accepted.

Queried, Robinett corrected the date to March 30, when he said he asked Graham about incentives mentioned in closed session the previous day, and of which he had been previously unaware.  It was then the town manager mentioned the $1.2 million and 200 jobs to him as clarification, he said.

One might note the above conversation occurred two weeks after the town’s consultant GDS had already endorsed Standard Energy at a March 15 council work session as the top applicant in both RFP scenarios, PPA and Design-Build.

Lauder has been one of the primary critics, along with Holloway, of Standard Energy’s ongoing private sector negotiations with AMP-Ohio as the RFP process proceeded.  He was also part of the council trio that attempted to oust Graham last year (along with Holloway and Sayre).  But while he may have been at its center, Lauder bemoaned the deteriorating solar situation.

It’s something that got out of hand and wasn’t handled correctly” Lauder said of the recent legal inquiry and media leak.  “Did I want to disrupt or derail the solar project—absolutely not.  But the numbers on energy costs just didn’t work out,” he added of his perspective of the abandoned RFP’s.

“There is a thought that we wasted $100,000 on the RFP process,” Lauder added.  “But I prefer to look at it as we possibly saved $18 million if we’d gone along with that upfront investment for power purchase (Standard Energy’s Steve Lamb approached council in late October about a possible 14 year, $18 million up front purchase of solar power to help startup funding for the solar field project.  Mayor Eugene Tewalt led a fairly harsh council reaction to that option of Lamb’s face at that meeting.  The pre-purchase option has since been removed from the table- see related solar update story).

Graham witch hunt?

Original SolAVerde partner and local businessman, Artic Air’s Greg Horton was angered at insinuations of shady dealings by his company and the nature of the initial reporting around those allegations.  He said revenue for scholarships or other community benefits had long been discussed in amount from half million to 1.5 million and never as part of the RFP process.

“I liken this to the Salem witch hunts,” Horton said.  “There appear to be people within town hall that have crested a witch hunt.  First it was our investors (Tom Sayre publicly targeted potential SolAVerde investor Kent Swig in mid 2009); then it was us a individuals (in fall of 2009 Sayere and Chris Holloway targeted SolAVerde principal Willi Lauderbach, as well as fellow councilman Tom Conkey, for the offer of weekday business traveler discounts at Conkey’s bed &breakfast);then they turned on Mike Graham,” Horton observed of a sequence of events.

“It would be a tragedy if one of the best things that could happen to this community could be scrubbled by a few people who appear to have personal agendas.  I mean all we’re trying to do is build a solar farm and a production facility here that will provide jobs.  I just can’t believe some people will vilify anyone to get there way.  Maybe they are so depressed about their own situation that they have to drag others down with them to make themselves feel better.

“To me it is a tragedy for this community; it is an embarrassment for this community; and it puts Front Royal in a bad light.  It appears it would take a miracle for Front Royal to get this now.  Too many roadblocks are  being thrown up.  But if these people think they are going to stop us from doing what we’re doing they are mistaken.  There are plenty of places that want this and will welcome it with open arms.”(AMP-Ohio was in discussion with another municipal partner, Danville, Va. For development of a solar power project when they refocused on Front Royal after being informed by town staff of the advanced stage of  talks between Standard Energy and the town.  Standard Energy is also in discussion in Fayetteville, Tennessee, where a mirror image proposal to the one here has been received “with open arms” at the local and state level, Horton said.  He added that, that project, in the works for six months is coming close to finalization as the one in discussion here for 11 months flounders under the weight of political infighting).

Counterpoint

Both Holloway and Lauder questioned the information flow leading to the bribe inquiries.

“In the RFP there was no discussion on incentives to the town.  So why would they be discussed with anybody?” Holloway wonders.  “I didn’t have a clue about incentives and Mike and Bret didn’t want to discuss it.  And I don’t know where this scholarship came from.  There was no mention of scholarships that I was aware of.  And if there was, why didn’t I, Carson and Mr. Sayre know?  The whole thin is screwy.  I’m not trying to derail this but here are lots of things going on behind closed doors.”

As for the legal opinion on potential improprieties tied to the RFP process, Lauder added, “If those offers were made prior to the RFP’s that should have been made perfectly clear.  But the fact it wasn’t in the RFP’s seems to be a problem.”

Told some involved believe there are personal agendas involved in attempting to scrap the solar project and leak information to the press to achieve that end, Holloway said, “My personal agenda is looking out for the town.  I didn’t run to become mayor.  I ran to do the best for the community.”

Asked about an eye witness report he had discussed renting or selling his vacant West Main Street duplex to SolAVerde’s Lauterbach last year, Holloway said, “ Sure, yea- throw that out there too- I sure did.  Willi wanted to rent my house but I said no, I was trying to sell it and I never heard back from him.”

The witness, who asked for anonymity, said at the apparent end of a conversation they heard Lauterbach tell Holloway, “Cheer up, you’ll sell it eventually.”

Lauterbach could not be reached for comment on the discussion about Holloway’s duplex.

A legal brief